You are on page 1of 30

Accepted Manuscript

Development of indicators for the social dimension of sustainability in a U.S. business


context

Margot J. Hutchins, Justin S. Richter, Marisa L. Henry, John W. Sutherland

PII: S0959-6526(18)33602-3
DOI: https://doi.org/10.1016/j.jclepro.2018.11.199
Reference: JCLP 14958

To appear in: Journal of Cleaner Production

Received Date: 4 September 2017


Revised Date: 21 November 2018
Accepted Date: 22 November 2018

Please cite this article as: Hutchins MJ, Richter JS, Henry ML, Sutherland JW, Development of
indicators for the social dimension of sustainability in a U.S. business context, Journal of Cleaner
Production (2018), doi: https://doi.org/10.1016/j.jclepro.2018.11.199.

This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to
our customers we are providing this early version of the manuscript. The manuscript will undergo
copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please
note that during the production process errors may be discovered which could affect the content, and all
legal disclaimers that apply to the journal pertain.
ACCEPTED MANUSCRIPT

Development of Indicators for the Social Dimension


of Sustainability in a U.S. Business Context
Margot J. Hutchinsa, Justin S. Richterb, Marisa L. Henryc, and John W. Sutherland*b
a
Sandia National Laboratory
P.O. Box 5800 / Mailstop 0672

PT
Albuquerque, NM 87185
mjhutch@sandia.gov
+1 505-284-1753

RI
b
Environmental and Ecological Engineering
Purdue University
Potter Engineering Center, Room 364

SC
500 Central Drive
West Lafayette, IN 47907
jsrichter@purdue.edu
jwsuther@purdue.edu

U
+1 765-496-9697
AN
c
Environmental Health & Engineering
Johns Hopkins University
615 North Wolfe Street
Baltimore, MD 21205
M

*
corresponding author
D

Abstract
TE

Businesses are being increasingly scrutinized regarding their social impacts. In order for businesses to
make decisions that support all three pillars of sustainability, i.e., the social, environmental, and economic
dimensions, tools and methods are needed that link their decisions to sustainability impacts – including
societal effects. However, before such methods can be established, measures of social sustainability are
EP

needed. Based on Maslow’s hierarchy of individual needs, a novel framework for social indicators has
been developed by evaluating the needs of social entities with which a company interacts, e.g., employees
and customers. A group of sustainability experts was surveyed using an iterative Delphi technique to
converge on a suite of social sustainability indicators that should be addressed by a U.S. business.
C

Statistical methods (i.e., Friedman test and t-distribution comparisons) were used to identify the “best fit”
social indicators for the various entities with which businesses interact. The resulting indicators can be
AC

used to evaluate social performance for a business enterprise. As examples, some indicators identified for
the employee social group include the percentage of employees below the cost-of-living adjusted poverty
line and the percentage of employees that believe their contribution to a company is valued.

Keywords
Sustainability, Decision making, Social indicators, Life cycle assessment
ACCEPTED MANUSCRIPT

Development of Indicators for the Social Dimension


of Sustainability in a U.S. Business Context
Margot J. Hutchins, Justin S. Richter, Marisa L. Henry, and John W. Sutherland

Abstract

PT
Businesses are being increasingly scrutinized regarding their social impacts. In order for businesses to
make decisions that support all three pillars of sustainability, i.e., the social, environmental, and economic
dimensions, tools and methods are needed that link their decisions to sustainability impacts – including

RI
societal effects. However, before such methods can be established, measures of social sustainability are
needed. Based on Maslow’s hierarchy of individual needs, a novel framework for social indicators has
been developed by evaluating the needs of social entities with which a company interacts, e.g., employees
and customers. A group of sustainability experts was surveyed using an iterative Delphi technique to

SC
converge on a suite of social sustainability indicators that should be addressed by a U.S. business.
Statistical methods (i.e., Friedman test and t-distribution comparisons) were used to identify the “best”
social indicators for the various entities with which businesses interact. The resulting indicators can be
used to evaluate social performance for a business enterprise. As examples, some indicators identified for

U
the employee social group include the percentage of employees below the cost-of-living adjusted poverty
line and the percentage of employees that believe their contribution to a company is valued.
AN
Keywords
M

Sustainability, Decision making, Social indicators, Life cycle assessment

Highlights
D

• Stakeholder-needs framework to categorize and rank social sustainability indicators


• Delphi survey used to establish best indicator for 30 stakeholder-needs categories
TE

• Statistically prove that top indicator is better than others for 16 of 30 categories

1. Introduction
EP

Businesses are becoming increasingly committed to addressing the challenges of sustainability [Arthur et
al., 2011]. Sustainability was brought to prominence by the Brundtland Commission, which defined
sustainability as meeting “the needs of the present without compromising the ability of future generations
C

to meet their needs” [World Commission On Environment and Development, 1987]. Sustainability has
been recognized as a multidimensional issue. Often, three interrelated dimensions of sustainability are
AC

acknowledged: environmental, social, and economic, i.e., the three pillars of sustainability [Elkington,
2002]. Although businesses are interested in being sustainable, many are struggling with what actions
they should take to address the triple bottom line of sustainability [Roca and Searcy, 2012; Sutherland et
al., 2016].

Decision makers within businesses focus on the economic pillar of sustainability as a matter of course.
Until recently, it was the only dimension of sustainability that was actively addressed. Over the last
several decades, corporations have increasingly considered the environmental pillar of sustainability.
Tools, concepts, and principles such as life cycle assessment, carbon footprint estimation, design for the
environment, and product stewardship are becoming ever more commonplace [Ashby et al., 2012].
Engineers in industry now consider such measures of performance as greenhouse gas emissions (GHG),

1
ACCEPTED MANUSCRIPT

resource consumption, solid waste discharges, liquid effluent wastes, and toxic emissions. Having such
measures of performance, or metrics, is critical to improvement. In the absence of such metrics, there is
no way to judge the efficacy of changes to an industrial system, whether positively or negatively
impacting environmental sustainability.

The third dimension of sustainability, the social dimension, has received less attention relative to the
environmental or economic dimension [Seuring and Muller, 2008a; Ashby et al., 2012; Cucek et al.,

PT
2012]. When social sustainability has been discussed in the literature, emphasis has been directed at
legislative issues or human health and safety in a specific context, rather than a broader spectrum of social
impacts [Seuring, 2004; Linton et al., 2007]. Scrutiny is intensifying on the social sustainability of
companies. Often, this is framed though a call for corporate social responsibility (CSR) [Marrewijk,

RI
2013]. It has been suggested that CSR includes: responsibility for “the impacts of decisions and actions . .
. on society and the environment,” considering the “expectations of stakeholders,” with “transparent and
ethical behavior” [ISO, 2010]. Carroll [1999] provides a historical perspective on the rise of CSR and its

SC
meaning. Topics associated with social sustainability or CSR have been described or defined in some
contexts [e.g., Sarkis et al., 2010, and Reuter et al., 2010]. However, owing to the relatively recent
attention to the subject, a structured approach using rigorous definitions for CSR and social sustainability
have yet to be established.

U
In many cases, a consensus has not been reached regarding appropriate measures of sustainability [Adams
and Frost, 2008]. This is an especially troubling issue for businesses owing to the old adage, “what gets
AN
measured gets managed.” As evidence of the lacking consensus, Parris and Kates [2003] reviewed 12
efforts to define sustainability indicators, ranging in scale from global (e.g., UN Commission on
Sustainable Development) to local (e.g., the Boston Indicators Project). The initiatives identified from 6
to 255 indicators. These indicators vary greatly in terms of the level of control that business decision
M

makers have over them, the effort required to incorporate them into decision-making processes, and the
financial burden associated with their implementation. Similarly, NIST (the National Institute of
Standards and Technology) in the United States has built a repository of sustainability indicators [NIST,
D

2011]. The repository is based on publicly available indicator sets (e.g., GRI, OECD, and company
provided metrics). Likely the most comprehensive set of social indicators was established to support
TE

social life cycle assessment (S-LCA) development, but quantitative indicators remain only a portion of
the proposed indicators with data often difficult to obtain [UNEP-SETAC, 2009; Benôit-Norris, et al.,
2013]. There is not a consensus among these sets, and an objective evaluation of the indicators is likely to
reveal that some may not, in fact, relate to sustainability.
EP

One approach for coming to terms with the issue of sustainability metrics, and in particular sustainability
measures for social performance of companies, is to take a systems view of a business. Here, we suggest
that there are four fundamental types of inputs and outputs into and out of a business, as shown in Figure
C

1. While in general, the four inputs, i.e., physical substances, financial resources, human resources, and
information, are the same type as the outputs, the business serves to transform the inputs in some way to
AC

create an added value to the consumer. Some would argue that the central purpose of a business is to
reconfigure inputs in a rational way such that there exists a financial return for owners or stockholders,
i.e., profit [Jensen, 1976; Lozano, 2014]. Sustainability requires that corporations maintain the integrity of
social and environmental systems while undertaking this reconfiguration (the economic health of the
business will almost always be a priority). As has been noted above, many efforts have been made to
integrate measures of sustainability into the decision-making practices associated with adjusting these
inputs and outputs. A major challenge addressed in this effort is the identification of appropriate and
useful indicators of social sustainability. This perspective is compatible with the theory of the firm, and
having appropriate and measurable indicators will allow firms to make rational decisions related to
sustainability [Lozano, 2014].

