Designing a decision support tool for integrating ESG into the natural resource extraction industry for sustainable development using the ordinal priority approach

Abstract

Environmental, Social and Governance (ESG) has become a critical indicator of sustainability performance. There is a compelling business case for ESG acceptance and integration; however, it is challenging to integrate ESG because there is no decision support tool for integrating ESG into the natural resource exploiting industry. This study applies the Ordinal Priority Approach (OPA) multicriteria decision-making method (MCDM) to develop a hierarchical decision support framework for integrating ESG into the natural resource industry. Twenty-five experts selected from multiple stakeholder groups in the natural resource industry evaluated a total of 3 main criteria and 25 sub-criteria identified through literature reviews and company sustainability reports. The results showed that “E" is the most important factor, followed by “S" and “G.” The overall top five sub-criteria include, Governance structure (G2), Emission (E1), Health and Safety (S1), the composition of the highest governance body and its committee (G6), and Risk Governance (G3). The results imply that managers should seek to integrate ESG into the natural resource industry for sustainable supply chain management because it has a strong potential to improve the credibility of their sustainability performance reporting. Again, managers and practitioners in the natural resource exploiting industry should sustain their environmental efforts, especially regarding emissions but should also consider energy issues and spills to improve the overall sustainability performance of the industry. Policymakers can consider implementing reporting and disclosure requirements that mandate natural resource extraction companies to provide transparent and comprehensive information on their ESG performance.