1) The sustainability balanced scorecard is an internal management tool that operationalizes sustainability goals from a company's strategic plan by linking sustainability management to business strategy. 2) It helps overcome shortcomings of conventional environmental and social management systems by integrating the three pillars of sustainability (environmental, social, economic) into a single strategic management tool. 3) The sustainability balanced scorecard offers three main advantages: it ensures sustainability management is practiced in both good and bad economic times, it helps disseminate sustainable development by demonstrating how sustainability contributes to economic objectives, and it improves performance across all three sustainability dimensions simultaneously.

1. Sustainability Balanced Scorecard
Professor Doug Cerf
Donald Bren Graduate School of Environmental
Science and Management
Environmental Accounting &Financial
Management (ESM 284)
Spring 2007

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

3. Sustainability Balanced Scorecard
• Introduction to Balanced Scorecard
– See Introduction to Balanced Scorecard.ppt
• 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
Printed on recycled
paper-actually better,
not printed at all

4. 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 ofPrinted on recycled a single and
sustainability into
overarching strategic management tool.
paper-actually better,
not printed at all

5. 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.
Printed on recycled
paper-actually better,
not printed at all

6. 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
Printed on recycled
paper-actually better,
not printed at all

7. Suitability of balanced scorecard as a tool for
sustainability 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
Printed on recycled
paper-actually better,
not printed at all

8. 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
Printed on recycled
paper-actually better,
not printed at all

9. 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 combinationPrinted on approaches is appropriate
of these recycled
paper-actually better,
not printed at all

10. 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 areon recycled
Printed already integrated in the
market system.paper-actually better,
not printed at all

11. 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
Printed on recycled
paper-actually better,
not printed at all

12. Addition of non market perspective
• Environmental and social aspects are not fully integrated
in the market exchange processes
– Example: externalities—non market portion of C0 2 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
Printed on recycled
within the standard four perspectives
paper-actually better,
not printed at all

13. 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
Printed on recycled
– This is not an independent alternative for integration, it
paper-actually better,
is an extension
not printed at all

14. 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
Printed on recycled
paper-actually better,
not printed at all

15. The process of formulating an
SBSC
Printed on recycled
paper-actually better,
not printed at all

16. Printed on recycled
paper-actually better,
not printed at all