Sustainability balanced scorecard
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Sustainability Balanced Scorecard. Professor Doug Cerf Donald Bren Graduate School of Environmental Science and Management Environmental Accounting &Financial Management (ESM 284) Spring 2007. Internal Management tool to operationalize sustainability goals from the company’s strategic plan.

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Sustainability Balanced Scorecard

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Sustainability balanced scorecard

Sustainability Balanced Scorecard

Professor Doug Cerf

Donald Bren Graduate School of Environmental Science and Management

Environmental Accounting &Financial Management (ESM 284)

Spring 2007


Internal management tool to operationalize sustainability goals from the company s strategic plan

Internal Management tool to operationalize sustainability goals from the company’s strategic plan


Sustainability balanced scorecard1

Sustainability Balanced Scorecard

  • Introduction to Balanced Scorecard

    • www.docin.com/p-8641624.html

  • Presentation based on

    • The Sustainability Balanced Scorecard –Linking Sustainability Management to Business Strategy” Figge, Hahn, Schaltegger and Wagner, Center for Sustainability Management University of Lüneburg, Germany

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Overview

Overview

  • Overall goal is to implement sustainability issues in the company’s strategic plan through the balanced scorecard system

  • Balanced Scorecard is a promising starting-point to incorporate environmental and social aspects into the main management system of a firm.

  • Sustainability management with Balanced Scorecard helps to overcome the shortcomings of conventional approaches to environmental and social management systems by integrating the three pillars of sustainability into a single and overarching strategic management tool.

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Link environmental and social management systems to economic management systems

Link environmental and social management systems to economic management systems

  • Many companies have implemented specific environmental or social management systems during the last decade.

  • These systems have, however, rarely been integrated with the general management system of a firm.

  • As a consequence environmental and social management is often not linked to the economic success of the firm

  • Consequently, the economic contribution of environment and social management therefore remains unclear.

  • This lack of integration is a major obstacle.

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The correlation between environmental social success and economic success

The correlation between environmental, social success and economic success

  • the literature is mainly based on empirical studies that refer to the correlation but not to the causality between environmental and social measures and the economic success of firms

  • To date there is a small amount of literature on the relation between environmental and social measures and the achievement of long-term economic goals

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Suitability of balanced scorecard as a tool for sustainability management

Suitability of balanced scorecard as a tool forsustainability management

  • Management should first identify and realize opportunities for simultaneous improvements in all three dimensions of sustainability (social, ecological and economic goals) in order to achieve strong corporate contributions to sustainability

  • SBSC offers the possibility to integrate the management of environmental and social aspects into mainstream business activities

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Integrating sustainability into bsc

Integrating Sustainability into BSC

  • Integrating the three pillars of sustainability into general business management (ie:BSC) offers three major advantages

    • Sustainability management that is economically sound will be practiced in successful and unsuccessful economic periods

    • Sustainability management that also contributes to economic objectives helps to disseminate the idea of sustainable development in business, as it serves as an appropriate role model for other businesses.

    • a business improves performance with regard to all the three dimensions of sustainability simultaneously

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Methods of integration

Methods of integration

  • Three possibilities to integrate environmental and social aspects in the BSC

    • Environmental and social aspects integrated in the existing four standard perspectives.

    • An additional perspective added to take environmental and social aspects into account

    • A specific environmental and/or social scorecard is formulated

  • Preferred in the listed order

  • A combination of these approaches is appropriate

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Integration into the four balanced scorecard perspectives

Integration into the four balanced scorecard perspectives

  • Similar to adding any other strategic aspect that is relevant to a particular perspective

  • Through a top down approach

    • Environmental and social aspects are integrated through respective strategic core elements or performance drivers

    • lagging and leading indicators as well as targets and measures are formulated

  • particularly appropriate for environmental and social aspects that are already integrated in the market system.

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Example

Example

  • a firm that aims at an environmental customer segment

    • the core measure ‘market share’ in the customer perspective would have an environmentally oriented dimension

    • the leading indicator ‘product features’ would have an environmental dimension

      • Environmentally friendly packaging

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Addition of non market perspective

Addition of non market perspective

  • Environmental and social aspects are not fully integrated in the market exchange processes

    • Example: externalities—non market portion of C02 pollution

  • Consequently a non market perspective needs to be added to incorporate these strategic aspects

  • In order to justify introduction of an additional non-market perspective, environmental and social aspects from outside the market system must explicitly represent strategic core aspects of the firm

  • Should only be used if the aspects can not be represented within the standard four perspectives

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A specific environmental and or social scorecard is formulated

A specific environmental and/or social scorecard is formulated

  • Predominantly used to coordinate, organize and further differentiate the environmental and social aspects

  • Should not be developed parallel to the conventional scorecard

  • In order to integrate sustainability management into mainstream business management

    • Must be added in conjunction with one of the other two integration alternatives

    • This is not an independent alternative for integration, it is an extension

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The process of formulating an sbsc has to meet the following

The process of formulating an SBSC has to meet the following……

  • must lead to integration of environmental and social management into business management

  • the SBSC is business unit specific

  • environmental and social aspects of a business unit must be integrated according to their strategic relevance

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The process of formulating an sbsc

The process of formulating an SBSC

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Sustainability balanced scorecard

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