Business must be the major driver of innovation and sustainability in our society if we are to avoid a “perfect storm” of resource scarcity, climate change, and pollution. The “triple bottom line” concept is a response to this need, but its use is limited because it does not address the competitive strategy of the firm. A strategy-based balanced scorecard system aligned with principles of the Triple Bottom Line offers a way to accomplish social and environmental goals while integrating them fully with financial performance and competitive advantage.
Analyzing the current incorporation of social, environmental And economic mea...World-Academic Journal
We theorize about the incorporation of social, environmental and economic dimensions into strategic performance measurement systems. 81Chinese companies were surveyed for the analysis. Along with the increasing of social responsibility pressure, numbers of enterprises are promoting environmental, social and economic performance as strategic sustainability measures. Although the addition of sustainability measures to enterprise’s long term business strategy has long time been a major preoccupation of literature. Some empirical researches have examined if these nonfinancial measures are effectively incorporated into strategic performance measurement systems. In this research, we will examine why the incorporation of sustainability measures into enterprise business strategy vary across enterprises operating in Shanghai.
Sugarcane Company’s performance has remained to be one of the challenging facts in the growing companies in Kenya today. The delays in harvesting operations are attributed to uncoordinated and unpredictable harvesting and transport schedules; and inefficiencies in mill operations. Therefore, the main aim of the study is to determine the influence of Sustainability Management Systems CSR on firm performance of selected sugarcane companies in Kenya. The study is guided by Corporate Social Performance Theory. This study used ex- post facto research design. Ex- post facto research design determines and reports the way things are. The target population was 528 employees. This study therefore sampled 228 respondents. Purposive sampling technique was used to select 10 managers, 24 supervisors, 38 accountants and 156 clerks from the 7 sugarcane companies because they have specific information concerning the effects of corporate social responsibility practice on firm performance of selected sugarcane companies in Kenya. Pilot study was done in order to test for validity and reliability of the research tools. The pilot study was done in Trans-Mara Sugar Company found in rift Valley region of Kenya. For inferential statistics, correlation and multiple regression was used for comparative analysis between frequencies of corporate social responsibility practice on firm performance. The study findings indicated that sustainability management systems have an effect on firm performance. The government will use this study in establishing policies that would ensure improvement in firm performance of sugarcane processing firms among other firms in Kenya. The study recommends that the companies should encourage sustainability management systems since sustainable management systems is an important mechanism for improving corporate sustainability performance. It can generate business value through measurement and management of sustainability risks and opportunities. The study recommends further researchers to study on corporate social responsibility strategy and financial performance of firms in Kenya which the study didn’t cover.
Analyzing the current incorporation of social, environmental And economic mea...World-Academic Journal
We theorize about the incorporation of social, environmental and economic dimensions into strategic performance measurement systems. 81Chinese companies were surveyed for the analysis. Along with the increasing of social responsibility pressure, numbers of enterprises are promoting environmental, social and economic performance as strategic sustainability measures. Although the addition of sustainability measures to enterprise’s long term business strategy has long time been a major preoccupation of literature. Some empirical researches have examined if these nonfinancial measures are effectively incorporated into strategic performance measurement systems. In this research, we will examine why the incorporation of sustainability measures into enterprise business strategy vary across enterprises operating in Shanghai.
Sugarcane Company’s performance has remained to be one of the challenging facts in the growing companies in Kenya today. The delays in harvesting operations are attributed to uncoordinated and unpredictable harvesting and transport schedules; and inefficiencies in mill operations. Therefore, the main aim of the study is to determine the influence of Sustainability Management Systems CSR on firm performance of selected sugarcane companies in Kenya. The study is guided by Corporate Social Performance Theory. This study used ex- post facto research design. Ex- post facto research design determines and reports the way things are. The target population was 528 employees. This study therefore sampled 228 respondents. Purposive sampling technique was used to select 10 managers, 24 supervisors, 38 accountants and 156 clerks from the 7 sugarcane companies because they have specific information concerning the effects of corporate social responsibility practice on firm performance of selected sugarcane companies in Kenya. Pilot study was done in order to test for validity and reliability of the research tools. The pilot study was done in Trans-Mara Sugar Company found in rift Valley region of Kenya. For inferential statistics, correlation and multiple regression was used for comparative analysis between frequencies of corporate social responsibility practice on firm performance. The study findings indicated that sustainability management systems have an effect on firm performance. The government will use this study in establishing policies that would ensure improvement in firm performance of sugarcane processing firms among other firms in Kenya. The study recommends that the companies should encourage sustainability management systems since sustainable management systems is an important mechanism for improving corporate sustainability performance. It can generate business value through measurement and management of sustainability risks and opportunities. The study recommends further researchers to study on corporate social responsibility strategy and financial performance of firms in Kenya which the study didn’t cover.
