Comparing the composite indicator Index Corporate Sustainability and the predictive model – An application on Czech manufacturing companies

Abstract

This paper focuses on a comparison of the composite indicator Index Corporate Sustainability ICS, the predictive model Corporate Sustainability Index CSIMDA for measuring and evaluating sustainability, and the economic predictive model Index of Financial Standing IB for concerns in the manufacturing industry. The aim was to determine the informative ability of these models, to analyse their differing results, and to identify which model is the most suitable. The results produced by these models by means of a comparison of 10 Czech concerns in the manufacturing industry in the period 2011-2013 are depicted in graphic form, and conclusions derived as to whether the given concerns are headed towards sustainability. Models of sustainability are based on environmental, social, corporate governance and economic indicators of performance (IESGEi) which are expressed in various units. The economic model is based on economic indicators. The results produced by comparison of the models indicates the most suitable model to be the composite indicator ICS which shows a high percentage of correctly classified companies on the basis of the Gini index. The subsequent classification of concerns according to the composite indicator is essentially different to the classification of concerns according to predictive models, first and foremost as a result of the construction of this model and the inclusion of environmental, social and corporate governance indicators in contrast to the predictive model CSIMDA and the predictive model IB. The results of research into the measurement and evaluation of corporate sustainability clearly indicate that, in addition to financial indicators, it is also essential to incorporate non-financial indicators into these models. Models for the measurement and evaluation of sustainability can provide investors and owners with information as to whether the given concern is headed towards sustainability or not.