2
ACCEPTED MANUSCRIPT

Inputs Outputs
Physical Substances Physical Substances
Human Resources Human Resources
Information Business Information
Financial Resources Financial Resources

PT
Figure 1. Basic Inputs and Outputs of a Business [Hutchins and Sutherland, 2008]

For environmental sustainability, the material and energy inflows (inputs) and outflows (outputs) into the

RI
environment form the basis for any analysis in support of decision-making. As has been noted, several
metrics and indicators have been deemed appropriate to characterize environmental sustainability. With
the social dimension of sustainability, there is significant debate over the relevancy of flows, the cause
and effects of social impacts, and the appropriateness of metrics and indicators [Benôit-Norris, et al.,

SC
2013; Sutherland et al., 2016; van Haaster, 2017]. In fact, a cursory examination of business CSR reports
reveals some commonalities, but many differences in the approach to identify and report social impacts
(e.g., Safeway, 2009, Siemens, 2011, and Fan, 2015). For example, should social sustainability focus on
employees, the communities where a company operates, or as Hauschild et al. [2005] suggest, the entire

U
supply chain? At issue is how different internal and external stakeholders view sustainable decision
making [Seuring and Muller, 2008b].
AN
As a primary step toward addressing social sustainability in the decision-making process of any business,
a suite of indicators related to the social dimension must be established. These social indicators will
define the inventory data that must be acquired. Many factors can affect the relevance of these indicators.
M

For example, the issues facing developing countries differ from those facing industrialized nations
[Agyekum, 2016]. Political practices and cultural beliefs may also define different indicators in different
regions. Given these dissimilarities, this work focuses on U.S. business operations and meeting the needs
D

of associated social stakeholder groups.


TE

For U.S. businesses to address the three pillars of sustainability, a better understanding of social
sustainability is needed. This is desirable because customers, the public, and other stakeholder groups are
taking increasing interest in the social implications of business operations. However, decisions cannot be
made to improve the social performance of a corporation until metrics/indicators are established for social
EP

sustainability. With that in mind, a fundamental contribution of this paper is to develop quantifiable social
sustainability indicators in a U.S. business context. To structure this effort a novel framework is proposed
that considers relevant social groups and a variety of need levels for each group. The research includes a
holistic, i.e., multidisciplinary, approach to address significant components of social sustainability, an
C

iterative survey of sustainability experts to pursue a consensus opinion regarding required social impact
measures, and a rigorous statistical analysis of the resulting survey data to converge on the important
AC

measures of social sustainability for a U.S. business.

2. Social Sustainability Indicator Framework


It is imperative to establish measurable social sustainability indicators to support business decision
making. However, prior to proposing such indicators, a framework to conceptualize social sustainability
is needed. The purpose of such a framework includes: guiding development of social sustainability
indicators, ensuring that important areas in social sustainability in the U.S. business environment are not
overlooked, and providing a means of logical organization for the developed indicators. The framework
proposed herein benefits from past contributions in the social sciences that define individual human
needs.

3
ACCEPTED MANUSCRIPT

2.1 Human Needs


Human beings may be viewed as a set of nested and interrelated dynamic systems [Kitano, 2002].
Maslow’s hierarchy of needs provides a framework for considering the physiological, emotional,
cognitive, and social needs that an individual is motivated to fulfill [Maslow, 1970]. Physiological needs
are the most basic, and lowest, on Maslow’s hierarchy of needs (see Figure 2). These needs are the most
critical in terms of the daily lives of human beings, and perhaps the easiest to understand and

PT
communicate. There is a substantial amount of information regarding the factors that affect the basic
physiological systems of humans. For example, food needed for survival can be expressed in terms of
calories, and can be calculated. As another example, occupational health regulations exist to limit
chemical exposure to avoid toxic effects.

RI
According to Maslow [1970], after physiological needs are met, individuals will seek to meet their safety
needs. Then, they will become concerned with love/belonging, esteem, and finally, self-actualization.

SC
Safety and security could be characterized by the presence of stable social structures and the absence of
threats to physical well-being. Belonging, affection, and love requirements may manifest as the desire to
overcome or avoid feelings of loneliness and alienation. The next higher order need is esteem and is often
exemplified by individuals seeking self-respect and respect from others because of their abilities and

U
achievements. Maslow views the highest order need, self-actualization, as the process of an individual
utilizing an increasing amount of his or her potential and capabilities “to become more and more of what
AN
one is, to become everything that one is capable of becoming” [Maslow, 1943]. Although critics have
argued that humans do not seek to fulfill these needs in a perfectly sequential manner [Wahba and
Bridwell, 1976], the hierarchy proposed by Maslow does provide a useful structure for categorizing
needs.
M

Self-actualization High
D

Esteem
Need Level
TE

Love/Belonging

Safety/Security
EP

Physiological Low
Figure 2. Representation of Maslow’s Hierarchy of Needs

2.2 Social Needs


C

A U.S. business has relationships with a number of social groups and entities, including employees,
customers, and the community in which it operates. Donaldson and Preston [1995] describe the normative
AC

aspects of stakeholder theory in terms of these relationships. Like an individual, these social groups have
needs that must be met. With this in mind, and building upon Maslow’s definitions for the needs of
individuals, the needs of a social entity or group of stakeholders are proposed to be:
• basic needs – the requirements to maintain the primary functions of the entity
• safety/security needs – freedom from real or perceived external threats to the entity
• affiliation needs – an understood role within a group and meaningful relationships with other
entities
• esteem needs – having both self-respect and the respect of other entities
• actualization needs – realizing the full potential of the entity

4
ACCEPTED MANUSCRIPT

A U.S. company impacts several social entities. On a fundamental level, a business influences the life of
individuals with which it interacts and, similarly, influences other organizations and stakeholder groups.
For the ultimate purpose of evaluating the social performance of a business, the needs of the social
entities with which it has a relationship have been defined according to the interaction between the
business and the entity. The stakeholders selected for this research are taken from Hutchins and
Sutherland [2008] and reflect those suggested by UNEP/SETAC Life Cycle Initiative [2009]. The
stakeholder group definitions were adjusted to account for the shift in perspective from external

PT
stakeholder to business decision maker and are aligned with the primary stakeholder groups identified by
Clarkson [1995]. It is assumed that a business must ensure positive interactions with stakeholders to
ensure survival of the business. The following general definitions of the social entities that engage with a
business were used:

RI
• employees – individuals that provide their skills and labor to the business, usually in exchange for
a monetary wage
• stockholders/owners – individuals, groups, or organizations with a financial investment in the

SC
business
• suppliers – individuals, groups, or organizations that provide the company with goods and
services
• customers – individuals, groups, or organizations that purchase products and/or services from a

U
business
• community – individuals with common interests within a geo-political or perceived regional
AN
boundary in which the business operates
• public – individuals not included in the other social groups or entities, as well as state, national,
and international governing bodies.
M

Considering the needs of a social entity, and the social entities and groups impacted by business, a
framework for social sustainability indicators has been established (see Figure 3). For a business to
evaluate social performance, measures are needed to assess how well, or poorly, the business is
addressing the various needs of the social groups/entities. Therefore, indicators are needed that
D

correspond to each combination of social entity and need level, as represented by the stakeholder-need
framework in Figure 3.
TE

Need Level
Actualization
Affiliation
Security
Safety /

Esteem
Basic
EP

Employees
Social Entity
C

Customers
Stockholders/Owners
Suppliers
AC

Community
Public
Figure 3. Stakeholder-Need Framework for Categorizing Social Sustainability Indicators

3. Method for Indicator Development


With an operable framework for social sustainability introduced, indicators are needed for each
stakeholder/need category. Attention now shifts to establishing a method for identifying the best indicator
for each stakeholder-need category to characterize the social performance of U.S. businesses.

5
ACCEPTED MANUSCRIPT

3.1 Application of the Delphi Method

In order to incorporate the opinions of sustainability experts and reach a consensus regarding the
preferred indicators used to measure social sustainability, a series of surveys were conducted using the
iterative Delphi technique. This technique has been used in a wide variety of applications to enable a
group of individuals to address a complex problem, such as managerial decision-making, economic
forecasting, identifying factors affecting quality of life, and determining research areas of importance

PT
[Zavadskas, 2017; Linstone and Turoff, 1975; Seuring and Muller, 2008b]. The group reaches consensus
through a series of iterative surveys or meetings. In each iteration, opinions are gathered, synthesized, and
presented to the group for further evaluation.

