Sustainability performance assessment framework based on a hybrid approach: a case of leather industry

Abstract

In today’s world, sustainability is not an option but rather a necessity for any business entity. In the literature, several sustainability assessment models have been proposed based on the economic, social, and environmental dimensions of sustainability. However, it is challenging for practitioners and researchers to assess the sustainability of an organization in a way that reflects all of these dimensions. Accordingly, using the leather industry in Bangladesh as a case study, this study proposes a sustainability performance evaluation model integrating the Balanced Scorecard (BSC) perspective and the Fuzzy Multiple Criteria Decision Making (FMCDM) approach. As a first step, we create a list of 21 indexes of sustainability, based on four BSC-based dimensions derived from the literature and experts’ inputs. Then, we estimate the relative weight of each sustainability index using a model based on the Fuzzy Analytic Hierarchy Process (FAHP). Results indicate that the top five important indexes of sustainability arecustomer satisfaction, customer retention rate, investment in energy-conservation and emission-reduction technologies, sales revenue from green product, and the efficiency of effluent treatment plant. To demonstrate our approach, we evaluate the sustainability performance of three illustrative companies from the leather industry using three MCDM methods — Simple Additive Weighting (SAW), fuzzy Technique for Order Preference by Similarity to Ideal Situation (TOPSIS), and fuzzy Multi-Criteria Optimization and Compromise Solution (VIKOR). Comparing the performance of the three companies, we highlight strategies for improving their sustainability performance. We thereby show that the proposed model can be an appropriate tool for industrial managers seeking to evaluate the efficacy of their sustainability strategies to gain a competitive advantage.