The Sustainability Balanced Scorecard: A Systematic Review of Architectures

Abstract

The increasing strategic importance of environmental, social, and ethical issues as well as related performance measures has spurred interest in corporate sustainability performance measurement and management systems. This paper focuses on the balanced scorecard (BSC), a performance measurement and management system aiming at balancing financial and nonfinancial as well as short and long-term measures. Modifications to the original BSC which explicitly consider environmental, social, or ethical issues are often referred to as sustainability balanced scorecards (SBSCs). There is much scholarly discussion about SBSC architecture and how it can be designed to relate performance dimensions, strategic objectives, and the logical links among these elements. To synthesise the widely scattered research findings and publications on the SBSC, we conducted a thematic analysis in a systematic literature review containing 69 relevant articles spanning a period of two decades.We found that sustainability-oriented modifications of the BSC architecture are motivated by instrumental and social/political to normative theoretical perspectives. Moreover, these modifications can be mapped with a typology of generic SBSC architectures. The first dimension of the typology describes the hierarchy between performance perspectives and strategic objectives and how it is related to the organisational value system. The second dimension describes how sustainability-related strategic objectives are integrated into SBSC performance perspectives and how this is related to corporate sustainability strategy. This study contributes to the development of the emerging SBSC literature and practice and, more generally, to research on corporate sustainability performance measurement and management. We conclude with a research agenda and implications for management.

Sustainability Balanced Scorecards and their Architectures: Irrelevant or Misunderstood?

“…This critique is well established in the literature and therefore has already been addressed in our review that consequently also explored nonlinear architectures (Hansen and Schaltegger 2016). However, Hahn and Figge's critique is once again too simplistic for reasons we now present.…”

“…Given the complex relationships between architecture and actual organisational practice as well as the high relevance legitimacy plays in corporate sustainability management practices (Schaltegger and Hörisch 2015;Aragón-Correa et al 2016), these different cases of misfit should also be explored in future research from the 4 The results of Bento et al's (2016) experimental study show, to some extent, that the technical integration of sustainability-related objectives in SBSC architecture may not always prevent financial bias. While the authors imply there is a general bias in the SBSC (even if it was implemented for instrumental reasons), we see the study rather as a proof of legitimacy seeking by the top management as a response to institutional pressures, with managers on the lower levels (the study participants) being pressured to decouple (Hansen and Schaltegger (2016). Bento et al themselves address one major limitation of their study: the SBSC architecture in their experiment was limited to an add-on perspective (architecture ''A0'' in our SBSC typology), which we have described as being prone to use as a marketing exercise or for philanthropic purposes.…”

“…Based on such evidence, we introduced a new dimension to SBSC architectures reflecting their different approaches to goal hierarchy (and related cause-and-effect chains or logical interrelationships): hierarchical, semi-hierarchical, and flat (non-hierarchical) architectures (Hansen and Schaltegger 2016). Unlike , we are confident that these approaches to SBSC hierarchy give much more flexibility to organisations with different ambition levels for sustainability.…”

“…One key result of our review of the SBSC literature is the development of a two-dimensional typology linking SBSC architectures to value systems and corporate sustainability strategies (Hansen and Schaltegger 2016). claim the architecture of an organisation does not reflect organisational progress towards sustainability (as specified through the two dimensions ''value system'' and ''sustainability strategy'').…”

“…A systematic review of the field (Hansen and Schaltegger 2016), as well as reactions from the field, demonstrates that research on the SBSC is in a sandwich position: On the one hand, mainstream strategists such as Kaplan and Norton (2001), the originators of the BSC, argue that if the concept was further developed to address multiple stakeholder goals, it would no longer be a balanced scorecard, but instead a ''stakeholder scorecard''. This view is supported by Jensen (2002), who questions the value of any corporate objective function with more than one (economic) goal to maximise, as this would jeopardise the economic success of the firm.…”