RI
The specific process followed in this research is shown in Figure 4. Broadly, an extensive list of social
sustainability indicators was generated, categorized, and revised; the number of indicators was reduced
based on best fit to the framework; and finally, the best indicator for each stakeholder-need category was

SC
sought. Electronic surveys were used to collect information from the group of experts. The purpose of
Survey 1 was to refine the preliminary set of indicators, identifying those that are important and adding
more indicators, as necessary. In Survey 2, the indicators were rated for each stakeholder-need category,
with the goal of identifying a small group of high-quality indicators. The purpose of Survey 3 was to

U
select the best indicator for each category, and therefore a ranking scheme was used.
AN
A preliminary collection of social sustainability indicators was refined from those suggested by
international organizations [International Labour Organization, 2009; United Nations, 2007; UNEP-
SETAC, 2009], sustainability reporting tools [Global Reporting Initiative, 2006], and peer-reviewed
literature [Parris and Kates, 2003; Labuschagne and Brent, 2005]. The preliminary indicators were
M

selected according to the following desirable characteristics:


• evaluating the impacts created by company operations on the well-being of various social groups
or entities (as opposed to social groups or entities affecting the well-being of a company),
• being understandable and communicable to stakeholders and, from their perspective, reflecting
D

the social sustainability of the business, and


• ensuring the ability to track progress in terms of social sustainability (e.g., measurable).
TE

The initial indicators were categorized, inadequate indicators were removed, and indicators were added to
address gaps uncovered by the framework. Following this activity, a total of 70 social sustainability
indicators were prepared for Survey 1 (shown in the first three steps on Figure 4. The number of
EP

indicators ranged from 1-13 for each stakeholder-need category (i.e., the thirty combinations of 5 need
levels and 6 social entities in the framework depicted in Figure 3).
C
AC

6
ACCEPTED MANUSCRIPT

PT
RI
Figure 4. Flowchart for Delphi Technique to Develop Social Sustainability Indicators

SC
Due to the extensive data collected from the Delphi study, an exhaustive discussion of complete survey
results for each survey round would be quite lengthy (See Supplemental Information tables containing
indicator results for each stakeholder-needs combination). Therefore, the discussion to follow will focus

U
on the five need levels associated with the employee stakeholder group to illustrate the method for
indicator development. The employee category was chosen because it highlights nuances in the
AN
methodology and results that are relevant to the entire study. Final results for all categories, i.e., all social
entities at each need level, will also be presented in summary (see sections 4.2-4.6).

For the set of surveys associated with the Delphi study (Figure 4: Survey 1 through Final set of Ranked
M

indicators), a respondent group was formed that included representatives from academia (faculty and
graduate students), industry, and governmental organizations involved in sustainability initiatives. The
group included individuals familiar with the three pillars of sustainability, and with knowledge of social
D

sustainability issues in the context of U.S. businesses. At the outset of the process for Survey 1, the
respondent group consisted of 41 individuals: 8 industrial practitioners, 4 individuals from government
organizations, 12 faculty members, and 17 graduate students. For the survey iterations within the Delphi
TE

study, all materials were distributed electronically.

The purpose of Survey 1 was twofold: to determine which of the existing indicators were important and to
increase the pool of indicators, if necessary. First, the respondents were asked to identify, from the initial
EP

list, any indicators that they believed would be important for a U.S. business to adopt as it strives to be
socially sustainable. Again, it is noted that U.S. businesses were the focus of this study because they are
subject to the same federal laws and regulations. Secondly, the respondents were asked to provide
additional indicators or suggest modifications to the initial 70 indicators. General comments and
C

suggestions were also welcomed. The response rate was 73% for the first survey. As seen in Table 1, the
number of indicators presented at the beginning of each survey round changes due to respondent
AC

feedback. For example, the indicators for basic needs expanded from one in Survey 1 to four in Survey 2.
Only the esteem needs category reduced from 13 in Survey 1 down to 6 in Survey 2 after expert feedback.

The purpose of Survey 2 was to rate the indicators and then reduce the indicator pool to a manageable and
suitable few. The rating determined how well the proposed indicators addressed a particular category of
needs using a 5-point Likert scale [Likert, 1932]. The Likert scale is a common tool used to quantify
qualitative data, in which “5” corresponded to “very well” and “1” corresponded with “very poorly.” In
Survey 2, new indicators were added to five of the six need levels, and indicators were revised within the
guidelines previously discussed. The respondent pool was expanded from 41 to 61 individuals to include
more industry professionals involved in sustainability efforts. Of the 61 individuals that received the

7
ACCEPTED MANUSCRIPT

second survey, 22 completed the survey and 2 more began the survey, but did not complete it. The
number of indicators was reduced and refined for all employee need categories as a result of Survey 2
responses. The results of feedback from Survey 2 can be seen in the beginning count of indicators for
Survey 3 in Table 1.

Table 1. Number of Indicators for Each Employee Need Category Beginning Each Survey Round
Survey 1 Survey 2 Survey 3
Employee Basic Needs 1 4 3

PT
Employee Safety/Security Needs 2 4 3
Employee Affiliation Needs 6 7 4
Employee Esteem Needs 13 6 3
Employee Actualization Needs 3 4 4

RI
The goal for Survey 3 was to rank the indicators and uncover which indicator might be best for each
category of social group and need level combination. The purpose of indicator ranking was to identify the

SC
indicator that best addresses each particular category of social sustainability and could be utilized by a
U.S. business to evaluate social performance. To generate the set of indicators for each category to be
used for Survey 3, the arithmetic average (sum total score divided by total responses) Likert score for
each indicator in Survey 2 was calculated. The three indicators from each category with the best rating

U
(i.e., highest average Likert scores) were included in the third survey. In categories where the third and
fourth highest rated indicators were within 0.1 on the 1 to 5 scale, both indicators were included in Survey
AN
3. Similar to the development of Survey 2, new indicators were added, indicators were revised, and
indicators were re-categorized, based on respondents’ comments and within the indicator categorization
guidelines. Due to these additions and revisions while preparing Survey 3, both the employee affiliation
and actualization need categories had more than three indicators in the final survey (see Table 1). In
M

Survey 3, respondents were asked to rank a set of indicators for each category, where the ranking of “1” is
associated with the best indicator for that category. It is noted that a ranking (“1” is best) was used to
generate this final set of indicators from Survey 3, not a rating (“5” is best) as in Survey 2. More potential
sustainability expert respondents were added for Survey 3, increasing the total to 67. Of those, 26 (39%)
D

individuals completed the survey.


TE

As an example, an overview of the indicators for employee safety/security needs is shown in Table 2.
Entering Survey 1, there were two proposed indicators: one related to health care coverage and a second
related to workplace injuries. In Survey 1, the respondents provided numerous suggestions and
comments. For this category, suggestions included: increasing attention to equity in health care coverage
EP

within a company, adding illness to the indicator involving lost work hours due to injury, addressing the
psychological and physical threats of harassment, and considering employee safety more explicitly.
Suggestions that fell outside the indicator categorization guidelines and did not address the needs
associated with safety/security included: adding indicators related to total scheduled work hours, family
C

circumstances, distance traveled to work, and options for leave of absence, disability, and retirement.
While some suggestions may seem to have a safety component, they do not fit within the definition of the
AC

safety/security need in section 2.2 requires “freedom from real or perceived external threats to the entity,”
and therefore were excluded from Survey 2.

The results of Survey 1, including respondent comments, were used to formulate the four indicators for
employee safety/security needs shown in Table 2, which were subsequently rated by the respondents in
Survey 2. The average, or arithmetic mean (sum of total respondent scores divided by total respondents),
Likert rating for Survey 2 and ranking for Survey 3, of each indicator is also shown in the table. At that
point, the indicator that seemed to best address employee safety/security needs was “ratio of average
annual scheduled work hours not lost due to injury or illness per employee to average annual scheduled
work hours per employee.” Between Survey 2 and Survey 3 the indicator regarding harassment was
altered slightly. “Gender identity” was added to the list of possible issues. The average ranking for each

8
ACCEPTED MANUSCRIPT

indicator, from Survey 3, is shown in Table 2. The best indicator for each category is the one that has the
lowest ranking value. It can be seen in Table 2 that the indicators were rated (Survey 2, “5” is best) and
ranked (Survey 3, “1” is best), sorted in the same order.

