What Is Sustainability in Business? A Discrete Choice Model Experiment


  •  Filipe Pohlmann Gonzaga    

Abstract

Through recent years, much has been said about the importance of sustainability in corporate strategy, and multinational corporations abiding by the United Nations (UN) Sustainable Development Goals (SDG’s). More and more corporations try to integrate sustainability principles, otherwise known as ESG (Environmental, Social, and Governance) into their marketing, corporate strategy, and business models.

There’s often a clash between non-governmental organizations (NGO’s), civil society, governments, and the private sector on what ESG best practices are, with some calling “greenwashing” some environmental-related actions companies are taking. This paper tries to tackle the first question in this challenge: what is sustainability in business? How individuals in different parts of the world are defining sustainability and how that may help corporations better address their ESG strategy to the market needs.

The question is addressed using a discrete choice model, to understand the utility functions of sustainability parameters. Those parameters were defined by a meta-analysis of 200 scientific papers on sustainability. The survey for the discrete choice model was made available online, in seven languages, and it was completed by 501 individuals across 41 countries.

Among the parameters researched, sustainable development goals adoption, followed by positive economic impact had the highest utility values. The lowest utility values were attributed to donations and racial equality. A disparity between what one would expect from stated preferences is seen in racial equality, as it ranked 4th in terms of preferences. On the same token, donations ranked last, in line with the utility value.



This work is licensed under a Creative Commons Attribution 4.0 License.