The popularity of Corporate Social Responsibility: A strategic reviewIOSR Journals
Abstract : Purpose: This research paper aims to explore a research question: Why Corporate Social Responsibility (CSR) should be popularized instead of imposed? Methodology: Answering the question CSR literature with the test of both theoretical and practical perspectives by following qualitative interview method. This research paper reviews the practical assessment of latest thinking about CSR. This research investigates three questions, these are: who are the investors of CSR, who makes decisions about CSR and potential implications of CSR? Findings: Most relevant theoretical framework offers guidance to managers where CSR is morally attractive force of business through legislative power. Imposed questions are revealed to answers of first two questions are quiet apparent. The answer of third question is inference that indicates three major findings. These are: the costs of CSR remain unrecognized, it helps the managers to take decisions, and CSR have government and civil society implications which we scarcely think. Practical Implications: The capacity of business can contribute to society that has proved through huge expenditure of firms. This paper concludes to encourage the business sensibly by using the popularity CSR as business duty. Value: This paper provides vital information on CSR as a business function.
The contemporary business environment has been highly complex and dynamic with organizations facing unprecedented amount of competition due to globalization and technological innovations. Merger and acquisition is one of the most popular organization strategy that organizations apply when faced with this kind of operating environment acquiring resources, skills, and competencies beyond their organization control. Many studies have been done to support implementation of M&As within organizations but they have indicated conflicting outcomes with some showing that it negatively affect organization performance and others indicating they positively affect performance. However, none of the studies done has concentrated on the effect within the privately traded organizations and very few but conflicting studies have been done on this relationship in Kenya. This study therefore sought to assess the effects of merger and acquisition on the performance of privately trading organizations in Kenya. The study was grounded upon the efficiency theory, the market power theory, and economic production theory. Reviewed literature revealed existing gaps related to the literature. The study adopted descriptive research design on short run data collected at UAP Insurance within the pre-merger (2012-2014) and post-merger (2015-2017) periods for various performance statistics, where descriptive analysis was applied to assess the differences and independent sample t-test. The study found that M&A affects the net profit margin, Return on Assets, Return on Equity, and earnings per share with all these performance indicators showing that the post-merger period had poorer performance than the pre-merger period. The study further observed that the M&A implementation caused serious disruptions in the operating environment and organization culture of the organization, which was bound to have negative implications on organization performance, employees and shareholders. The study recommends that organizations should avoid M&A strategy unless their current assets are able to fund their current liabilities beyond the short run period, as the declined performance was linked to the disruptions experienced from M&A implementations. The study also recommends that M&A intended changes should occur sequentially to cushion the organization internal operations from the disruptions due to the changes. Study suggests further studies assessing the long term impact of M&A on organization performance.
This presentation is a backgrounder on B Corps, as delivered at an information session at MaRS on May 13th, 2011. It includes background on: what is a B Corporation, their ratings system, service offerings, public policy, and implications for access to capital.
The Corporate Social Responsibility Strategies and Activities Employed By the...iosrjce
Corporate social responsibility (CSR) playa an increasingly important role in business success
today, and economic, political, and social factors are shaping CSR strategies around the world. Approached
strategically, CSR has the potential to generate opportunity, innovation and competitive advantage for
organizations while solving pressing social problems. The study explored the effectiveness of CSR strategies on
organizational performance by ascertaining whether responsibility towards primary stakeholders influences the
financial and non-financial performance of commercial banks. The author focused on the Equity Bank in Kenya.
Content analysis of the Bank’s financial reports between the years 2006 and 2012 was done to ascertain the
relationship between CSR and performance of the Bank. The establishment of EGF, a fully fledged subsidiary of
Equity Bank, to handle all aspects of social responsibility for the Bank is a clear attestation of how important
and serious the institution considers CSR in their day-to-day operations. The categorization of the CSR
strategies into thematic areas showed that, to the Eank, social responsibility is not just a philanthropic deed to
society but a strategic tool for furtherance of business objectives, including stakeholder relationships. The study
recommended the need for organizations to be more inclusive and participatory among all the stakeholders at
all levels of implementation as well as further research to determine the level at which CSR impacts on
performance and the influence of prior organizational performance on social responsibility.
STRATEGY FORMULATION MODEL TO IMPROVE IMPLEMENTATION OF CORPORATE SOCIAL RESP...IAEME Publication
This research is based on reality condition of Corporate Social Responsibility
(CSR) activity in generic CSR program. Many companies implement CSR based on
external pressures, such as regulators, environmentalists and other associations. CSR
Implementation is not an internal awareness of company to improve social
environment and has no relevance to main activities and corporate strategy.
Therefore, it does not give benefits to the performance and competitive advantage.
