Navigating ESG complexity: An in-depth analysis of sustainability criteria, frameworks, and impact assessment

Environmental, social, and governance (ESG) criteria serve to gauge a company's sustainability and societal impact. The evaluation of a firm's performance on these ESG criteria involves a thorough examination of its practices and policies across various domains, encompassing environmental responsibility, labor standards, human rights, corporate governance, and community engagement. Despite the considerable body of research in this domain, the absence of a universally accepted ESG framework and the lack of consensus on the practical utilization of diverse ESG indicators remain noteworthy challenges. With this backdrop, our study has two primary objectives. Firstly, we present a comprehensive framework that encompasses an extensive range of ESG criteria and associated indicators. Additionally, we gauge the relevance of these indicators by examining their correlation with ESG scores obtained from a prominent rating agency. To accomplish this, we employ a non-parametric regression analysis approach rooted in the multicriteria decision-making preference disaggregation paradigm. We present empirical findings based on an international dataset spanning the years 2006 to 2020. •We examine the role of ESG indicators in the formation of ESG ratings based on a multicriteria decision making approach.•Analysis is performed over time, across sectors and between developing and developed countries.•While Biodiversity Impact Reduction steadily tops the environmental pillar, there is a shift in the emphasis of ESG criteria.•Training and Development Policy and Policy Human Rights are most relevant for the evaluation of firms’ social performance.•The level of economic development of a country does influence the importance of the ESG criteria