Practices that are good for the environment and society may appear to have a negative impact on corporate profitability, but use of the balance scorecard can result in a clearer picture of the relationship among sustainable practices, corporate strategies, and profitability. This article explores three ways that sustainable practices can be incorporated into BSC and discusses issues that should be considered when selecting sustainability related measures, targets, and goals. It also examines ways to enhance both internal and external reporting of sustainability-related performance.

Adopting green operating practices is certainly good for the environment, yet the implications of such practices for a business’s profitability may be viewed as both positive and negative. On one hand, by contributing to product differentiation in the market- place and enhancing organizational image to investors and customers (both current and potential), green practices may increase a company’s profitability. On the other hand, green practices may actually reduce profitability because of extra costs that result from implementation and continuation of sustainable practices. For example, installing solar panels on a building may lower monthly electricity bills, but, concomitantly, the reduced electricity bills may be more than offset by the high purchase and installation costs associated with the panels.

The sustainability concept now runs rampant in business literature, but, unfortunately, there is no agreed- upon definition of sustainability or its underlying tenets. “Sustainable” or “green” practices will be found throughout the operations of a business. These practices can be included in the design features of an organization’s buildings, vendor selection in the supply chain, production of goods and provision of services, and packaging features and distribution elements of those products and services, and the practices will be a significant consideration in a product’s ultimate disposal.

The BSC typically reflect four interrelated perspectives of a company: financial, customer, international business prowess, and learning and growth. Each perspective has a series of performance measures, targets, and goals that reflect the firm’s long-term strategies. The financial perspective takes the viewpoint of the company shareholders and typically uses traditional financial measures such as operating cash flows, return on investment, and changes in operating income over time.

The customer perspective addresses product and firm differentiation strategies as well as value creation from the viewpoint of the organizations client base. The international business processes perspective includes measures of the efficiency and the effectiveness of the firms operations. The learning and growth perspective focuses on the creation of organizational value through employees and innovative practices.

The first method is to add a fifth perspective to the BSC. It may be the simplest approach for companies that want to emphasize sustainability as a key corporate value or a critical strategy. The sustainability perspective consists of social and environmental performance indicators that link with the other four BSC dimensions and highlights the importance of social, environmental, and economic responsibility as a corporate goal. This approach could allow management to establish less definitive measurements without compromising organizational aggregation.

The second approach is sustainability-balanced scorecard (SBSC). A separate SBSC is an appropriate for many companies such as those existing BSC but want to measure or integrate sustainability without the disruption and cost of adopting a full-scale BSC. SBSC include the following four perspectives: sustainability, stakeholders, processes and learning. The sustainability perspective would emphasize the triple bottom line of economic prosperity, environmental quality, and social justice. The stakeholder perspective would incorporate measures of business ethics, labor practices, and impact on society. The processes perspective would focus on specific organizational external and internal processes products, tools, and systems. The learning perspective would stress organizational synergy, training, and research and development. A strength of the SBSC is that a well-defined corporate sustainability strategy is not essential to its development.

The third is integrating sustainability measures throughout the four perspectives. Management has to both define the metrics that are important in measuring progress towards organizational sustainability objectives, and how sustainability (or lack thereof) will affect the future. Incorporating new measures are important the firms financial well being as customer satisfaction, manufacturing cycle efficiency, and patent-generating research and development. The integration method also works well for companies that have adopted a more all-encompassing definition of sustainable practices that includes environmental, health, and social aspects. This article relates to accounting class because of the topics covered such as sustainability, triple bottom reports, return on investment, and balanced scorecard.

The article concludes with developing sustainability metrics. These provide tangible guidance to how the strategies implemented help create shareholder value. There are three ways that sustainable practices can be incorporated into the balanced scorecard: adding a fifth perspective to the BSC, a sustainability-balanced scorecard, and integrating sustainability measures throughout the four perspectives. My perspective is, I know how important it is to be not only more “green” today, but as cost effective as possible.

The three methods don’t look too complicated to be implemented. The article states at the end that companies are being pressured by stakeholders to become more transparent, and such transparency is becoming the norm rather than the exception. The 2008 KPMG international survey of corporate responsibility reporting found that, in 2008, nearly 80% of the worlds largest 250 companies issued some type of responsibility report. These responsibility reports included governance, ethical, environmental and social issues. It is now more important than ever to go green.

Our guarantees

Study Acers provides students with tutoring and help them save time, and excel in their courses. Students LOVE us!No matter what kind of essay paper you need, it is simple and secure to hire an essay writer for a price you can afford at StudyAcers. Save more time for yourself. Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more