This research focus is to develop a CSR implementation model based on internal
awareness of company by examining the leadership behavior to formulate CSRoriented
strategy formulation in an effort to improve company performance. This
research location is Makassar Industrial Estate (PT.KIMA). The unit analysis is
company. The samples are 81 leaders at general manager level and leadership of
company functional manager level. The study proves that transformational leadership
stylehas a significant effect on CSR-oriented strategy formulation. Leaders with
ethical integrity rules, norms and policies will increase the leadership commitment to
formulate the company's strategy by taking into account aspects of natural and social
environment in addition to main purpose to generate profits. Organizational learning
culture improves the effectiveness of corporate strategy formulation. Strategy
formulation will improve leadership commitment to create CSR implementation
THE IMPACT OF KNOWLEDGE MANAGEMENT ON ORGANISATIONAL PERFORMANCEIAEME Publication
Knowledge Management is a process that transforms individual knowledge into organisational knowledge. The main aim of the project is to show that through creating, accumulating, organising and utilising knowledge, oraganisation can enhance organisational performance. The impact of knowledge Management practices on performance was emprically tested through structural equation modelling. The sample included 52 employees from HCL .The result shows that knowledge management practices measured through information technology, organisation and knowledge positively affect organisational performance
In order to survive and sustain in today’s turbulent business environment an organisation needs to explore opportunities and avoid threats constantly. Organisations succeed or fail due to the strategies formulated by its decision makers. Executives working in organisations possess unique perceptions regarding the events occurring in the business environment and they exhibit varied scanning behaviours. This uniqueness is reflected in their decisions and strategies.
In this white paper published by Sustainable Brands and co-authored by Mark Stapylton of BrandPanorama with Nancy Elder, JetBlue’s VP of Communications, we discuss the importance of sustainability branding in creating shared value, competitive advantage, and long-term profitability. Without measurement to quantify the return on investment in sustainability relevance and integration are inherently limited, but there are key ROI metrics every company or organization can adopt that will prove the value of sustainability to their brand and accelerate their progress.
The popularity of Corporate Social Responsibility: A strategic reviewIOSR Journals
Abstract : Purpose: This research paper aims to explore a research question: Why Corporate Social Responsibility (CSR) should be popularized instead of imposed? Methodology: Answering the question CSR literature with the test of both theoretical and practical perspectives by following qualitative interview method. This research paper reviews the practical assessment of latest thinking about CSR. This research investigates three questions, these are: who are the investors of CSR, who makes decisions about CSR and potential implications of CSR? Findings: Most relevant theoretical framework offers guidance to managers where CSR is morally attractive force of business through legislative power. Imposed questions are revealed to answers of first two questions are quiet apparent. The answer of third question is inference that indicates three major findings. These are: the costs of CSR remain unrecognized, it helps the managers to take decisions, and CSR have government and civil society implications which we scarcely think. Practical Implications: The capacity of business can contribute to society that has proved through huge expenditure of firms. This paper concludes to encourage the business sensibly by using the popularity CSR as business duty. Value: This paper provides vital information on CSR as a business function.
The contemporary business environment has been highly complex and dynamic with organizations facing unprecedented amount of competition due to globalization and technological innovations. Merger and acquisition is one of the most popular organization strategy that organizations apply when faced with this kind of operating environment acquiring resources, skills, and competencies beyond their organization control. Many studies have been done to support implementation of M&As within organizations but they have indicated conflicting outcomes with some showing that it negatively affect organization performance and others indicating they positively affect performance. However, none of the studies done has concentrated on the effect within the privately traded organizations and very few but conflicting studies have been done on this relationship in Kenya. This study therefore sought to assess the effects of merger and acquisition on the performance of privately trading organizations in Kenya. The study was grounded upon the efficiency theory, the market power theory, and economic production theory. Reviewed literature revealed existing gaps related to the literature. The study adopted descriptive research design on short run data collected at UAP Insurance within the pre-merger (2012-2014) and post-merger (2015-2017) periods for various performance statistics, where descriptive analysis was applied to assess the differences and independent sample t-test. The study found that M&A affects the net profit margin, Return on Assets, Return on Equity, and earnings per share with all these performance indicators showing that the post-merger period had poorer performance than the pre-merger period. The study further observed that the M&A implementation caused serious disruptions in the operating environment and organization culture of the organization, which was bound to have negative implications on organization performance, employees and shareholders. The study recommends that organizations should avoid M&A strategy unless their current assets are able to fund their current liabilities beyond the short run period, as the declined performance was linked to the disruptions experienced from M&A implementations. The study also recommends that M&A intended changes should occur sequentially to cushion the organization internal operations from the disruptions due to the changes. Study suggests further studies assessing the long term impact of M&A on organization performance.
This presentation is a backgrounder on B Corps, as delivered at an information session at MaRS on May 13th, 2011. It includes background on: what is a B Corporation, their ratings system, service offerings, public policy, and implications for access to capital.
The Corporate Social Responsibility Strategies and Activities Employed By the...iosrjce
Corporate social responsibility (CSR) playa an increasingly important role in business success
today, and economic, political, and social factors are shaping CSR strategies around the world. Approached
strategically, CSR has the potential to generate opportunity, innovation and competitive advantage for
organizations while solving pressing social problems. The study explored the effectiveness of CSR strategies on
organizational performance by ascertaining whether responsibility towards primary stakeholders influences the
financial and non-financial performance of commercial banks. The author focused on the Equity Bank in Kenya.
