Measuring corporate social responsibility: an evaluation of a new sustainable development goals index for Fortune 500 companies

Abstract

Purpose The purpose of this study is to explore, develop, and evaluate a new sustainable development goals (SDG) index that quantifies corporate social responsibility (CSR). By providing a granular perspective with clear justification for methods, this index is more applicable to academic research in comparison with the CSR indices published by private companies. Design/methodology/approach Focusing on the Fortune 500 companies in 2017, this study uses data from Bloomberg, ASSET4, and the Carbon Disclosure Project. A z-score was calculated for each variable, which was then aggregated according to the SDG indicator list to calculate each SDG score. Various robust analyses were conducted. Findings The SDG index shows that companies tend to score worse on environment-related goals compared with social goals. Furthermore, for each SDG, there are differences across industrial sectors, a finding that is enabled by the more granular approach of this index. Additionally, the leaders and laggards are identified for each of the SDGs. Originality/value This study identifies the methodological weaknesses of the existing CSR indices and introduces and evaluates an alternative index based on the SDGs. This alterative index provides methodological clarity and granularity of data, which were lacking in previously established indices.

Corporate social responsibility and corporate interlocks: Fortune 500 companies’ performance on the Sustainable Development Goals

“…In calculating the SDG score using the variables, all variables were weighed the same within a goal. For a detailed discussion on the construction of the index, refer to Lee and Hess (2022).…”

“…This paper uses the SDG index, which is developed and introduced in a separate paper (Lee and Hess, 2022) to measure CSR behavior of corporations. The new SDG index on corporations allows a granular understanding of CSR compared to the existing indices.…”

“…Furthermore, to make the SDGs quantifiable for corporations, the variables that may not directly describe the SDGs were included. For a complete list of the variables and how they compose each SDG, refer to Lee and Hess (2022).…”

“…First, to measure the granular components of CSR performance, this paper uses the new index for CSR based on the Sustainable Development Goals (SDGs) (Lee and Hess, 2022). The SDGs were initially developed for government actors by the United Nations in 2015, but the framework also includes corporations as one of the leading actors for sustainable change (Martinuzzi et al , 2017; Stafford-Smith et al , 2017; Lee and Hess, 2022). Second, it builds on the existing studies on corporate interlocks and further explores the importance of corporate interlocks as an independent variable for CSR.…”

Corporate Scandals and Global Indexes

“…The SDG can also help companies with their CSR efforts by serving as a measure of its three dimensions. The SDGI is an index that quantifies CSR based on fulfilling the 17 SDG (Lee & Hess, 2022).…”