Table 2. Indicator Development Example: Employee Safety/Security Needs


Employee Safety/Security Needs
Percent of employee health care costs covered by the company (across all employees)
Survey 1 Indicators Ratio of average annual scheduled work hours not lost due to injury to average annual

PT
scheduled work hours per employee
Ratio of average annual scheduled work hours not lost due to injury or illness per employee to
Survey 2 Indicators average annual scheduled work hours per employee (4.17)
(Average Likert Percentage of employee health care costs covered by the company (3.79)

RI
rating; with 5 being Percentage of employees that believe they have experienced harassment due to their gender,
the highest) sexual orientation, race, religion, etc. (3.63)
Percentage of employees that work with potentially hazardous chemicals or machinery (2.75)
Ratio of average annual scheduled work hours not lost due to injury or illness per employee to

SC
Survey 3 Indicators average annual scheduled work hours per employee (1.73)
(Average ranking;
Percentage of employee health care costs provided by the company (1.92)
with 1 being the
Percentage of employees that believe they have experienced harassment due to their gender,
best)
gender identity, sexual orientation, race, religion, etc. (2.35)

U
3.2 Application of Statistical Tools
AN
The previous section described the process for engaging experts and the iterative development of
indicators using a Delphi method. The outcome of the method (following Survey 3) was highly ranked
indicators for all combinations of six stakeholder groups and five need levels. After Survey 3, the number
of indicators in each stakeholder-need category ranged from 1 to 4 (See Appendix Table A-1 for count of
M

indicators at beginning of each survey round). Owing to uncertainty, an indicator’s ranking for a given
stakeholder-need category may not be statistically different than the ranking of the other indicators. A
statistical comparison of the indicators within each category would further clarify if a statistically best
D

indicator has been found. The tests that follow were performed on each category, comparing indicator’s
rankings to one another and detecting the significance of differences between each indicator’s ranking.
TE

The Friedman test is a non-parametric statistical test that can be applied to the collected survey data to
determine if such a difference exists. The null hypothesis for the Friedman test statistic (FTS) is that all
indicators within a given category are ranked equally. A rejection of the null hypothesis indicates that at
EP

least one of the indicators has an average ranking that is statistically different compared to the other
indicators within that category. The rank assigned by a particular respondent (i.e., block) to a particular
indicator (i.e., treatment) is given by Xij. The FTS (adjusted for ties) is given by:
C


= (1)
AC

where:
b is the number of respondents (i.e., number of blocks);
k is the number of indicators (i.e., number of treatments) within a given category;
Rj is the sum of the ranks for a particular indicator: =∑ ; (2)

=∑ ∑ ; and (3)
= ! ! + 1 ⁄4 . (4)

9
ACCEPTED MANUSCRIPT

The distribution of T1 is often approximated by the chi-square distribution with k – 1 degrees of freedom.
This has been shown to be a good approximation for k > 7 [Gibbons and Chakraborti, 2003]. In this work
k is 3, 4, or 5, depending on the category, which implies that the chi-square distribution may not be a
good approximation. Therefore, following the recommendation of Conover [1999], the test statistic T2
was employed where:

&
= , (5)
&

PT
and the FTS, T2, may be approximated by the F-distribution with ν1 = k – 1 and
ν2 = (b – 1) (k – 1). In this work, because the number of respondents (i.e., number of blocks) was 26 for

RI
all categories and the number of indicators in Survey 3 (i.e., number of treatments) varied from 3 to 5, the
possible combinations of ν1, ν2 were (2, 50), (3, 75), and (4, 100). The associated probability distribution
functions are shown in Figure 5. An alpha (α) value of 0.05 was used to determine if the null hypothesis
can be rejected. If the null hypothesis associated with the Friedman test was rejected, a comparative test

SC
based on the t-distribution was used to determine if indicators j1 and j2 have a statistically meaningful
difference in their ranking, as follows:

&

U
' − '>* +⁄ , 1− - (6)
AN
where , , A1, C1, and T1 were defined previously. The number of degrees of freedom associated
with this statistic is equal to the product of (b – 1) and (k – 1). If the Friedman test was rejected, all
possible pairings of indicators within a category were tested.
M

1.2

1 ν1 = 2, ν2 = 50
D

0.8
ν1 = 3, ν2 = 75
TE
f (F)

0.6

0.4 ν1 = 4, ν2 = 100
EP

0.2

0
-1 1 3 5
C

F
AC

Figure 3. F-Distributions for ν1, ν2 = (2, 50), (3, 75), and (4, 100)

To summarize, for each category (i.e., all combinations of stakeholder group and need level), the indicator
rankings collected in Survey 3 were subjected to a series of statistical differentiation tests to distinguish if
the respondents collectively believed any particular indicator was indeed “best” among the provided
indicators. These statistical tests were performed for each category, considering all the indicators within
that category. Statistically best indicators were identified for 16 of the 30 categories.

4. Results and Interpretation

10
ACCEPTED MANUSCRIPT

All thirty categories (i.e., all combinations of social entity and need level) of indicators underwent the
same Delphi process that consisted of three survey rounds. Based on the opinions of a pool of
sustainability experts, indicators were proposed, evaluated, revised, added, and, in some cases, removed
for each category. The full results of Survey 3 are displayed in the tables in the Appendix. The Friedman
test statistic (FTS), T2, for each of the categories of indicators and its associated p-value, as well as the
average rank for each individual indicator is also provided in the tables. The ranks of indicators in the
different categories are not necessarily comparable. This is because respondents were asked to rank the

PT
indicators relative to other indicators within the category, as opposed to between categories, and the
number of indicators within the categories varied between 3 and 5. Based on the Friedman test and the
subsequent comparative test, an indicator that has the best ranking relative to the other indicators in the
same category or a better ranking, relative to at least one indicator in the same category, is noted with an

RI
“X” in the column “Best or Better Indicators.” An indicator that is indistinguishable from the better or
best indicator is noted with an “i.” Table 3 presents the results of the Survey 3 and the statistical analysis
of the responses for the employee social group across all five need levels. To further demonstrate the

SC
analysis that was performed, the results related to the employee social group are discussed in detail in
section 4.1. Results for the other social groups are summarized in sections 4.2-4.6.

4.1 Indicators Describing Employee Needs

U
Table 3 displays the indicator results for the employee social group, for each need level. The FTS
indicates that there is a preference for at least one indicator, compared to the other indicators within the
AN
same category, for the indicators associated with four of the five employee needs. For example, the
calculated FTS for employee basic needs is 16.9. This may be compared to an F-distribution with ν1 = 2
and ν2 = 50 degrees of freedom. The probability of obtaining an F-value that is as large or larger than 16.9
is very close to 0 (0.000002). Because this probability is less than 0.05, we reject the null hypothesis that
M

all of the indicators within that category have the same ranking. Conversely, the value of the Friedman
test statistic for employee safety/security needs (the probability of an F value being greater than the FTS
value of 2.75 is 0.074) suggests that there is no difference in preference for any of the indicators over the
others, based on α = 0.05 (since 0.074 is not less than 0.05).
D

The results of the comparative tests following the Friedman test, are displayed in the column “Best or
TE

Better Indicators” in Table 3. Three of the indicator categories have a single indicator that was found to
be provably “best” for that category, as noted with an “X” in the column. One of the categories has an
indicator that was found to be “better” than at least one of the other indicators within that category and an
indicator that has a statistically indistinguishable rank from the “better” indicator is noted with an “i.”
EP

Finally, the employee safety/security needs category does not have any indicators that are statistically
better than the others, as previously noted.

Table 1. Social Sustainability Indicators Related to Employees


C

Indicator Category
FTS; p- Best or
(Number of Average
Indicators value Better
indicators entering Rank
AC

for FTS Indicators


final survey)
Percentage of employees below the poverty line, adjusted for
1.27 X
local cost of living
Employee Basic Percentage of employees eligible for government assistance 2.31 16.9;
Needs (3) Percentage of employees that believe they have adequate 0.000
time to attend to their basic physiological needs (e.g., eating, 2.42
drinking, using the restroom) during work hours
Ratio of average annual scheduled work hours not lost due to
Employee injury or illness per employee to average annual scheduled 1.73
2.75;
Safety/Security work hours per employee
0.074
Needs (3) Percentage of employee health care costs provided by the
1.92
company

11
ACCEPTED MANUSCRIPT

Percentage of employees that believe they have experienced


harassment due to their gender, gender identity, sexual 2.35
orientation, race, religion, etc.
Annual employee retention rate (breakdown by age group,
1.92 X
gender, socio-economic class, etc.)
Percentage of employees that would recommend the
2.31 i
Employee Affiliation company to a friend or relative as a place to work 3.86;
Needs (4) Percentage of employees that believe they belong or feel a 0.013
2.85
sense of connectedness within the company

PT
Percentage of employees that envision themselves at the
2.92
company for the remainder of their career
Percentage of employees that believe their contribution to the 6.47;
1.50 X
company is valued 0.003

RI
Employee Esteem Percentage of employees that believe the company values
2.12
Needs (3) their quality of life
Ratio of lowest quintile for salary to highest quintile for
2.38
salary

SC
Annual percentage of employees receiving company-
sponsored training for professional development (e.g.,
1.50 X
education reimbursement, cross-training opportunities,
professional development seminars)
Employee
Percentage of employees that believe they are able to pursue 21.48;

U
Actualization Needs 2.27
their own professional interests on the job 0.000
(4)
Percentage of employees that believe professional
2.62
development activities are helpful to them
AN
Percentage of positions that were filled by internal applicants,
3.62
as opposed to outside hires

As an example of the comparative test process, consider the sum of the ranks, Rj, for the indicators in the
M

employee basic needs category, shown in Table 4. Rj is equal to the sum of the ranks assigned to an
indicator by each of the respondents (i.e., if an indicator received a rank of 1, 2, and 2, from respondents
A, B, and C, the sum of ranks would be 5). For ease of discussion, each of the three indicators is assigned
D

a numeral I – III. The difference between the sum of ranks for indicators I and II is 27, between I and III
is 30, and between II and III is 3. These differences may be compared to the critical value of 13.1, which
is a scaled t-value and can be calculated based upon previously provided data while taking α = 0.05. The
TE

differences between the sum of ranks for the indicators, relative to the critical value and the reference
probability distribution function are shown in Figure 6. The reference probability distribution function is
an appropriately scaled t-distribution as given in Equation 6.
EP

Table 4. Sum of Ranks for Employee Basic Needs


Indicator Rj
I. Percentage of employees below the poverty line, adjusted for local cost of living 33
C

II. Percentage of employees eligible for government assistance 60


III. Percentage of employees that believe they have adequate time to attend to their basic physiological needs
AC

63
(e.g., eating, drinking, using the restroom) during work hours

The difference between indicators I and II (27) as well as I and III (30) is greater than the scaled critical t-
value (13.1). This suggests that the sum of ranks for indicator I is significantly lower than the sum of
ranks for indicators II and III. Because respondents were asked to assign a ranking of “1” to the indicator
that best addresses each particular category of social sustainability, it may be said that indicator I is best
within its category. In other words, the indicator “percentage of employees below the poverty line,
adjusted for local cost of living” appears to best represent employee basic needs.