Content analysis of the Bank’s financial reports between the years 2006 and 2012 was done to ascertain the
relationship between CSR and performance of the Bank. The establishment of EGF, a fully fledged subsidiary of
Equity Bank, to handle all aspects of social responsibility for the Bank is a clear attestation of how important
and serious the institution considers CSR in their day-to-day operations. The categorization of the CSR
strategies into thematic areas showed that, to the Eank, social responsibility is not just a philanthropic deed to
society but a strategic tool for furtherance of business objectives, including stakeholder relationships. The study
recommended the need for organizations to be more inclusive and participatory among all the stakeholders at
all levels of implementation as well as further research to determine the level at which CSR impacts on
performance and the influence of prior organizational performance on social responsibility.
STRATEGY FORMULATION MODEL TO IMPROVE IMPLEMENTATION OF CORPORATE SOCIAL RESP...IAEME Publication
This research is based on reality condition of Corporate Social Responsibility
(CSR) activity in generic CSR program. Many companies implement CSR based on
external pressures, such as regulators, environmentalists and other associations. CSR
Implementation is not an internal awareness of company to improve social
environment and has no relevance to main activities and corporate strategy.
Therefore, it does not give benefits to the performance and competitive advantage.
This research focus is to develop a CSR implementation model based on internal
awareness of company by examining the leadership behavior to formulate CSRoriented
strategy formulation in an effort to improve company performance. This
research location is Makassar Industrial Estate (PT.KIMA). The unit analysis is
company. The samples are 81 leaders at general manager level and leadership of
company functional manager level. The study proves that transformational leadership
stylehas a significant effect on CSR-oriented strategy formulation. Leaders with
ethical integrity rules, norms and policies will increase the leadership commitment to
formulate the company's strategy by taking into account aspects of natural and social
environment in addition to main purpose to generate profits. Organizational learning
culture improves the effectiveness of corporate strategy formulation. Strategy
formulation will improve leadership commitment to create CSR implementation
THE IMPACT OF KNOWLEDGE MANAGEMENT ON ORGANISATIONAL PERFORMANCEIAEME Publication
Knowledge Management is a process that transforms individual knowledge into organisational knowledge. The main aim of the project is to show that through creating, accumulating, organising and utilising knowledge, oraganisation can enhance organisational performance. The impact of knowledge Management practices on performance was emprically tested through structural equation modelling. The sample included 52 employees from HCL .The result shows that knowledge management practices measured through information technology, organisation and knowledge positively affect organisational performance
In order to survive and sustain in today’s turbulent business environment an organisation needs to explore opportunities and avoid threats constantly. Organisations succeed or fail due to the strategies formulated by its decision makers. Executives working in organisations possess unique perceptions regarding the events occurring in the business environment and they exhibit varied scanning behaviours. This uniqueness is reflected in their decisions and strategies.
In this white paper published by Sustainable Brands and co-authored by Mark Stapylton of BrandPanorama with Nancy Elder, JetBlue’s VP of Communications, we discuss the importance of sustainability branding in creating shared value, competitive advantage, and long-term profitability. Without measurement to quantify the return on investment in sustainability relevance and integration are inherently limited, but there are key ROI metrics every company or organization can adopt that will prove the value of sustainability to their brand and accelerate their progress.
In the second of a series of reports commissioned by HSBC, we consider the extent to which businesses are incorporating responsibility in their business operations.
By Brandon Boze, Margarita Krivitski, David F. Larcker, Brian Tayan, and Eva Zlotnicka
Stanford Closer Look Series
May 23, 2019
Recently, there has been debate among corporate managers, board of directors, and institutional investors around how best to incorporate ESG (environmental, social, and governance) factors into strategic and investment decision-making processes. In this Closer Look, we examine a framework informed by the experience of ValueAct Capital and include case examples.
We ask:
• What is the investment horizon prevalent among most companies today?
• Do companies miss long-term opportunities because of a focus on short-term costs?
• How many companies have an opportunity to profitably invest in ESG solutions?
• What factors determine whether a company can profitably invest in ESG solutions?
• Can investors earn competitive risk-adjusted returns through ESG investments?
• If so, how widespread is this opportunity?
Due to the current instability in the business world, organizations should be able to anticipate changes and have coherent responses at hand to effective manage risks, create value, build good relations, increase profit and improve competitive positioning.
A report titled Exploring Strategic Risk issued in 2013 for Forbes Insights by Deloitte, contains some very important conclusions for the business community. 300 executives from around the world were interviewed for the study, in an attempt to find out their vision of the risk strategy and current changes and analysing how organizations should face these new challenges.
Sometimes it is difficult to link risks to a specific financial impact and not all data are pertinent to the evaluation of emerging risks. That's why companies have to be aware of internal risks and manage them well in order to be able to manage external risks and invest into strategic assets such as human capital, clients and innovation.
This insight explains the case of the financial services as the sector that less trust generates due to its short-sightedness, lack of values and lack of professional education that resulted in corruption and bad practices, which compromised the financial sector.
