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Sustainability management able experiences when developing and implementing a

with the Balanced Scorecard SBSC.
As the research project has found out, a Sustainability
Thomas Bieker Balanced Scorecard (SBSC) provides sufficient potential
Institute for Economy and the Environment to overcome the above-mentioned shortcomings in sustain-
at the University of St. Gallen (IWOe-HSG) ability management (see Figge et al. 2001; Bieker et al.
2001). It is a tool that has been developed to focus on
more qualitative aspects (such as social and environmental
Address: Tigerbergstrasse 2, ones). It provides a methodology to bridge the gap between
9000 St. Gallen (Switzerland) the strategic and operative levels of companies. Yet the
fon: 0041/71/224-2744 BSC is designed to “translate strategies into action”.
This implies that appropriate strategies are defined be-
fax: 0041/71/224-2722
forehand. So, five different types of sustainability strate-
e-mail: gies are presented that may be used as strategic input for
the a Sustainability Balanced Scorecard. After that, two
of these strategies are translated into action with a specific
Abstract Sustainability Balanced Scorecard including the possible
In recent years many corporations have implemented causal relationships between environmental and social
environmental and/or social management systems (such aspects on the one hand and financial performance on the
as ISO 14000, EMAS or SA 8000) in order to man- other hand. To conclude, opportunities and challenges
age and control sustainability-related issues. However, when implementing a SBSC are discussed. As the paper
these management systems often fall short in companies’ shows, the type of the strategy chosen in advance bears
practice for two reasons. First of all, in many cases these several implications for the structure of a SBSC. This is
management systems are run on the operating level, i.e. illustrated with empirical examples of SBSC concepts
they are not linked to the strategic planning and man- from the companies Volkswagen and Unaxis.
agement of the company. As recent research has revealed,
there is a lack of appropriate strategies regarding the The concept of the Sustain-
management of environmental and/or social aspects in an ability Balanced Scorecard
effective and efficient way (e.g. Dyllick & Hamschmidt This chapter presents the methodology of the
2000; Baumast & Dyllick 2001). Secondly, these Sustainability Balanced Scorecard (SBSC). The
management systems are mostly executed separately from SBSC-concept is based on the “traditional” Bal-
the traditional general management systems which are anced Scorecard (BSC), a management tool and
used by top and middle management to control and run methodology developed by Kaplan and Norton
business. These two problems of sustainability manage- in 1997 (see Kaplan & Norton 1997). The idea
ment have been the motivation for a qualitative research to use the tool also for the purpose of environ-
project at the Institute for Economy and the Environment mental management is not completely new and
at the University of St. Gallen (IWOe-HSG). In the has already been suggested by Kaplan & Norton.
project, the management tool and methodology of the In recent years, the research project “A Man-
traditional Balanced Scorecard (Kaplan & Norton agement Cockpit for Corporate Sustainability”
1997) have been developed further towards the „Sustain- has developed the BSC further to a SBSC as a
ability Balanced Scorecard“ (SBSC) integrating ecologi- concept for sustainability management (e.g. Ep-
cal, social as well as economic aspects. The co-operation stein & Wisner, 2001; Schaltegger & Dyllick
with six companies has made it possible to gather valu- 2002).1