12
ACCEPTED MANUSCRIPT

Scaled tν, 1-α/2 Ref. PDF


II - I
III - I
III - II

PT
cc
0 10 20 30 40
Comparative Statistic

RI
Figure 6. Differences in Sum of Ranks for Indicators of Employee Basic Needs Relative to
Appropriate Reference Distribution

SC
The sums of ranks for the indicators associated with employee affiliation needs are shown in Table 5 and
the differences between those ranks are shown in Table 6. In this case, the critical value against which the
absolute difference of the ranks is compared is 20.2. The differences between the sum of ranks for
indicators I and III, and indicators I and IV, are 24 and 26, respectively. These differences are both greater

U
than the critical value of 20.2. This, coupled with the fact that the sum of ranks for indicator I is less than
the sum of ranks for III and IV, implies that indicator I is better than indicators III and IV. However, there
AN
is no statistical evidence that the sum of ranks for indicator I is different from that of indicator II – the
difference in the sum of ranks is 10, which is less than 20.2. This is shown graphically in Figure 7. In
summary, for the indicators in the employee affiliation category, indicator I, “annual employee retention
rate (breakdown by age group, gender, socio-economic class, etc.),” is better than the two indicators with
M

the worst average rankings for that category, indicators III and IV, but it cannot be statistically
differentiated from indicator II, “percentage of employees that would recommend the company to a friend
or relative as a place to work.” Therefore, in Table 3, an “X” is placed in the column “Evidence the
D

indicator is best or better” for indicator I because it is better than at least one other indicator within that
category and an “i” is placed in the column for indicator II because it is indistinguishable from the best
ranked indicator and is not statistically better than any of the other indicators.
TE

Table 5. Sum of Ranks for Employee Affiliation Needs


Indicators Rj
I. Annual employee retention rate (breakdown by age group, gender, socio-economic class, etc.) 50
EP

II. Percentage of employees that would recommend the company to a friend or relative as a place to work 60
III. Percentage of employees that believe they belong or feel a sense of connectedness within the company 74
IV. Percentage of employees that envision themselves at the company for the remainder of their career 76
C

Table 6. Absolute Differences Between Employee Affiliation Indicator Sum of Ranks


I II III
AC

II 10
III 24 14
IV 26 2 16

13
ACCEPTED MANUSCRIPT

PT
RI
SC
Figure 4. Differences in Sum of Ranks for Indicators of Employee Affiliation Needs Relative to
Appropriate Reference Distribution

U
Similar to the category of indicators for employee basic needs, within the categories for employee esteem
AN
needs and employee actualization needs, a single indicator was found to best represent the categories.
“Percentage of employees that believe their contribution to the company is valued,” and “percentage of
employees that believe they are able to pursue their own professional interests on the job,” seem to best
represent employee esteem needs and employee actualization needs, respectively. Within the category of
M

indicators for employee safety/security needs, there was not sufficient evidence to reject the null
hypothesis associated with the Friedman test and therefore, none of the indicators appears to have a
significantly better rank than any of the others. In this case, the Friedman Test Statistic does not prove
D

that the indicator with the best ranking for safety/security is provably superior to the other indicators. In
general, the methodology provides key insights and guidance into the indicators a business might use to
evaluate its social sustainability in a holistic way. Each social group was subjected to the same procedure
TE

for every indicator category, and a summary of the analysis follows.

4.2 Indicators Describing Customer Needs


EP

Table A-2 in the Appendix displays the full indicator set associated with the social group customer. There
appears to be a preference for a single indicator for two of the categories of customer needs. “Percentage
of company products/services that directly meet the basic needs of the customer (e.g., food, water,
shelter)” and “percentage of customers that believe company products/services improve their quality of
C

life” seem to be the best indicators for customer basic needs and customer actualization needs,
respectively. Regarding customer safety/security needs, the indicator “percentage of company
AC

products/services for which consumer health and safety impacts are understood across the life cycle and
are less negative, relative to similar products/services” had a better rank than the two worst ranked
indicators, but cannot be differentiated from “percentage of company products/services that are not toxic
or harmful during use.”

None of the indicators in the categories associated with customer affiliation and customer esteem were
statistically different from the others. In their open-ended responses, the survey respondents expressed
some concern about measures of a customers’ affiliation or esteem being more closely related to
marketing and consumer perception than verifiable sustainability. The open-ended responses also seemed
to reveal that depending on the products or services being provided, different need levels or indicators
may be more important for a company to address. For instance, an aerospace company may not fulfill any

14
ACCEPTED MANUSCRIPT

basic needs (food, water, shelter, etc.) of a customer, but their customers may feel like the company’s
products increase their quality of life. Perhaps these issues created some difficulty in ranking the
indicators.

4.3 Indicators Describing Stockholder/Owner Needs


Table A-3 shows the full indicator set associated with stockholder/owner needs. For stockholder/owner
basic needs, the two indicators related to return on investment, adjusted for inflation, appear to be better

PT
than the other indicator proposed, which is related to the operational time affected by labor issues. If an
alpha value of 0.10 is employed, the rate of return averaged over 10 years has a better rank than annual
rate of return. Within the category stockholder/owner safety/security needs, there was one indicator,
“percentage of stockholders/owners that believe any of their personal information the organization

RI
possesses is secure,” that seemed significantly worse than the others, but it was not possible to
differentiate between the remaining three indicators. The indicator “percentage of stockholders, with an
option to vote, that vote” appears to be better than the worst ranked indicator in the category

SC
stockholder/owner esteem needs, but it cannot be differentiated from “percentage of stockholders that
believe the company is responsive to their views.” It is unclear which indicators best represent
stockholder/owner affiliation and actualization needs.

U
4.4 Indicators Describing Supplier Needs
As can be seen in Table A-4, “percentage of supplier invoices paid on time by the company” seems to be
AN
the best indicator for supplier basic needs. The indicators “ratio of contract length between company and
supplier to industry average contract length, averaged across all company suppliers” and “percentage of
contracts between the company and its suppliers that are failed/breached by the company” appear to be
better measures of supplier safety/security needs than the other two indicators suggested for that category.
M

For the categories associated with supplier affiliation, esteem and actualization needs, none of the
indicators within those categories appeared to be significantly better or worse than the others.

4.5 Indicators Describing Community Needs


D

Survey respondents expressed a number of concerns related to the indicators proposed for community
needs. Their concerns included: accurate measurement of the indicators, meaning of the indicators,
TE

differences in directionality (i.e., is a higher value “good” or “bad” for a particular indicator), and the
importance/need for a company to address a particular category. These concerns may help to explain the
lack of differentiation between the indicators in the categories for community basic, safety/security,
esteem, and actualization needs (see Table A-5). For the category community affiliation needs,
EP

“percentage of company employees from the local community” appears to be better than the two
indicators with the worst rankings, but cannot be differentiated from the indicators “percentage of
company suppliers from the community” and “percentage of community members that believe the
company is involved in the community in a positive way.” It should be noted that for this category,
C

because there were ties among the individual responses, a slightly different test statistic was used, which
is approximated by the F-distribution.
AC

4.6 Indicators Describing Public Needs


Table A-6 displays the full indicator results for public needs. Two indicators appear to be ranked higher
than the other indicators in each of the categories for public affiliation, esteem, and actualization needs.
For public affiliation needs, the indicators, “ratio of investment in efforts to inform government(s) of
company activities and efforts relative to market capitalization (measure of worth of company)” and
“ratio of financial and in-kind contributions to non-partisan, non-governmental organizations to market
capitalization (measure of company worth)” appear to have better rankings than the other two suggested
indicators in that category, but it is not possible to differentiate between them. “Percentage of company
publications that include or address sustainability” appears to be better than the worst ranked indicator,

15
ACCEPTED MANUSCRIPT

but cannot be differentiated from “Percentage of general public that believe the company increases the
prestige or image of the U.S. internationally” in the category public esteem needs. Similarly, for the
category public actualization needs, “Ratio of financial/in-kind contributions to the public (for cultural
enrichment activities, community events, non-employee education programs, etc.) to market capitalization
(measure of company worth)” appears to be better than the worst ranked indicator, but cannot be
differentiated from “Percentage of the general public that is aware of the company and also believes the
company is making the world a better place.” None of the indicators proposed in the categories for the

PT
public’s basic and safety/security needs are statistically better than the others. Some of the comments
reflected philosophical concerns about the relationship businesses should have with the public generally
and government specifically.