The report A Crisis of Culture: Valuing Ethics and Knowledge in Financial Services examines the role of integrity and knowledge in restoring culture in the financial services industry. The conclusions appear in the full version of this document.
The financial industry is just one example in the wider panorama. Lack of values is widespread and creates significant risks. Bad practices trigger problems such as loss of profit, loss of reputation and even loss of shareholders, clients and employees.
The crisis, as well as the arrival of new technologies, urges companies to maintain their good practices and emphasize aspects as ethics, leadership, commitment, performance, transparency and sustainability.
The digital revolution and social networks encourage companies to be more transparent: companies meet their promises and obligations, deliver a coherent dialogue and improve the relationship with their stakeholders.
Application of values raises the possibility of good results and profits for companies through improvement of their reputation and business as well as optimization of resources. This certainly creates competitive advantages, establishes a strong cultural connection and improves employees’ motivation.
Before taking any decision, an institution should keep in mind the fact that it needs implicit and explicit public approval. Good business management implies risk management, creating a climate of trust, good will, credibility, social commitment and empathy between stakeholders and the company.
Aligning ESG with Corporate Strategy to Gain a Competitive AdvantageLuke Holland
Organizations can no longer choose to prioritize ESG. Sustainable plans are at the very center of the policies of those who wish to be competitive and profitable. However, the optimal strategy for ESG integration services differs based on the business. Furthermore, if ESG strategies are not evaluated holistically, they may clash with other operational goals. Companies are utilizing the strategy and actions of stakeholders willing to back their vision of a sustainable framework by putting the most successful practices based on brand values in place.
Tools, techniques and strategies for understanding, measuring and communicating impact. 19th-20th June 2018, London. This two-day conference will highlight the latest methods being applied by business to measure the impact of their sustainability programs. We’ll discuss and debate the pros and cons of the different tools and techniques available, whilst assessing what has really worked for companies in practice.
Aligning ESG with Corporate Strategy to Gain a Competitive Advantage - SG Ana...SG Analytics
From the sudden surge in the popularity of green finance to the pervasive impact of ESG factors on consumers and their purchasing decisions
Visit: https://us.sganalytics.com/blog/aligning-esg-with-corporate-strategy-to-gain-a-competitive-advantage/
An Exploratory Study of Factors Influencing Corporate Sustainability on busin...AkashSharma618775
This study evaluates the effect of corporate sustainability on business performance of manufacturing
industries in USA, from 2012 to 2015. These Manufacturing industries are listed in Corporate Social
Responsibility Hub (CSRHub), Morning Star and Global Reporting Initiative (GRI). All data used in this report
were extracted from 37 manufacturing companies’ Sustainability, corporate social responsibility (CSR) and
annual reports. These companies are of diverse sectors such as Automobile, Health care, consumer goods, food,
beverages and technology. Quantitative method of research is used in this study; this also includes the use of
explanatory and descriptive research design. The main issues to be discussed in this study are Donation, Incident
rate reduction and Water Recycled as the independent variables, while Revenue is the dependent variable. Data
analysis was carried out using the regression analysis, descriptive statistics and correlation. E-views software
generated the data for further analysis. The findings imply that donation has a positive insignificance effect on
revenue, reduced incident rate reduction had positive significance effect on revenue and water recycling has
negative insignificant effect on revenue. In the future researches, larger samples of companies form diverse sectors
and subsectors should be studied to broaden the research on company performance especially the non-financial
aspect.
An Exploratory Study of Factors Influencing Corporate Sustainability on busin...AkashSharma618775
This study evaluates the effect of corporate sustainability on business performance of manufacturing
industries in USA, from 2012 to 2015. These Manufacturing industries are listed in Corporate Social
Responsibility Hub (CSRHub), Morning Star and Global Reporting Initiative (GRI). All data used in this report
were extracted from 37 manufacturing companies’ Sustainability, corporate social responsibility (CSR) and
annual reports. These companies are of diverse sectors such as Automobile, Health care, consumer goods, food,
beverages and technology. Quantitative method of research is used in this study; this also includes the use of
explanatory and descriptive research design. The main issues to be discussed in this study are Donation, Incident
rate reduction and Water Recycled as the independent variables, while Revenue is the dependent variable. Data
analysis was carried out using the regression analysis, descriptive statistics and correlation. E-views software
generated the data for further analysis. The findings imply that donation has a positive insignificance effect on
revenue, reduced incident rate reduction had positive significance effect on revenue and water recycling has
negative insignificant effect on revenue. In the future researches, larger samples of companies form diverse sectors
and subsectors should be studied to broaden the research on company performance especially the non-financial
aspect.
