Sustainability Index Measurement

Sustainability is increasingly gaining traction in the corporate landscape in the light of

increasing global warming, pollution and several other socio-economic factors in the
environment around us. Thus, it has become imperative to measure the standings of
sustainability rankings based on audits, indexes, appraisals and assessments.

Different corporations have disparate scale of operations that need continuously evolving
sustainable governance standards to evaluate their adherence to public policies laid out by
governments and regulatory bodies. As important as the financial performance, there ought to
be a methodology used by companies to measure their performance related to long-term goals
of maintaining harmony with the environment and other agents.

In order to achieve the above stated statement, we have set about designing a model to evaluate
the sustainable index of companies operating across diverse sectors. This model can be
explained in the following manner:

 Identification of the various measurement criteria: Devising the six clusters of

Economic Impact, Environmental Impact, Corporate Governance, Social Impact,
Human Potential and Sustainable Research. Inside each of these six clusters, there
would be numerous dimensions to base the questionnaire.
 Figuring out the implementation criteria: The implementation could be dissected into
5 levels, namely: Questionnaire design, Normalization of data inputs, Assigning
weights as a multiplication factor, Congregation of the weighted values of six
measurement criteria.
 Sustainability Index: The above factorization gives us an index based out of 100, that
would provide the examiner of a relative substantiation when compared to a company
that shall contain similar parameters of examination.

However, there is a caveat to using this methodology. The weights assigned to the dimensions
under each of these clusters are subject to constant upgradation. At times, there might be a
scenario where one or more of these dimensions are not applicable to the company. In such
cases, there needs to be a weight distribution or even might call upon the creation of a new
cluster. But, the weights under a cluster shall always add up to 100.

As used in our model, there need not be a uniform fixation of weights assigned to the
dimensions. At times, it is heavily dependent on the industry or the expertise of the examiner
based on experience and other factors. Also, with the upgradation of the model, the dynamicity
of the parameters should be kept under consideration. It goes without saying that since the
weights assigned are susceptible to changes over time periods, as a result, the weights assigned
to the individual clusters are not fixed and relies heavily on the dimensions under the clusters.

The results obtained from this evaluation model should be pitted against industry averages to
obtain a relative standing about an organization. The following section provides more details
about the model:
Economic Impact
 Green procurement (20)
 Supplier Management (20)
 Production Efficiency (20)
 Downstream Activities (20)
 Salvage Cost Management (10)
 Capital Management (10)
Environmental Impact
 Executive Stakeholder Control (10)
 Government & Policy adherence
(10)
Social Impact
 Societal upliftment (20)
 Employment generation (20)
 Occupational & health hazards (30)
 Social Innovations (30)

 Solid waste Management (20) Human Potential

 Energy Management (20)
 Human & Labour rights (20)
 Air Pollution Control (10)
 Human Capital Development (20)
 Carbon footprint (10)
 Education & Training Needs (20)
 Acidification potential (20)
 Diversity & Inclusion (20)
 Eutrophication potential (10)
 Public Relations (10)
 Ozone protection (10)
 Talent Management (10)
Corporate Governance
Sustainable Research
 Business processes (20)
 Innovation Management (30)
 Transparency (20)
 R&D Capability (30)
 Risk & Crisis Management (20)
 Green Research (30)
 Anti-Corruption practices (10)
 New Product Development (20)
 Documentation (10)

Sustainability Index:
=0.1666*PRODUCTSUM (A1:A7, B1:B7) + 0.1666*PRODUCTSUM (C1:C7, D1:D7) +
0.1666*PRODUCTSUM (E1:E7, F1:F7) + 0.1666*PRODUCTSUM (G1:G7, H1:H7) +
0.1666*PRODUCTSUM (I1:I7, J1:J7) + 0.1666*PRODUCTSUM (K1:K7, L1:L7)
For simplicity, the weights assigned to each of the cluster is same, i.e. 1/6=0.1666

Here, the matrices A1:A7, C1:C7, E1:E7, G1:G7, I1:I7, K1:K7 denote the WEIGHTS of the
six dimensions of the clusters (A, C, E, G, I, K).

The matrices B1:B7, D1:D7, F1:F7, H1:H7, J1:J7, L1:L7 denote the INPUTS provided in
response to the analysis of the corresponding parameters based on the company’s data. The
inputs are always provided on a scale of 1 to 10 and shall therefore be always less than 1. For
example, if rating is given as 6 out of 10, the final rating is taken as 0.6 to be multiplied with
the corresponding weight.