Environmental and financial performance in the S&P 500: a novel mcdm approach

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Authors: Marjorie Taboada, Yong Tan, Charbel José Chiappetta Jabbour, Peter Wanke
Cited by: 1
References: 83

Abstract

Abstract This paper proposes a novel multi-criteria decision-making (MCDM) framework to analyze the interplay between environmental and financial dimensions in corporate performance. Building on an optimized signal decomposition of the polar factorization, the method calibrates trade-off matrices under alternative scenarios privileging criterion importance, trade-off strength, or balanced relations. Applied to a panel of S&P 500 firms, the approach generates performance scores and entropy-weighted consensus rankings across three classical MCDM methods—TOPSIS, VIKOR, and COPRAS—under nine scenario–method combinations. The empirical results highlight that financial synergies, especially those linking equity, liabilities, assets, and cash flow, dominate across sectors, while environmental and social criteria appear only in specific contexts. ESG variables are structurally linked to firm scale in Basic Materials and Energy, to financing flows in Real Estate, and to decarbonization costs in Utilities, but remain marginal in Financials and Consumer Cyclicals. Negative trade-offs are rare, emerging mainly in tensions between efficiency and scale or responsibility and emissions. Overall, the findings demonstrate that ESG trade-offs in the S&P 500 are sector-contingent, reflecting differences in regulatory exposure, reputational pressure, and operational structure. The proposed framework contributes to both methodology and practice by offering a systematic tool to disentangle the relative weight of financial and environmental criteria in corporate decision-making.

Fields of Study & Subjects

Sustainable Building Design and Assessment Corporate Social Responsibility Reporting Sustainable Supply Chain Management

Publication details

Journal / source
Annals of Operations Research
Publisher
Springer Science and Business Media LLC
Publication date
30 June 2026
Language
EN