Triggers and considerations for refreshing CSR marketing servicesTilly Pick
A major trend that I consider in my work and that is influencing tomorrow’s winners is the rise in environmental, social and governance principles (ESG). That’s code for “we need to all be considerate global citizens.” (CSR, or Corporate Social Responsibility, is how ESG relates to brand marketing.) People are taking notice, at all levels and everywhere. From stock exchanges to massive pension funds, the UN to Millennials, and big non-profits to those on shoe-string budgets, the discussions and work that are happening will lead to good things. For customers. Investors. Employees. Suppliers. Our communities, too. Nirvana for marketers wired to create value that makes a difference. Follow me here, on Twitter and LinkedIn if you feel the same way.
Sustainability Reporting: Definition, Benefits, And Challenges | Enterprise W...Enterprise Wired
Sustainability reporting has emerged as a critical tool for organizations to transparently communicate their environmental, social, and governance (ESG) performance.
1. Link Sustainability to Corporate Strategy Using the Balanced Scorecard
“People and their managers are working so hard to be sure things
are done right, that they hardly have time to decide if they are
doing the right things.” Stephen R. Covey
Abstract
Business must be the major driver of innovation and sustainability in
our society if we are to avoid a “perfect storm” of resource scarcity,
climate change, and pollution. The “triple bottom line” concept is a
response to this need, and is meant to include social and
environmental performance along with financial performance as a
gauge of organizational success. However, its use is limited because By Howard Rohm
it does not address the competitive strategy of the firm. A strategy- President and CEO
based balanced scorecard system aligned with principles of the Balanced Scorecard Institute
Triple Bottom Line offers a way to accomplish social and &
environmental goals while integrating them fully with financial Dan Montgomery
performance and competitive advantage. Senior Associate
Balanced Scorecard Institute
The Imperative for Sustainability
In a recent article¹, the Harvard Business Review compared what it called the “Sustainability Imperative” to other
game-changing business megatrends of the past generation, such as the rise of the quality movement, the
personal computer, and the Internet. Such game-changing trends profoundly affect the competitiveness, and
even the survival, of organizations.
Sustainability is an umbrella term for a set of structural changes that impact corporate strategy and
performance, and are here to stay, including:
Growing environmental pressures related to increasing population
Resource scarcity and rising costs for energy and materials as billions of people aspire to join the middle
class in places such as India, China, and Brazil
Increasing consumer demand for safe and natural products
Unprecedented levels of transparency arising from the Internet and social media
Stronger demands for accountability and engagement among the “millennial” generation of workers,
and stronger demands for improved governance by boards and other stakeholders
1
“The Sustainability Imperative”, by David A. Lubin and Daniel C. Esty, Harvard Business Review, May 2010
975 Walnut Street, Suite 360 . Cary, North Carolina 27511 USA . Phone: 919.460.8180 Fax 919.460.0867 . www.balancedscorecard.org
2. Linking Sustainability to Corporate Strategy using the Balanced Scorecard– Page 2 of 10
Sustainability and corporate social responsibility (CSR) have become closely connected terms. Originally,
sustainability referred to the long term environmental impacts of human activities, while corporate social
responsibility had to do with social impacts. Increasingly, these two are used interchangeably.
For purposes of this paper we will use the term “sustainability” in this fuller meaning.
Bob Willard, in his groundbreaking book The Next Sustainability Wave², identifies a continuum of “shades of
green” when it comes to companies embracing sustainability.
Stage 1: Pre-compliance – the company is focused entirely on profits, cuts corners to reduce cost
wherever possible and actively resists regulation and other pressures for sustainable behavior.
Stage 2: Compliance – the business manages its liabilities by obeying the law and applicable regulations,
but sustainability is treated as a cost.
Stage 3: Beyond Compliance – moving from defense to offense, the company realizes it can pro-actively
reduce cost and risk by minimizing waste, pollution, energy use and harmful social impacts.
Stage 4: Integrated Strategy – the firm re-brands itself as a company committed to sustainability, and
integrates sustainability with key business strategies, capturing added value from breakthrough
sustainability initiatives that benefit all stakeholders.
Stage 5: Purpose and Passion – the company is driven by a passionate commitment to improve the
company, society, and the environment because it’s the right thing to do.
Companies that are seeking to move into Stage 3 and beyond must develop a more comprehensive way to
measure performance that includes sustainability. The most popular formulation for this new view of
performance is the Triple Bottom Line. Simply put, the Triple Bottom Line involves planning, managing, and
reporting on business results in three areas:
Economic: Sales, profits, ROI, jobs created, cash flow
Environmental: Impacts on air, water, waste, biodiversity, energy use
Social: Product responsibility, community impacts, labor practices, human rights
The Global Reporting Initiative (GRI) is perhaps the best-known and most widely adopted framework for Triple
Bottom Line performance reporting. As of 2009, more than 1400 corporations in 60 countries were producing
reports using this framework... GRI guidelines were developed in consultation with a large number of
stakeholders, including non-governmental organizations (NGO’s).
