Development of a Sustainability Balanced Scorecard: Translating Strategy into Value- Based Sustainability Management

The Balanced Scorecard is a management tool that supports the successful implementation of corporate strategies on the basis of performance indicators linked with causal chains. It has been discussed and considered widely both in practice and research. By linking operational and nonfinancial corporate activities through causal chains to the firm’s long-term strategy the Balanced Scorecard allows 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 have a significant impact on the economic success of a business. The Balanced Scorecard thus provides a promising starting-point to the incorporation of environmental and social aspects into the main management system of a firm. Given this potential, a range of authors have dealt with the topic of a Sustainability Balanced Scorecard. However, the basic approach and method of value-oriented sustainability management through the Balanced Scorecard have only recently been discussed in detail (cf. Figge et al. 2001a and 2001b). Value-oriented corporate 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 management tool. After a brief discussion of the different possible forms of a Sustainability Balanced Scorecard this article takes a closer look at the process of and steps in formulating a Sustainability Balanced Scorecard for a business unit. Before doing so, the Balanced Scorecard and its suitability for valueoriented sustainability management are briefly outlined.