Multidimensional Inequality Metrics for Sustainable Business Development

Abstract

This paper introduces a novel methodology for measuring and decomposing multidimensional inequality, allowing for the breakdown of overall inequality into contributions from distinct dimensions. This approach offers valuable insights for sustainable business development by identifying economic sectors where Environmental, Social, or Governance (ESG) practices are most unequal and thus may benefit from policy intervention. Additionally, it explores the relationship between company size and sustainability, highlighting that the most concentrated sectors tend to exhibit the greatest ESG inequality. Applying this methodology to a sample of over 1000 small and medium-sized enterprises across various sectors in Italy, our analysis of the multidimensional index for 2022 reveals notable disparities in corporate financial performance and ESG adoption. Specifically, the manufacturing sector exhibited the highest inequality in financial performance, with an index of 0.77, indicating significant variation in financial health and firm size. Conversely, the financial services sector showed lower financial inequality, with an index of 0.23, suggesting more uniform outcomes. On the ESG front, the financial sector demonstrated the highest inequality, particularly in environmental and social dimensions, with an average Gini coefficient of 0.26, while the manufacturing sector displayed a more consistent ESG performance, with an average Gini of 0.19. These findings underscore sector-specific patterns in financial and ESG dimensions, providing a foundation for targeted interventions to reduce disparities.

Keywords

• inequality measurement
• multidimensional inequality
• market inequality
• ESG
• decomposition analysis
• sustainable growth