Despite its growing adoption, the Triple Bottom Line approach has serious limitations, including:
Lack of focus on the firm’s distinctive competitive strategy
A potential lack of connection to the “real” business of the firm, as seen by financially-oriented
executives and board members
Treatment of social and environmental impacts as an “add-on”, rather than a key part of business
strategy
Focus on generic activities and outcomes, with no guidance on “how to get there from here”
2
Bob Willard, The Next Sustainability Wave: Building Boardroom Buy-in, New Society Publishers, 2005
975 Walnut Street, Suite 360 . Cary, North Carolina 27511 USA . Phone: 919.460.8180 Fax 919.460.0867 . www.balancedscorecard.org
3. Linking Sustainability to Corporate Strategy using the Balanced Scorecard– Page 3 of 10
What’s missing is a link that lets a business make the connection between sustainability and business success.
As Michael Porter has put it: “If corporations were to analyze their prospects for social responsibility using the
same frameworks that guide their business choices, they would discover that CSR can be much more than a cost,
a constraint, a charitable deed – it can be a source of opportunity, innovation and competitive advantage.”³
If you would like to align and integrate your sustainability or CSR strategy with your overall business strategy,
and measure and communicate with clarity how well you are executing that strategy, then a strategy-based
balanced scorecard system may be what you need.
About the Balanced Scorecard
A strategy-based balanced scorecard system involves the collaborative development of a firm’s “Story of the
Strategy”, that identifies the connection between organizational capacity, efficient business processes, customer
value, stakeholder satisfaction, sustainability performance, and market and financial outcomes. The balanced
scorecard has proven to be one of the more enduring business management ideas of the last 20 years, and has
been adopted by more than half of Fortune 500 companies, and many government and nonprofit organizations
as well.
The balanced scorecard uses four strategic perspectives, shown in Figure 1, below – complementary but distinct
lenses for looking at organizational strategy and performance:
Owners, investors and analysts view the organization as a financial system that provides return on
investment.
Customers and stakeholders see the business’ products and services as a way to satisfy needs and
desires at an appropriate price.
Internal management and staff work on business processes to efficiently turn resources into outputs
that can be sold to satisfy customer needs.
Organizational capacity is the foundation of the others – the physical infrastructure, culture, tools and
technology, knowledge and skills, and information systems required to plan, design, and deliver
products and services to customers and stakeholders.
3
“Strategy and Society – The Link Between Competitive Advantage and Social Responsibility”, by Michael E. Porter and Mark R. Kramer,
Harvard Business Review, December 2006.
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4. Linking Sustainability to Corporate Strategy using the Balanced Scorecard– Page 4 of 10
Figure 1: The Four Balanced Scorecard Perspectives
Most “sustainability metrics” are, in fact, internal process measures, and in some cases support branding
exercises in the customer & stakeholder perspective. These include greenhouse gas emissions, water usage,
waste generated, and electricity used. While important, these are only part of the picture.
The Connection between Strategy and Performance Measures
The Balanced Scorecard Institute has developed a Strategic Management Maturity Model™ that describes the
evolution of performance management and measurement. At one extreme, measurement-based balanced
scorecards are simple dashboards of performance measures grouped into categories that are of interest
primarily to an organization’s managers and executives. Measurement-based scorecards almost always report
on operational performance measures, and offer little strategic insight into the way an organization creates
value for its customers and other stakeholders. Most sustainability metrics, including GRI reports, fall into this
category.
At the other extreme, a strategic performance scorecard system is an organization-wide integrated strategic
planning, management, and measurement system. These strategy-based scorecard systems align the work
people do with corporate vision and strategy, and communicate strategic intent throughout the organization,
and externally to interested stakeholders.
In strategy-based balanced scorecard systems, performance measures are the result of thinking about business
strategy and what the organization is trying to accomplish first, to measure progress toward goals. In strategy-
based systems, the first question to answer is the strategic question: “Are we doing the right things?” The
operations, process, and tactical questions come later: “Are we doing things right?”
Figure 2, below, shows the logic of how a strategy-based balanced scorecard is developed, starting at the high-
altitude of mission and vision and linking strategy, step-by-step, to operations on the ground.
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5. Linking Sustainability to Corporate Strategy using the Balanced Scorecard– Page 5 of 10
Figure 2: Strategic Thinking and Planning Using the Balanced Scorecard
Strategic Themes
Sustainability becomes strategic when it is integrated into the fabric of the organizational planning and
management process. The two most visible places where sustainability should be highlighted are the
organization’s high-level strategic themes and the strategic objectives that are the strategic building blocks
(“strategy DNA”) of this strategy.
A strategic theme is a major “pillar” of the strategy that directly supports achievement of the vision and mission
of the organization. A good theme is not just a particular objective, but a linked set of objectives that touches on
all four of the scorecard perspectives. These linked objectives tell the story of the strategy, and form the basis
for communicating the strategy story to everyone in a consistent manner.
Organizations typically have several common strategic themes or focus areas, such as: Operational Excellence,
Product Innovation, or Strategic Partnering. Sustainability could be a theme as well. As a theme, Sustainability
can be described through each of the four perspectives of the balanced scorecard, for example:
From a financial standpoint, sustainability means staying in business, and creating an acceptable return
for investors.