RI
5. Conclusions
Business enterprises need tools and methods to make decisions that support the triple bottom line of

SC
sustainability. One area where this need is especially acute is social sustainability. Researchers around the
world are beginning to develop Social-LCA tools, but debate regarding what impacts or measures of
performance should be considered is ongoing. Within this work, a framework for evaluating social
sustainability performance has been proposed that considers the social entities with which a company

U
interacts, and the needs of those entities. Using this framework, and the iterative Delphi technique, social
sustainability indicators for U.S. businesses have been proposed. These indicators provide measures of the
AN
performance for a business enterprise. The outcomes of this work include:
• a framework that addresses six social entities with five need levels to form thirty social indicator
categories,
• characterization of the relationships between a business and the social entities with which it
M

interacts, and
• measurable indicators for each combination of social entity and social need.
In particular, a “best” indicator was identified for many social group/need categories. It is notable that
D

many of these indicators have not previously been associated with social sustainability. This may be
because this effort has exclusively focused on indicators that are relevant to and measurable by U.S.
businesses as opposed to indicators and sets of indicators with a larger scope (e.g., national or global trade
TE

level).

As was intended, the indicators in Tables 3 and A-2 to A-6 span a range of issues for the social entities
that interact with a U.S. business. For some categories (i.e., combination of social entity and need level), a
EP

single indicator was statistically identified that best addresses that category. Other categories are
addressed by two to four indicators. When there are multiple indicators for a group/need level, businesses
should select those indicators that seem most appropriate considering their products/services, market
share, and relationships with the social entities. If a company is not presently addressing the basic needs
C

of its stakeholders, it would be sensible, and perhaps most impactful to begin addressing social
sustainability associated with basic needs using the associated indicators presented in this work. As the
AC

organization matures and begins to meet lower order needs, it may consider addressing subsequent higher
order needs in Maslow’s hierarchy. The indicators a business chooses to use may be incorporated into
decision-making tools such as those proposed by Hutchins and Sutherland [2008], Bai and Sarkis [2010],
McElroy [2013] and Nikolaou et al. [2013].

Many opportunities remain to contribute new research in the area of evaluating an organization’s
contributions to social sustainability. While there is substantial motivation to incorporate indicators of
social performance into a life cycle assessment (LCA) methodology, challenges related to aggregation
and normalization must be addressed [Benoit et al., 2010]. Because an organization may engage in
behaviors that are beneficial to social structures, and other behaviors that are detrimental, an increase in

16
ACCEPTED MANUSCRIPT

the value, i.e., weighting, of the proposed indicator may more accurately reflect a positive or negative
change. This challenge may be dealt with by constructing the indicators as ratios and percentages, as
discussed in this paper, and then aggregating the indicators. Combining the calculated values for negative
social impacts and the reciprocals of the calculated values for positive social impacts will then generate a
comprehensive value for the indicator. In order to establish a baseline or benchmark for social impacts, a
reference data set for the indicators could be created by compiling performance data from a group of
companies. This information could then be used in the normalization stage of LCA.

PT
Additionally, further work is needed to better understand suitability of indicators, i.e., how indicators
should be used in particular situations [Asif et al., 2013] and the effect of other dimensions of
sustainability performance [Pullman et al., 2009; Lourenco et al., 2012]. Although the indicators do not

RI
address every issue that may concern stakeholder groups, tracking these indicators will provide some
insight into areas where a business is addressing social sustainability and areas where opportunities exist.
Perhaps particular attention should be paid to a specific social entity or perhaps certain need levels could

SC
be overlooked.

The process of indicator development using the Delphi technique was challenging and could be improved
in future research. In the initial stages of indicator identification and rating, survey respondents were

U
limited to individuals within the authors’ professional network who were knowledgeable about
sustainability. Future researchers are encouraged to seek out a broader cross-section of respondents. This
may lead to better and more robust indicators. The indicator development reported herein began in the
AN
mid-2000s. Future research will benefit from social indicators that have been reported since then, e.g.,
Joung et al. [2013] and be positioned to address recent changes in social norms. Finally, while every
category of stakeholder-need was found to have a “best” social indicator, some indicators were not
statistically differentiable from the next best indicator. A larger, more diverse, set of respondents could
M

provide a larger initial set of indicators, greater precision in the statistical tests, and provide greater
differentiability among indicators.
D

The social sustainability indicators and associated framework established in this work contribute to the
collective understanding of what it means to be sustainable. Providing an operational definition with
TE

quantitative measures for assessment will enable businesses to effectively focus on improving their
sustainability and prevent “sustainability” from becoming a term that can be shaped to support any
decision, behavior, or outcome.
EP

6. Acknowledgements
The authors would like to gratefully acknowledge the support of the NSF Sustainable Futures IGERT
project (Grant DGE0333401). Dr. Hutchins received support from the Sustainable Futures IGERT and the
C

Henes Doctoral Fellowship at Michigan Technological University, and the Sustainable Manufacturing
Partnership at UC-Berkeley. We would like to thank the scholars from the Sustainable Futures Institute
AC

(SFI) at Michigan Tech for their efforts in primary indicator categorization. In addition, the authors want
to thank Cindy Bayley, Sean Wihera, and Dr. Gamini Mendis for their thoughtful comments and editorial
assistance.

7. References
Adams, C. A., & Frost, G. R., (2008). Integrating sustainability reporting into management practices.
Accounting Forum, 32, 288-302.

17
ACCEPTED MANUSCRIPT

Agyekum, E. O., Fortuin, K. J. P., & van der Harst, E. (2017) Environmental and social life cycle
assessment of bamboo bicycle frames made in Ghana. Journal of Cleaner Production, 143, 1069-1080.

Arthur, D., Balagopal, B., Haanaes K., Kong M. T., Velken, I., Hopkins, M. S., & Krstakeuschwitz, N.
(2011). Sustainability: The “Embracers” Seize Advantage. MIT Sloan Review, 52(3), 1-27.

Ashby, A., Leat, M., & Hudson-Smith, M., (2012). Making connections: a review of supply chain

PT
management and sustainability literature. Supply Chain Management: An International Journal, 17(5)
497-516.

Asif, M., Sercy, C., Zutshi, A., & Fisscher, O.A.M., (2013). An integrated management systems approach

RI
to corporate social responsibility. Journal of Cleaner Production 56, 7-17.

Bai, C., & Sarkis, J. (2010). Integrating sustainability into supplier selection with grey system and rough

SC
set methodologies. International Journal of Production Economics, 124, 252-264.

Benôit, C., Ciroth, A., & Prakash, S. (2010). The guidelines for social life cycle assessment of products:
just in time! International Journal of Life Cycle Assessment 15, 156-163.

U
Benôit-Norris, C., Traverso, M., Valdivia, S., Vickery-Niederman, G., Franze, J., Azuero, L., Ciroth, A.,
Mazjin, B., & Aulisio, D. (2013). The Methodological Sheets for Sub-Categories in Social Life Cycle
AN
Assessment (S-LCA). Paris, France. UNEP-SETAC.

Carroll, A. B., (1999). Corporate social responsibility: evolution of a definitional construct. Business and
Society 38(3), 268-295.
M

Clarkson, M. B. E., (1995). A stakeholder framework for analyzing and evaluating corporate social
performance, Academy of Management Review, 20:92-117.
D

Cucek, L., Klemes, J. J., & Kravanja, Z., (2012). A Review of footprint analysis tools for monitoring
TE

impacts on sustainability. Journal of Cleaner Production, 34, 9-20.

Conover, W. J. (1999). Practical Nonparametric Statistics. John Wiley & Sons, New York.
EP

Donaldson, T., & Preston, L. E., (1995). The stakeholder theory of the corporation – concepts, evidence,
and implications, Academy of Management Review, 20:65-91.

Elkington, J. (2002). Cannibals with Forks: The Triple Bottom Line of 21st Century
C

Business. Reprint. New Society Publishers, Capstone, Oxford.


AC

Fan Y., Wu R., Chen J., & Apul D. (2015) A Review of Social Life Cycle Assessment Methodologies. In:
Muthu S. (eds) Social Life Cycle Assessment. Environmental Footprints and Eco-design of Products and
Processes. Springer, Singapore.

Gibbons, J. D., & Chakraborti, S. (2003). Nonparametric Statistical Inference. 4th ed., Taylor & Francis
Group, New York.

Global Reporting Initiative (2006). Sustainability Reporting Guidelines.

Hauschild, M., Jeswiet, J., & Alting, L. (2005). From Life Cycle Assessment to Sustainable Production:
Status and Perspectives. CIRP Annals, 54(2), 1-21.

18
ACCEPTED MANUSCRIPT

Hutchins, M. J., & Sutherland, J. W. (2008). An exploration of measures of social sustainability and their
application to supply chain decisions. Journal of Cleaner Production 16(15) 1688-1698.

Hutchins, M. J., Gierke, J. S., & Sutherland, J. W. (2010), Development of a Framework and Indicators
for Societal Sustainability in Support of Manufacturing Enterprise Decisions, North American
Manufacturing Research Conference, 26-28 May 2010, Kingston, Ontario, Canada.

