Balanced score card
THE SUSTAINABILITY
BALANCED
SCORECARD
Linking sustainability management to business strategy Overview
Introduction
Formulating a balanced scorecard for sustainability Examples
Conclusions
Introduction
In the current times capital investment is not the only source of competitive advantages anymore. Companies now must be flexible, responsive and with high quality deliveries.
“Soft” factors become increasingly important:
Intellectual
capital
Knowledge creation
Excellent customer orientation
Sustainability
What pushes companies towards sustainability?
Environmental pressure
Resource scarcities
Rising costs for resources and materiales
Increasing demand for safe and natural products Incresed levels of transparency
Incresing demands for accountability and governance. Rohm and Montgomery, 2000
Problems with sustainability and corporate strategy
Traditionally management only reacts to perceived financial scarcities:
The
financial model measures past performance, not investments for the future.
Lack of focus in the competitive strategy.
Changes in the soft factors are not clearly depicted. Social and environmental performance considered just as “add-on”.
A strategy for integration is needed.
Balanced Scorecard (BSC)
“Identifies the major strategically relevant issues of a company, and links these issues with causal chains to the firm’s long term strategy”. “Turns soft factors and intangible assets into explicit and controllable factors”
It’s a communication, informing and learning system, not controlling.
(Figge et al 2002).
The four perspectives of BSC
Financial
Customer
Internal process
Learning and growth
Defines financial performance.
Endpoint of the cause-effect relationships of the other
BSC perspectives.
Customer value proposition
BALANCED
SCORECARD
Linking sustainability management to business strategy Overview
Introduction
Formulating a balanced scorecard for sustainability Examples
Conclusions
Introduction
In the current times capital investment is not the only source of competitive advantages anymore. Companies now must be flexible, responsive and with high quality deliveries.
“Soft” factors become increasingly important:
Intellectual
capital
Knowledge creation
Excellent customer orientation
Sustainability
What pushes companies towards sustainability?
Environmental pressure
Resource scarcities
Rising costs for resources and materiales
Increasing demand for safe and natural products Incresed levels of transparency
Incresing demands for accountability and governance. Rohm and Montgomery, 2000
Problems with sustainability and corporate strategy
Traditionally management only reacts to perceived financial scarcities:
The
financial model measures past performance, not investments for the future.
Lack of focus in the competitive strategy.
Changes in the soft factors are not clearly depicted. Social and environmental performance considered just as “add-on”.
A strategy for integration is needed.
Balanced Scorecard (BSC)
“Identifies the major strategically relevant issues of a company, and links these issues with causal chains to the firm’s long term strategy”. “Turns soft factors and intangible assets into explicit and controllable factors”
It’s a communication, informing and learning system, not controlling.
(Figge et al 2002).
The four perspectives of BSC
Financial
Customer
Internal process
Learning and growth
Defines financial performance.
Endpoint of the cause-effect relationships of the other
BSC perspectives.
Customer value proposition