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Radial, Non-radial and Intermediate Models for Environmental Assessment (ESG)

In: Environment and Sustainability for ESG and SDGs

Author

Listed:
  • Toshiyuki Sueyoshi

    (Shandong University)

  • Mika Goto

    (Institute of Science Tokyo)

Abstract

This chapter compares three DEA approaches for EA (Environmental Assessment) which examines the level of simultaneous achievement on economic prosperity and environmental protection. Chap. 2 has discussed that ESG and SDGs are important concepts for the sustainability enhancement in our societies, but they are imprecise in terms of practicality. To handle the impreciseness, Chap. 3 has first discussed DEA from energy economics and production economics. In this chapter, we incorporate “undesirable outputs” into the DEA framework to develop a new type of approach which is referred to as “DEA-EA”. The DEA approach measures the performance of many entities which use multiple inputs to produce not only multiple desirable outputs (e.g., electricity) but also multiple undesirable outputs (e.g., CO2). The incorporation of undesirable outputs makes it possible that we measure the level of ESG by DEA-EA. We conventionally classified DEA-EA into radial or non-radial categories in the previous studies. Recently, a new “intermediate” model, analytically locating between the radial and non-radial measures, has been proposed as the third alternative. The new approach measures a degree of unified inefficiency on each production factor so that it can determine the level of unified efficiency from the total of these inefficiency scores. This chapter discusses the analytical features of the three (radial, non-radial and intermediate) approaches by comparing their analytical structures. The methodological comparison conveys a message that DEA-EA is applicable to various ESG issues from economic prosperity and environmental protection. However, it may be true that many DEA-EA applications often suffer from a methodological bias, implying that different models produce different empirical results. In guiding large policy issues on ESG, we need to compare several different models to obtain reliable empirical evidences. This chapter discusses such a methodological issue from the practicality of these models in assessing various concerns on energy and environment. We analytically describe how DEA-EA can determine ESG from “investment”, using non-radial model. The other two (radial and intermediate) models may follow the similar process on ESG investments as discussed for the non-radial model.

Suggested Citation

  • Toshiyuki Sueyoshi & Mika Goto, 2025. "Radial, Non-radial and Intermediate Models for Environmental Assessment (ESG)," Springer Books, in: Environment and Sustainability for ESG and SDGs, chapter 0, pages 61-97, Springer.
    • Handle: RePEc:spr:sprchp:978-981-96-2464-5_4
    DOI: 10.1007/978-981-96-2464-5_4
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