The Quest for an ESG Country Rank: A Performance Contribution Analysis/MCDM Approach

Yong Tan, Amir Karbassi Yazdi (), Jorge Antunes, Peter Wanke, Angappa Gunasekaran, Henrique Luiz Corrêa and Giuliani Coluccio
Additional contact information
Yong Tan: School of Management, University of Bradford, Bradford BD7 1DP, UK
Amir Karbassi Yazdi: Departamento de Ingeniería Industrial y de Sistemas, Facultad de Ingeniería, Universidad de Tarapacá, Arica 1000000, Chile
Jorge Antunes: COPPEAD Graduate Business School, Federal University of Rio de Janeiro, Rua Paschoal Lemme 355, Rio de Janeiro 21949-900, Brazil
Peter Wanke: COPPEAD Graduate Business School, Federal University of Rio de Janeiro, Rua Paschoal Lemme 355, Rio de Janeiro 21949-900, Brazil
Angappa Gunasekaran: School of Business Administration, Penn State, Harrisburg, PA 16801, USA
Henrique Luiz Corrêa: Crummer Graduate School of Business, Rollins College, Winter Park, FL 32789, USA
Giuliani Coluccio: Departamento de Ingeniería Industrial y de Sistemas, Facultad de Ingeniería, Universidad de Tarapacá, Arica 1000000, Chile

Mathematics, 2024, vol. 12, issue 12, 1-24

Abstract: Utilizing Multi-Criteria Decision Analysis (MCDA) methods based on environmental, social, and governance (ESG) factors to rank countries according to these criteria aims to evaluate and prioritize countries based on their performance in environmental, social, and governance aspects. The contemporary world is influenced by a multitude of factors, which consequently impact our lives. Various models are devised to assess company performance, with the intention of enhancing quality of life. An exemplary case is the ESG framework, encompassing environmental, social, and governmental dimensions. Implementing this framework is intricate, and many nations are keen on understanding their global ranking and avenues for enhancement. Different statistical and mathematical methods have been employed to represent these rankings. This research endeavors to examine both types of methods to ascertain the one yielding the optimal outcome. The ESG model comprises eleven factors, each contributing to its efficacy. We employ the Performance Contribution Analysis (PCA), Clifford algebra method, and entropy weight technique to rank these factors, aiming to identify the most influential factor in countries’ ESG-based rankings. Based on prioritization results, political stability (PSAV) and the voice of accountability (VA) emerge as pivotal elements. In light of the ESG model and MCDA methods, the following countries exhibit significant societal impact: Sweden, Finland, New Zealand, Luxembourg, Switzerland, Denmark, India, Norway, Canada, Germany, Austria, and Australia. This research contributes in two distinct dimensions, considering the global context and MCDA methods employed. Undoubtedly, a research gap is identified, necessitating the development of a novel model for the comparative evaluation of countries in relation to prior studies.

Keywords: environmental; social; and governance (ESG); Multi-Criteria Decision Making (MCDM); Clifford algebra; Performance Contribution Analysis (PCA); entropy weight (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2024
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