Comparison of Sustainable Environmental, Social, and Corporate Governance Value Added Models for Investors Decision Making

Marie Pavláková Dočekalová and Alena Kocmanová
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Marie Pavláková Dočekalová: Department of Economics, Faculty of Business and Management, Brno University of Technology, Kolejní 4, Brno 61200, Czech Republic
Alena Kocmanová: Department of Economics, Faculty of Business and Management, Brno University of Technology, Kolejní 4, Brno 61200, Czech Republic

Sustainability, 2018, vol. 10, issue 3, 1-13

Abstract: The Sustainable Value-Added Model is a new approach in value-oriented strategic management that focuses on maximizing the value that is created by non-financial sustainability indicators. The objective of this paper is to refine the calculation of sustainable added value by incorporating environmental, social, and corporate governance sustainability indicators, assigning weights to the indicators and, by alternative methods, assigning target values to the indicators. Ten alternative models of Sustainable Environmental, Social, and Corporate Governance Value Added were created. The models encompass 11 environmental, social, and corporate governance indicators of sustainability, and two economic indicators (Earnings before Interest, Taxes, Depreciation and Amortization, and Value Added). Indicator values are related to the target values that represent the opportunity costs. The quality of the models was assessed by statistical methods, i.e., the Receiver Operating Characteristic curve, Gini index, and Kolmogorov-Smirnov statistic. The results of these statistics show sufficient quality of all the models proposed. The most accurate model is that with the economic indicator Value Added and target values that are based on the values of the company with the best economic results.

Keywords: corporate sustainability; sustainable value added; ESG indicators; non-financial indicators; benchmarking; Data Envelopment Analysis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
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