PT
International Labour Organization (2009). International Labour Standards. http://www.ilo.org. Accessed 9
October 2009.

RI
ISO (2010). International Standard. ISO 26000: Guidance on Social Responsibility.

Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs, and

SC
ownership structure. Journal of Financial Economics. 3(4), 305-360.

Joung, C. B., Carrell, J., Sarkar, P., & Feng, S. C. (2013). Categorization of indicators for sustainable
manufacturing. Ecological Indicators, 24(0), 148-157. doi:10.1016/j.ecolind.2012.05.030

U
Kitano, H. (2002). Systems Biology: A Brief Overview. Science, 295(5560), 1662-1664.
AN
Labuschagne, C., & Brent, A. C. (2005). Sustainable project life cycle management: the need to integrate
life cycles in the manufacturing sector. International Journal of Project Management, 23(2), 159-168.

Likert, R., (1932). A technique for the measurement of attitudes. Archives of Psychology, 22(140), 1-55.
M

Linstone, H. A., & Turoff, M. (1975). The Delphi method: techniques and applications, Reading, MA,
Addison-Wesley.
D

Linton, J. D., Klassen, R., & Jayaraman, V. (2007). Sustainable supply chains: an introduction. Journal of
TE

Operations Management, 25(6), 1075-1082.

Lozano, R. Carpenter, A., & Huisingh D. (2014). A review of ‘theories of the firm’ and their
contributions to Corporate Sustainability. Journal of Cleaner Production, 106, 430-442.
EP

Lourenco, I. C., Branco, M. C., Curto, J. D., & Eugenio, T. (2012). How does the market value corporate
sustainability performance? Journal of Business Ethics 108, 417-428.
C

Marrewijk, M. (2013). Concepts and definitions of CSR and corporate sustainability: Between agency
and communion. In Citation Classics from the Journal of Business Ethics, Advances in Business Ethics
AC

Research 2, A.C. Michalos and D.C. Poff (eds.), Springer.

Maslow, A. H. (1943). A Theory of Human Motivation. Psychological Review, 50, 370-396.

Maslow, A. H. (1970). Motivation and personality, New York, Harper & Row.

McElroy, M. E. (2013). The Social Footprint Method, available from:


http://www.sustainableorganizations.org/Social-Footprint.pdf accessed 10-10-13

National Institute of Standards and Technology (NIST) (2011). Sustainable Manufacturing Indicators
Repository. http://www.mel.nist.gov/msid/SMIR/Indicator_Repository.html

19
ACCEPTED MANUSCRIPT

Accessed March 30, 2012; last updated October 4, 2011.

National Research Council (1999). Our common journey: a transition toward sustainability. Washington,
D.C., National Academy Press.

Nikolaou I. E., Evangelinos K. I., & Allan S. (2013). A reverse logistics social responsibility evaluation
framework based on the triple bottom line approach. Journal of Cleaner Production 56, 173-184.

PT
Parris, T. M., & Kates, R. W. (2003). Characterizing and Measuring Sustainable Development. Annual
Review of Environment and Resources, 28, 559-586.

RI
Pullman, M. E., Maloni, M. J., & Carter, C. R. (2009). Food for thought: social versus environmental
sustainability practices and performance outcomes. Journal of Supply Chain Management 45(4), 38-54.

SC
Reuter, C., Foerstl, K., Hartmann, E., & Blome, C. (2010). Sustainable global supplier management: The
role of dynamic capabilities in achieving competitive advantage. Journal of Supply Chain Management,
46(2), 45-63.

U
Roca, L. C. & Searcy, C., (2012). An analysis of indicators disclosed in corporate sustainability reports.
Journal of Cleaner Production, 20, 103-118.
AN
Safeway (2009). Heart of Safeway: People Products Community Planet.
http://www.safeway.com/CMS/includes/docs/2009%20CSR%20Report.pdf Accessed March 30, 2012.

Sarkis, J., Helms, M. M., & Hervani, A. A., (2010). Reverse logistics and social sustainability. Corporate
M

Social Responsibility and Environmental Management, 17, 337-354.

Siemens (2011). Sustainability Report 2010: Seize opportunities, minimize risks, live our values.
D

http://www.siemens.com/sustainability/pool/en/current-reporting/sustainability-report_2010.pdf Accessed
March 30, 2012.
TE

Seuring, S. (2004). Integrated chain management and supply chain management comparative analysis and
illustrative cases. Journal of Cleaner Production, 12(8-10), 1059-1071.
EP

Seuring, S., & Muller M. (2008a). From literature review to a conceptual framework for sustainable
supply chain management. Journal of Cleaner Production, 16(15), 1699–1710.

Seuring, S., & Muller M. (2008b). Core issues in sustainable supply chain management: a Delphi Study.
C

Business Strategy and the Environment, 17, 455-466.


AC

Sutherland, J. W., Richter, J. S., Hutchins, M. J., Dornfeld, D., Dzombak, R., Mangold, J., Robinson, S.,
Hauschild, M. Z., Bonou, A., Schönsleben, P., & Friemann, F. (2016). The role of manufacturing in
affecting the social dimension of sustainability. CIRP Annals - Manufacturing Technology, 65(2), 689-
712. doi:https://doi.org/10.1016/j.cirp.2016.05.003

United Nations (2007). Indicators of sustainable development: guidelines and methodologies. New York.

UNEP-SETAC Life Cycle Initiative (2009). Guidelines for Social Life Cycle Assessment of Products.
http://www.unep.org/pdf/DTIE_PDFS/DTIx1164xPA-guidelines_sLCA.pdf Accessed April 2, 2016.

20
ACCEPTED MANUSCRIPT

van Haaster, B., Ciroth, A., Fontes, J., Wood, R., & Ramirez, A. (2017). Development of a
methodological framework for social life-cycle assessment of novel technologies. International Journal of
Life Cycle Assessment. 22: 423-440.

Wahba, M. A., & Bridwell, L. G. (1976). Maslow reconsidered: a review of research on the need
hierarchy theory. Organizational Behavior & Human Performance, 15(2), 212-240.

PT
World Commission On Environment and Development (1987). Our common future. Oxford; New York,
Oxford University Press.

Zavadskas, E. K., Turskis, Z., Vilutiene, T., & Lepkova, N. (2017) Integrated group fuzzy multi-criteria

RI
model: Case of Facilities management strategy selection. Expert Systems with Applications. 82, 217-331.

U SC
AN
M
D
TE
C EP
AC

21
ACCEPTED MANUSCRIPT

8. Appendix
Table A-1. Count of Indicators At Start of Survey Round (Survey 1, Survey 2, Survey 3)
Need Level
Basic Safety/Security Affiliation Esteem Actualization
Employees 1,4,3 2,4,3 6,7,4 13,6,3 3,4,4
Social Entity

Customers 1,4,3 3,4,4 1,6,3 1,5,3 2,5,4

PT
Stockholders/Owners 2,5,3 4,7,4 2,6,3 1,5,3 2,4,3
Suppliers 2,4,3 1,4,4 2,5,3 2,4,3 1,6,4
Community 1,3,3 1,5,4 2,4,5 2,4,3 2,3,3

RI
Public 3,4,3 2,5,3 3,3,4 1,3,3 1,6,4

U SC
AN
M
D
TE
C EP
AC

22
ACCEPTED MANUSCRIPT

Table A-2. Indicators Related to Customers


Indicator Category FTS; p- Best or
Average
(Number of indicators Indicators value Better
Rank
entering final survey) for FTS Indicators
Percentage of company products/services that directly
meet the basic needs of the customer (e.g., food, water, 1.54 X
shelter)
Customer Basic Needs 4.81;
Percentage of customers that could not live without a

PT
(3) 2.19 0.012
company product/service
Percentage of customers that consume the product or
2.27
service without direct, fatal side effects
Percentage of company products/services for which

RI
consumer health and safety impacts are understood across
1.96 X
the life cycle and are less negative, relative to similar
products/services

SC
Percentage of company products/services that are not toxic
2.15 i
or harmful during use
Customer Safety/Security 4.82;
Needs (4) Percentage of company products/services with instructions 0.004
for safe, healthy use that were reviewed by a consumer 2.88
safety review board

U
Ratio of disability adjusted life years (DALYs) associated
with customer use of company products/services to
3.00
AN
average life span of non-users of the company
products/services
Percentage of customers that display company loyalty 1.69
(e.g., are repeat customers for a given product/service or
purchase two or more products/services from the
M

Customer Affiliation company) 1.95;


Needs (3) Percentage of customers that believe the company listens 0.152
2.19
to their needs
D

Percentage of customers that believe the company


2.12
mission/vision is aligned with their beliefs
Percentage of the customers that believe the company is 1.81
TE

responsive to their needs


Ratio of products/services that are certified by a
governmental, non-governmental, or industrial group (e.g.,
Customer Esteem Needs 1.96 1.20;
organic, fair trade, sustainable forestry initiative) to
(3) 0.309
EP

products/services that are eligible for certification

Percentage of customers that believe the company


2.23
products/services increase their sense of self-worth
C

Percentage of customers that believe company


1.54 X
products/services improve their quality of life
Percentage of company products/services that allow for
AC

personalization and adjustments to meet changing 2.73


Customer Actualization needs/wants 8.45;
Needs (4) 0.000
Percentage of customers that believe company
2.77
products/services support their aspirations
Percentage of customers that believe company
2.96
products/services help them realize their true potential