What is a Balanced Scorecard? The BSC can be BSC, Kaplan and Norton, maintained that com-
understood as a management system, which is panies are lacking sophisticated tools for the
structured according to the logic of the cyber- management of intangible or qualitative assets
netic management circle (“plan-do-check-act”). (e.g. customer satisfaction, processes quality,
Kaplan & Norton position the Balanced Score- infrastructures, know-how). Intangible assets,
card as a tool for organisations to manage the however, seem vital in order to stay competitive
demands of relevant stakeholders and to trans- in the future. So, the Balanced Scorecard pro-
late strategies into action (“from strategy to ac- vides ‘enablers’ that focus on the achievement of
tion”). Possible stakeholders that are strategically strategic goals in the future (leading indicators) as
relevant could be shareholders, customers or well as results (lagging indicators) to depict the
employees. Their demands are integrated into effectiveness and efficiency of measures in the
core management of companies within a “finan- past. Strategies can be usually interpreted as a set
cial”, “customer” or “learning” or “process” of hypotheses of causes and effects. So within a
perspective (see Figure 1 below). So, the frame BSC the relevant goals and corresponding indi-
of the Balanced Scorecard consists of four perspec- cators are linked to each other revealing this
tives (see Figure 1). Each perspective consists of structure of causal relationships. Such relation-
relevant strategic goals, indicators and measures ships are both relevant within each perspective
to achieve them. One should emphasise the fact and also between them. Objectives of the “learn-
that the concept remains open for integrating ing” perspective, for instance, serve as ‘enablers’
further relevant stakeholders or perspectives, e.g. for the achievement of goals of the other ‘over-
an environmental perspective (cf. Kaplan & arching’ perspectives (e.g. customers, finance).
Norton 1997, pp. 33). When conceiving the


How should we act

M ts

towards our share-

KP ls


holders in order to


be financially

Customers Internal Processes

How should we act In which business



towards our customers processes we have

M ts

M ts


K P ls

K P ls


to be the best in



in order to realize our





objectives? Strategy class to satisfy our

shareholders and

Learning and Development


How can we foster

M ts
KP ls

our potentials to



change and growth


in order to realize
our visions?

Figure 1: The methodology of the Balanced Scorecard

(adapted from Kaplan & Norton, 1997, p. 9)


In the predominant financial perspective objec- ness profitability. Nevertheless, it is suitable for
tives similar to traditional systems of man- the management of sustainability or CSR as well
agement and accounting are included to de-
(cf. Bieker & Waxenberger 2002). It is possible
pict the financial performance of the com-
that the “financial” perspective and correspond-
pany. In contrast to traditional management
instruments, the BSC concept stresses the ing goals serve the achievement of society-
importance of so-called value drivers for fu- related objectives and is no longer positioned
ture profitability. “on top” (e.g. the Volkswagen example later on).
The customer perspective aims at the identifica- But, as the BSC is a tool to implement strategies
tion of relevant customers and market seg- it is necessary to define a sustainability policy
ments that contribute to the financial goals. and strategy beforehand. This fact is reflected by
In terms of a market-based management of positioning the “vision” or “strategy” in the
the company, this dimension makes it possi-
centre of Figure 1. What is a SBSC compared to
ble to get the internal processes, services and
the traditional Balanced Scorecard concept? The
products into line with the necessities of
current and future markets. SBSC may help to detect important strategic
environmental and/or social objectives of the
Within the dimension of internal processes,
firms should identify and structure effi- company, a single SBU or department and to
ciently the internal value-driving processes illustrate causal relationships between qualitative
that are vital regarding the goals of custom- “soft facts” and the financial performance (cf.
ers and shareholders (e.g. innovation, pro- Bieker et al. 2001, pp. 29). So, the use of a SBSC
duction and after-sales; see Kaplan & Nor- as a planning instrument could enhance transpar-
ton, 1997 p. 89).
ency of potentials for (economic, environmental
Human resources being an underlying stra- or social) value-added emerging from social
tegic factor of success, Kaplan and Norton
and/or ecological aspects and prepare the im-
suggest a perspective for learning and develop-
plementation process of the strategy. It offers a
ment that tries to depict all staff- and organ-
isational-related aspects that are important reference frame (“strategy map”) which makes it
regarding organisational reengineering proc- possible to understand how causalities between
esses (cf. Weber & Schäffer 2000, pp. 201). the single economical, ecological and social tar-
The Sustainability Balanced Scorecard is based get dimensions may arise. In addition to this, the
on the traditional BSC, but provides a broader environmental or sustainability department of a
scope by integrating all three dimensions of company can gain experience with the instru-
sustainability. So, it has a different content and ment SBSC itself and may, by doing so, increase
possibly a different structure (“architecture”). In internal acceptance. As a conclusion, the setting-
addition to the four perspectives of the tradi- up of a SBSC may be already a very valuable
tional BSC, it is possible to include a fifth per- training process. But there are several success
spective in order to explicitly address stake- factors to consider when implementing a SBSC.
holder issues. The BSC coming up with both These are discussed in the following section.
financial and non-financial aspects and is an
openly structured and flexible management in- Implementing a Sustainabil-
strument that provides a high potential regarding ity Balanced Scorecard
sustainability management. It is true that the When defining and implementing a Sustainability
BSC has been developed for the purpose of Balanced Scorecard, strategic, cultural, structural
linking strategic goals in its four dimensions to as well as methodological aspects seem to be
the financial bottom line and to increase busi- most relevant. Similar to the traditional BSC


