Perceived Sustainability Index

Abstract

This chapter proposes a corporate sustainability evaluation framework by creating a composite index, the Perceived Sustainability Index, which integrates the company's environmental, social, and corporate governance (ESG) score and the consumer perception of corporate sustainability. This index uses MSCI ESG ratings and X data. The framework conceptually aligns with the multidimensional nature of sustainability, the stakeholder theory, and the customer-centric nature of companies. The index enables researchers to examine corporate sustainability from a dual perspective: the consumers and the rating agencies. It also provides companies with an indicator to progress on their sustainability journey while meeting the consumers' societal needs, which, if not met, might adversely impact the corporate reputation and, eventually, the business performance. The authors illustrate their argument by analyzing the Perceived Sustainability Index for 100 companies and then discuss three case studies – a high performer, a low performer, and a potential greenwashing.