Mathematical Models for Evaluating Sustainability: A Corporate Approach

The chapter's goal is to establish a theoretical and quantitative framework that represents the impact of natural capital and social capital on company financial performance, emphasising the significance of incorporating both dimensions into corporate sustainability modelling and analysis. By reflecting on the main theories regarding the previously mentioned concepts and by including the prevalence that the natural and social capital have toward economic development and social welfare, the mathematical models are created. In addition to this, the mathematical models must be based on a solid conceptual basis. Therefore, definitions are elaborated for the concepts of financial performance and sustainable financial performance in order for the mathematical models to be able to clearly differentiate between the two. In order for sustainability and corporate responsibility to be public goods, available to all, the mathematical models imply some conditions such as: the existence of perfectly functioning social relationships based on information exchange between corporations and their surrounding stakeholders, the absence of public government corruption and unanimously accepted standards for the weights of corporate’s responsibilities and its methods of accomplishing these responsibilities. Furthermore, a model regarding the corporate sustainable performance is proposed that comprises types of capital such as natural and social, among others. These types of capital are key to ensuring the characteristic of sustainability when addressing further corporate financial and economic performance. As such, the reader can expect to find variables depicting resource efficiency use, social relations creation and maintenance, and individual welfare included in the forthcoming mathematical models.