Measuring corporate sustainability in a synthetic way. Is it possible?

Luis Díaz-Marcos, Ricardo Queralt Sánchez de las Matas, Óscar Aguado-Tevar, María García de Blanes Sebastián

Article ID: 3386
Vol 5, Issue 2, 2025
DOI: https://doi.org/10.54517/jelp3386
Received: 5 March 2025; Accepted: 8 April 2025; Available online: 24 April 2025; Issue release: 30 June 2025


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Abstract

This study develops a synthetic sustainability indicator (SSI) to assess corporate sustainability performance using data from Spanish IBEX 35 companies. Utilizing sparse principal components analysis (sPCA), the study condenses 65 Environmental, Social, and Governance (ESG) variables into a single indicator, addressing the lack of standardization in CSR evaluations and enabling comparisons across companies and sectors. The results show that environmental practices are the most significant factor (37.30%), followed by labor practices (19.23%) and corporate governance (18.52%). The study’s key contribution lies in offering a quantifiable, transparent method for evaluating corporate sustainability. The SSI provides valuable insights for investors and analysts, promoting data-driven decision-making and encouraging corporate improvements in sustainability performance.


Keywords

corporate sustainability; synthetic indicator; sparse principal components analysis; environmental, social and governance (ESG); IBEX 35


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