Assessment of Corporate Sustainability via Fuzzy Logic

Abstract

Corporations interact with society and the physical and biological environment in ways that affect both sides. In this capacity, corporations play an important role in the sustainability of a region or country. Symmetrically, a corporation’s sustainability depends on the sustainability of its wider environment. In this paper, a multi-stage fuzzy reasoning model is presented to assess a corporation’s sustainability. The model has two fundamental components: human and ecological. The human component has up to four inputs: economic, political, knowledge, and welfare. The ecological component can also have up to four inputs: air, water, land, and biodiversity. Each of these eight components has a number of basic inputs suitable for evaluating a given corporation. The model can be used to assess a corporation’s sustainability, record its historical evolution, and compare the company to its direct competitors. Equally importantly, sensitivity analysis of the model reveals the most important basic indicators affecting corporate sustainability, identifying areas which managers and executives should place special attention. An application example based on three large international corporations in the same industry illustrates the usefulness of the model.