The Sustainability Balanced Scorecard – linking sustainability management to business strategy

TLDR

The Balanced Scorecard links operational and non‑financial activities to long‑term strategy, enabling alignment of all corporate actions and inclusion of non‑monetary success factors, and has been widely discussed in practice and research. The authors propose using the Balanced Scorecard as a foundation to embed environmental and social dimensions into a firm’s core management system. The paper reviews possible forms of a Sustainability Balanced Scorecard, explains how to design one for a business unit, and outlines the conventional Balanced Scorecard’s suitability for sustainability management. © 2002 John Wiley & Sons, Ltd and ERP Environment.

Abstract

Abstract The Balanced Scorecard of Kaplan and Norton is a management tool that supports the successful implementation of corporate strategies. It has been discussed and considered widely in both practice and research. By linking operational and non‐financial corporate activities with causal chains to the firm's long‐term strategy, the Balanced Scorecard supports the alignment and management of all corporate activities according to their strategic relevance. The Balanced Scorecard makes it possible to take into account non‐monetary strategic success factors that significantly impact the economic success of a business. The Balanced Scorecard is thus a promising starting‐point to also incorporate environmental and social aspects into the main management system of a firm. Sustainability management with the 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. After a brief discussion of the different possible forms of a Sustainability Balanced Scorecard the article takes a closer look at the process and steps of formulating a Sustainability Balanced Scorecard for a business unit. Before doing so, the basic conventional approach of the Balanced Scorecard and its suitability for sustainability management will be outlined in brief. Copyright © 2002 John Wiley & Sons, Ltd and ERP Environment.