Measuring and classifying the social sustainability of European banks: An analysis using interval-based composite indicators

Promoting social information disclosure can develop sustainable banking. This paper aims to evaluate the social sustainability of banks by constructing a new interval-based composite indicator using the Thomson Reuters database. In this paper, to measure the social sustainability of European banks, we propose an approach to construct interval-based composite indicators that usefully extends the construction of the composite indicator and allows us to measure the uncertainty generated by the choices made in the construction of the composite indicator. The methodological approach is based on Monte Carlo simulation and allows us to improve the information provided by the composite indicators. Thus, we measure the value of the social indicator and its subcomponents and the uncertainty of the value due to the different possible weightings. The results show that the best international ESG practices in European banks are found in French and British banks, especially in Italian ones. Finally, we analyze innovative perspectives and propose policy recommendations to support sustainable banking ecosystems in light of the increasing attention to ESG indicator disclosure and its correspondence to reality.