23
ACCEPTED MANUSCRIPT

Table A-3. Indicators Related to Stockholders/Owners


Indicator Category FTS; p- Best or
Average
(Number of indicators Indicators value Better
Rank
entering final survey) for FTS Indicators
Average annual rate of return on investment, adjusted
1.38 X
for inflation, over the last 10 years
Stockholder/Owner Annual rate of return on investment, adjusted for 28.7;
1.81 X
Basic Needs (3) inflation 0.000

PT
Percentage of scheduled operational time that is not
2.81
affected by labor issues
Percentage of business units with risk management
plans, including contingency plans, for all types of risk 2.08 X

RI
(e.g., financial, political, and natural)
Percentage of stockholders who believe their investment
2.19 X
Stockholder/Owner is secure
8.35;

SC
Safety/Security Needs
Percentage of business units that have completed 0.000
(4) 2.27 X
financial and risk management audits in the past year
Percentage of stockholders/owners that believe any of
their personal information the organization possesses is 3.46

U
secure
Average annual stockholder persistence rate (i.e.,
AN
percentage of stockholders that do not sell) relative to 1.88
similar investment opportunities
Stockholder/Owner 0.49;
Percentage of stockholders that contribute non-
Affiliation Needs (3) 0.615
monetarily to the company (e.g., volunteer for an 1.96
advisory board position)
M

Percentage of stockholders who use the dividend re-


2.15
investment option
Percentage of stockholders, with the option to vote, that
1.58 X
D

vote
4.49;
Stockholder/Owner Percentage of stockholders that believe the company is
2.08 0.016 i
Esteem Needs (3) responsive to their views
TE

Ratio of publicly held voting stock to total stock 2.35


Percentage of stockholders that believe the company is a
1.81
good corporate citizen
EP

Percentage of investment funds or indexes that are


Stockholder/Owner 0.80;
labeled socially-conscious, sustainable, etc. that include 2.04
Actualization Needs (3) 0.454
stock in the company
Percentage of stockholders that believe the company
2.15
strategic plan is aligned with their goals
C
AC

24
ACCEPTED MANUSCRIPT

Table A-4. Indicators Related to Suppliers


Indicator Category FTS; p- Best or
Average
(Number of indicators Indicators value Better
Rank
entering final survey) for FTS Indicators
Percentage of supplier invoices paid on time by the
1.38 X
company
Ratio of the current assets to current liabilities for all the 10.2;
Supplier Basic Needs (3) 2.23
suppliers to the company 0.000

PT
Ratio of average monthly purchases made by the company
2.38
to total company accounts payable across all suppliers
Ratio of contract length between company and supplier to
industry average contract length, averaged across all 2.08 X

RI
company suppliers
Percentage of contracts between the company and its
2.08 X
Supplier Safety/Security suppliers that are failed/breached by the company 4.2;

SC
Needs (4) Annual percent change in the company purchases 0.008
2.88
averaged across all suppliers
Percentage of suppliers that believe any of their
private/proprietary information the company possesses is 2.96
secure

U
Percentage of suppliers with which the company seeks 1.88
additional or renewed contracts
AN
Supplier Affiliation Percentage of suppliers that the company collaborates with 1.04;
1.88
Needs (3) in R&D efforts or grant proposals 0.361
Percentage of company-supplier partnerships in which
environmental or corporate social responsibility 2.23
M

information is shared
Ratio of products/services the company purchases from its
suppliers that are certified by a governmental, non-
governmental, or industrial group (e.g., organic, fair trade, 1.81
D

sustainable forestry initiative) to products/services that are


Supplier Esteem Needs eligible for certification 0.80;
(3) 0.454
TE

Percentage of suppliers the company engages in external


2.04
activities (e.g., research and educational outreach)
Percentage of suppliers that provide regular feedback (e.g.,
2.15
constructive criticism) to the company
EP

Percentage of the company-supplier contracts with


2.23
performance improvement incentives for the supplier
Percentage of suppliers that are provided with assistance in
2.50
identifying improvement opportunities
Supplier Actualization 0.75;
C

Needs (4) Percentage of suppliers that the company audits for their 0.528
environmental and social responsibility (e.g., workplace 2.50
conditions)
AC

Percentage of suppliers that are provided with training 2.77


opportunities

25
ACCEPTED MANUSCRIPT

Table A-5. Indicators Related to Community


Indicator Category FTS; p- Best or
Average
(Number of indicators Indicators value Better
Rank
entering final survey) for FTS Indicators
Ratio of financial contributions made by the company to
regional economy, relative to the size of the regional 1.77
economy
Community Basic Needs Percent of prevailing local (e.g., city, township) tax rate 2.57;

PT
1.88
(3) paid by the company 0.087
Percentage of community infrastructure that is
provided/supported (beyond required taxes) by the 2.35
company

RI
Percentage of facilities for which community risk
assessment has been completed by the company and 2.42
approved by the community

SC
Percentage of company employees that have received
Community training for emergencies, waste disposal, waste handling, 2.42
proper materials handling, etc. 0.25;
Safety/Security Needs
0.858
(4) Percentage of facilities for which the company has
established a community emergency response plan, which 2.46

U
has been approved by the community
Percentage of days without community human health and
2.69
AN
safety issues due to company activity
Percentage of company employees from the local
1.94 X
community
Percentage of company suppliers from the community 2.79 i
M

Percentage of community members that believe the


3.06 i
company is involved in the community in a positive way
Community Affiliation 23.9;
Needs (5) Ratio of average annual hours of service per employee for 0.000
community activities to average annual work hours per 3.23
D

employee
Percentage of community groups recognized (e.g., given
an award) at a regional or higher level that are sponsored 3.98
TE

by the company

Percentage of company board members that are from the 1.85


community
EP

Ratio of community/company partnerships in external


Community Esteem activities (e.g., research and educational outreach) to 2.00 0.61;
Needs (3) company contracts with local entities 0.549
Ratio of public forums, held by the company, to address
C

potential community infrastructure changes (e.g., road


2.15
construction) to community infrastructure changes led by
the company
AC

Ratio of financial/in-kind community contributions (for


cultural enrichment activities, community events, non-
1.73
employee education programs, etc.) to market
Community capitalization (measure of company worth) 1.95;
Actualization Needs (3) Percentage of community members that believe their 0.152
2.00
quality of life has improved due to the company
Percentage of products/services for which social life cycle
2.27
assessment has been completed

26
ACCEPTED MANUSCRIPT

Table A-6. Indicators Related to the Public


Indicator Category FTS; p- Best or
Average
(Number of indicators Indicators value Better
Rank
entering final survey) for FTS Indicators
National tax rate paid by the company 1.96
Ratio of the value of fines and sanctions for non-
compliance with laws and regulations to market 2.00 0.04;
Public Basic Needs (3)

PT
capitalization (measure of company worth) 0.964
Percent of employees that are able to leave work to vote,
2.04
serve as jurors, or otherwise participate in the democracy
Percentage of employees receiving training in policies and 1.69

RI
procedures concerning aspects of human rights that are
relevant to operations
Percentage of investment agreements, weighted by value,
Public Safety/Security 2.30;
that include human rights clauses or that have undergone 2.04

SC
Needs (3) 0.111
human rights screening
Percentage of company sales that are devoted to
products/services that support human/environmental 2.27
health/safety/security

U
Ratio of financial and in-kind contributions to non-
partisan, non-governmental organizations to market 1.58 X
capitalization (measure of company worth)
AN
Ratio of investment in efforts to inform government(s) of
company activities and efforts relative to market 2.12 X
Public Affiliation Needs capitalization (measure of worth of company) 14.8;
(4) 0.000
Percent of local, state, and national political
M

3.15
representatives that have interacted with the company
Ratio of financial and in-kind contributions to political
parties, politicians, and related institutions to market 3.15
capitalization (measure of company worth)
D

Percentage of company publications that include or


1.58 X
address sustainability
TE

Percentage of general public that believe the company 4.91;


Public Esteem Needs (3) 2.04 i
increases the prestige or image of the U.S. internationally 0.011

Ratio of scholarly publications resulting from company


2.38
EP

efforts to number of trade association memberships


Ratio of financial/in-kind contributions to the public (for
cultural enrichment activities, community events, non-
1.81 X
employee education programs, etc.) to market
C

capitalization (measure of company worth)


Percentage of the general public that is aware of the
Public Actualization company and also believes the company is making the 2.50 4.20; i
AC

Needs (4) world a better place 0.008


Percentage of employees that contribute service for the
2.85
public good (including holding public office)
Ratio of the percentage of minorities in management
positions to percentage of minorities in the public 2.85
workforce

27
ACCEPTED MANUSCRIPT

Highlights
• Stakeholder-needs framework to categorize and rank social sustainability indicators
• Delphi survey used to establish best indicator for 30 stakeholder-needs categories
• Statistically prove that top indicator is better than others for 16 of 30 categories

PT
RI
U SC
AN
M
D
TE
C EP
AC

Related Interests