concept, the definition of a sustainability strategy “traditional” Balanced Scorecard (e.g. Berliner
on the corporate level seems vital, because Wasserbetriebe) were acquainted with routines
within each perspective of the SBSC goals, of planning and implementing corporate strate-
measures and performance indicators have to be gies. This turned out as a success factor since
defined. There is practical evidence, that in cor- such companies already had well-defined and
porate practice, this step is not trivial at all and consistent strategic goals.
indeed may be very time-consuming, because Generally speaking, if there is a lack of suitable
even “sustainable leaders” may frequently lack strategies we frequently observed problems
explicit sustainability strategies (cf. Bieker et al. when defining appropriate strategic goals for the
2002a). This is the reason why this paper puts company. Moreover, well-established routines of
emphasis on strategic aspects and corresponding planning and budgeting are a fostering factor
types of SBSC (see sections 3 and 4). when setting-up a SBSC. A part from strategic
issues, cultural or micropolitical aspects seem to
Strategic aspects be most relevant when setting up and introduc-
A BSC as well as a SBSC implies strategies. But ing a BSC or a SBSC.
rarely do such explicit strategies exist in the area
of sustainability management. So, it is important The importance of corporate culture
to define suitable strategies within a strategic There is no denying the fact that aspects of hier-
planning process. From there, strategic goals, archical power or prestige as well as career-
key performance indicators as well as appropri- related interests might have a negative effect on
ate measures can be deduced. Moreover it seems the introduction of a SBSC. A new management
to be important that the corporate policy, on the instrument entails deep changes in management.
one hand, and the strategy match well with each A SBSC is new because of both its methodology
other in order to guarantee a “strategic fit”. If and its content that might question established
not, employees may feel disoriented and insecure strategies structures and processes. So, it is cer-
what the company stands for. Let me illustrate tainly true that, on the one hand, a SBSC bears
this idea with a quotation from an employee: risks. But, on the other hand, a SBSC provides
“Internally, neither do we do know what are our the company as well as selected departments and
visions or strategies nor where to go from here.” employees with chances. There seems to be a
But also stimuli from outside may force a com- trade-off between chances and risks that deter-
pany to lay down explicit strategies. As an exam- mines at the end of the day the internal accep-
ple, the Swiss mechanical engineering company tance of the instrument. Here cultural factors
Unaxis has been confronted with increasing (Schein 1992) might play an important role. Here
customers’ requirements regarding the environ- the underlying assumptions, thoughts and beliefs
mental aspects of its products. So, the SBSC of employees regarding strategic and goal-
project at Unaxis’ triggered a process of formu- oriented thinking and acting, quantitative con-
lating an Environmental, Health and Safety pol- trolling tools or the concept of sustainability
icy that stresses the importance of environ- itself are of utmost importance. It is certainly
mental and social goals. In addition to the exis- true that the use of key performance indicators
tence of explicit strategies, the management on the company, department and employee level
tools that are used by the company are highly increases transparency and is often rejected by
relevant. Project findings support the idea that employees. So what are fostering aspects inside
those companies who have already introduced a