From a customer and stakeholder standpoint, sustainability means satisfying and providing value for the
growing number of safety and sustainability-conscious consumers.
From a process standpoint, sustainability means managing materials, energy, and waste in the most eco-
efficient way possible.
From an organizational capacity standpoint, sustainability means creating a culture that values
sustainability, reflected in the choices that employees make every day.
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6. Linking Sustainability to Corporate Strategy using the Balanced Scorecard– Page 6 of 10
Strategic Objectives
Strategic Objectives are the building blocks of strategic themes, and help make strategy actionable for
employees. Objectives are expressed as continuous improvement activities that are unique to each perspective
and are lower in “strategic altitude” than themes. Strategic objectives are linked together to form a strategy
map, and the strategy map shows visually how objectives work together in an integrated, cause and effect
fashion to achieve the strategic results associated with each strategic theme.
When building an integrated strategy-based scorecard system, we build a “Strategy Map” for each theme. A
strategy map shows the cause and effect links among strategic objectives, across the four perspectives, in a
visual map that tells the “Story of the Strategy”.
Figure 3 is a typical strategy map for a “Sustainability” theme.
Figure 3: A Generic Sustainability Theme Map
Here is the story the strategy map tells:
“By creating a strong focus on sustainability in our corporate culture, we will align our people to develop
more eco-efficient products, partner with regulators more effectively, and reduce the life cycle impact
of our operations. In addition, we build new information technology capabilities that help us track life
cycle impacts more effectively.
“By producing more eco-efficient products, we will provide value for the increasing number of “green”
customers in our market, which will lead to increased sales. Our capability for partnering will enable us
to communicate more pro-actively with the regulatory community, allowing us to be an active player
rather than responding reactively to government directives. This will reduce business risk. Also, more
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7. Linking Sustainability to Corporate Strategy using the Balanced Scorecard– Page 7 of 10
ecologically safe products will reduce potential product liability risk. Reduced risk will have a positive
impact on our cost of capital.
“Reduced life cycle impacts will lead to direct cost savings on fuel, water, electricity and waste disposal.
Taken together, increased revenues, reduced risks, and reduced costs will increase our profitability.”
Building a strategy-based scorecard planning and management system, and more importantly, a high-
performance organization, is like building a custom house. Figure 4, below, shows how the strategic themes –
the organization’s Pillars of Excellence – support the strategic results that lead to accomplishment of the Mission
and Vision.
Figure 4: Strategic Themes are the Pillars that Support the Mission & Vision
Once all the theme maps are developed, they are combined to create an overall strategy map for the
organization. All of the themes, including sustainability, are merged into a powerful, mutually reinforcing
business strategy, shown in Figure 5, below.
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8. Linking Sustainability to Corporate Strategy using the Balanced Scorecard– Page 8 of 10
Figure 5: The Corporate Strategy Map
Here, the sustainability theme is woven into the bigger vision of organizational success, which also includes the
other themes. The larger Story of the Strategy might be:
“We will work to improve our culture, encouraging greater focus on sustainable products, along with
more open participation and employee engagement. This is necessary in order to increase our
innovation, to create products that satisfy emerging customer needs, to minimize harm to the planet
and benefit the communities in which we operate. Developing this culture will also help us find ways to
increase efficiencies throughout our operations. This will be supported by better information systems.
Taken together, increased innovation and operational efficiency will enable us to produce a better
product at less cost, improving value for our customers. This will both reduce our costs, and increase our
revenues.
“Part of our culture is about recognizing the need to partner with all of our stakeholders, including
regulators, suppliers, representatives of the communities we operate in, non-governmental
organizations, and others. This will lead to better stakeholder relationships, making it easier to pro-
actively avoid problems that may affect our license to operate. This will reduce our business risk,
positively impacting our cost of capital.
“Increased profitability will result from increased revenue, reduced risk, and reduced costs.”
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9. Linking Sustainability to Corporate Strategy using the Balanced Scorecard– Page 9 of 10
Developing Measures
In a strategy-based balanced scorecard system, measures are a means, not an end. Think of performance
measurement as a process, not an event. Meaningful, strategically important measures can only be developed
once strategic objectives have been developed and linked together on the strategy map.
Figure 6, below, shows how performance measures, targets, and initiatives are developed in service of these
objectives.
Figure 6: A Complete Strategy-Based Balanced Scorecard
Each strategic objective is supported by one or more measures. As you can see, the company is tracking life
cycle impacts, has set targets for reducing them, and has identified initiatives to achieve that reduction. This set
of measures can still support conventional sustainability reporting requirements and initiatives, but is now
linked explicitly to the broader competitive and financial strategy of the firm.
The Balanced Scorecard Institute’s Framework: Nine Steps to Success™
We use a nine-step framework to build an organization’s balanced scorecard system. Over the past fifteen years,
we have helped over 100 organizations in 30 countries build scorecard systems based on this framework. We
have trained several thousand people from 55 different countries in the approach. The steps and their sequence
are shown in the Figure 7, below.
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