doi:10.3808/jei.200400031
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Rating and Evaluating the Combined Financial and Environmental Performance of Companies in the Metals and Mining Sector

J. S. Yeomans*

Management Science Area, Schulich School of Business, York University, Toronto, ON M3J 1P3, Canada

*Corresponding author. Email: syeomans@schulich.yorku.ca

Abstract


The basic intent in financial performance evaluation is to appraise current business operations internally and to benchmark them against similar business operations externally in order to identify best-in-class practices. In this paper, a new positive environmental/financial screening approach that can simultaneously include a wide combination of regulatory, technological, operational and event dimensions is created for the analyzing, rating, ranking, benchmarking, and selecting of companies from an industry sector. A method is provided that advances the use of Data Envelopment Analysis (DEA) for rating and ranking diverse groups of companies using a combination of both financial and environmental performance measures. This novel approach proceeds by first stratifying the sector into comparably efficient groups of companies through the construction of a series of efficient DEA frontiers, and then by ranking each company within these groups relative to DEA-based contextual attractiveness measures calculated from the different partitions. The method is illustrated through an application to a group of companies from the Metals and Mining Industry sector.

Keywords: Benchmarking, financial/environmental screening, rating and ranking


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