## 3 Dataset and Variables
### Financial Strength and Environmental Indicators: VADIS and TRUCAM  
The ORBIS database [38] provides a range of financial strength indicators for analyzing various aspects of company viability. This study focuses on the VADIS indicator, which assesses a company's evolution by considering a multitude of factors (approximately 15,000 per company). Based on this comprehensive assessment, the VADIS indicator offers several key insights, including:  
1. Probability of Business Bankruptcy (P2 BB): - This metric assesses the likelihood that a company will declare bankruptcy in the next 18 months.
2. Probability of Business Sale (P2 BSold): - Measures the likelihood that a company will be sold in the next 18 months.
3. Estimated Value of Company Operation (VPI EDV): - Estimates the value of the future operation of companies associated with a P2 BSold indicator and is expressed in terms of a confidence interval (i.e., it has upper and lower limits).  
This study utilizes the VADIS indicator (P2 BB), which assigns companies an integer value ranging from 1 to 9 to represent their propensity for failure. A value of 1 indicates a low propensity for bankruptcy, while a value of 9 indicates a high propensity. Table 1 provides a detailed overview of the VADIS scale.  
\begin{table}
\begin{tabular}{c c} \hline \hline
**Value** & **Risk of Bankruptcy for the Company in the Next 18 Months Is as Follows:** \\ \hline
9 & More than 10 times the average of its country \\ \hline
8 & Between 5 and 10 times the average of its country \\ \hline
7 & Between 3 and 5 times the average of its country \\ \hline
6 & Between 2 and 3 times the average of its country \\ \hline
5 & Between 1 and 2 times the average of its country \\ \hline
4 & Between 1/2 and 1 time the average of its country \\ \hline
3 & Between 1/5 and 1/2 times the average of its country \\ \hline
2 & Between 1/10 and 1/5 times the average of its country \\ \hline
1 & Less than 1/10 times the average of its country \\ \hline \hline \end{tabular}
\end{table}
Table 1: Scale of the VADIS financial strength indicator on the propensity for bankruptcy.  
This study incorporates the environmental indicator TRUCAM, derived from the Trucost environmental risk rating developed by S&P Global Trucost, a leading UK-based environmental consultancy. TRUCAM values were obtained from the ORBIS database [38]. TRUCAM quantifies the potential percentage of a firm's revenue at risk due to environmental damage. This involves costs associated with remediation, pollution mitigation, supply chain disruptions, and resource dependencies. When evaluating the possible financial risk that a business may incur as a result of its environmental impact, this variable is important.  
The environmental risk score of the TRUCAM indicator comprises a company's total direct environmental costs and supply chain costs associated with resource use and pollution, expressed as a percentage of revenue. Consequently, companies with higher environmental risk scores relative to their industry peers demonstrate greater environmental intensity and may face increased exposure to environmental costs.  
The combined use of VADIS and TRUCAM facilitates an in-depth analysis of the interaction between financial strength and environmental impact. These metrics are essential to our research because they allow us to examine possible causal links between environmental risk and the likelihood of business failure.