Lights and shadows on sustainability rating scoring

Abstract

Many organizations currently publish sustainability ratings that quantify the sustainability of firms by aggregating scores. These organizations analyze companies in economic, social, environmental and corporate governance terms. However, some of these scores are associated with problems of how positive and negative assessments are offset. This work proposes a methodology for using fuzzy logic in the design of a comprehensive sustainability rating for firms. This technique for measuring sustainability addresses the complexity of the concept and enables the incorporation of expert knowledge into the system of assessment. This approach is applied to organizational information taken from the 2008 Accountability Rating and corrects one of the weaknesses revealed by methodologies based on the aggregation of scores—the offset effect—enabling decision-maker to manage it. This is considered an important research topic because of the growth of social responsible financial markets, and the fact that investors are demanding more accurate information.