Constructing the FEEM sustainability index: A Choquet integral application

This paper presents the development of the FEEM sustainability index (FEEM SI), a composite index including 19 different indicators grouped in the three classical pillars of sustainability – economic, social and environmental. We present the relevance of multi-attribute aggregation methodologies when dealing with such complex concepts and apply an aggregation methodology used for this case study: the Choquet integral operator. First, we normalize each sustainability indicator with the use of a benchmarking procedure with a smooth target of sustainability. We then develop an aggregation tree of sustainability criteria and a questionnaire to measure the values that experts attribute to individual sustainability criteria and their interaction. This survey suggests that a majority of experts consider sustainability criteria as complementary to each other. After combining the preferences of different experts to establish a consensus, we construct the FEEM SI using the Choquet integral aggregation procedure. The results for sustainability levels show that countries that are ranked at higher (lower) positions are those that have better (worse) outcomes in at least in two final pillars, respectively. Finally, we conduct a robustness analysis by repeating the aggregation procedure with different convex combinations of experts' preferences. The results indicate that, while sustainability levels of countries do vary with the expert preferences, countries' respective rankings remain mainly the same, irrespective of the combination of experts' preferences.