corporate culture regarding the implementation Factors of corporate structure

of a SBSC? If a new instrument is to be “alive” inside the
An important precondition for the internal ac- management process it has to be internally ac-
ceptance of the instrument is a commitment cepted. Additionally it should be integrated into
from top management to introduce a SBSC. This the general management of the company and
implies both a methodological backing of the revised regularly according to changes in corpo-
instrument itself as well as the importance of rate strategy. To achieve this, the SBSC can be
sustainability-related issues. Moreover there is a used inside core management processes, i.e. as a
body of evidence that top management should management instrument in the business and
take into account possible mental reservations of review processes as well as a supporting tool in
employees and tackle them in a proactive way. strategic planning and budgeting. Moreover, a
Here a discourse-oriented infrastructure may put SBSC may better integrate environmental
the planning tool to internal discussion before and/or social management systems into the
implementing it. A development of the instru- “core” management within only one instrument.
ment together with involved departments and This may help to avoid the above-mentioned
employees can be reasonable so that they adhere redundancies or internal frictions of “separate”
to the principles and goals of the company or management systems. A SBSC may include the
the SBUs (see Bieker & Waxenberger 2002). As environmental and social goals and relieve exist-
a SBSC stresses the relevance of ecological and ing sustainability-oriented management systems.
social aspects. a cultural analysis regarding cor- But this implies fundamental structural changes
porate sustainability may deliver top manage- inside the organisation and because of internal
ment with valuable data. The more aspects of cultural resistances, a sensitive procedure. So,
sustainability are internally accepted by employ- before setting-up a SBSC, one should carefully
ees the more open-minded will they react to- analyse which management systems could even-
wards new concepts of sustainability manage- tually be removed and assess the room to move
ment. In addition to this, micropolitical issues within corporate culture. It is obvious that, here
such as influence and hierarchical power may again, top level commitment to remove existing
also turn out to be relevant within a SBSC proc- systems by a SBSC is become crucial. If this is
ess. Here the executive personnel as well as envi- not done beforehand it might entail another
ronmental and social managers should be willing system that is not integrated into core manage-
to promote “their” issue inside the company and ment and is internally rejected as another “addi-
also accept that environmental or social aspects tional” tool that only represents extra work. This
are no more “owned” and managed exclusively again might lower the internal acceptance.
by themselves. As a SBSC might substitute exist-
ing management systems, environmental or so- Process-related and methodological
cial managers might be afraid of a corresponding factors
loss of power or independence and feel an in- How should one proceed when setting up a
creased pressure to succeed. This might entail a SBSC? Here aspects of the development process
disapproval of the instrument inside the organi- itself as well as methodological issues should be
sation. taken into account. First of all, it is important to
consider the internal “management calendar”
and to provide sufficient resources (personnel,
time) for the developing of such a tool. More-


over the way in which the instrument is con- ecological and social goals are concerned, one
nected with corporate strategies may be impor- can frequently observe that these are not ap-
tant. The SBSC as well as the traditional Bal- proved of by employees. This phenomenon is
anced Scorecard rather suggest a top down ori- most likely to happen in companies where the
ented methodology. This implies that strategic above-mentioned top management commitment
goals are prescribed by top management. Not regarding sustainability-related goals is lacking.
rarely does this lead to internal resistances be- Generally speaking and very similar to experi-
cause employees’ concerned are not considered ences from “traditional” management, the ex-
at all and existing measures and budgets are pressiveness, measurability and influence of
jeopardised. So coming up from experiences in performance indicators faces restrictions. Be-
corporate practice a combination of both top sides, the visualisation of causal relationships
down as well as bottom up may enhance internal between the strategic goals is helpful to under-
acceptance of the instrument and strategic goals. stand their interconnectedness and to define
On the one hand the general strategic input important key factors of success. In the context
comes as a guideline from top management that of corporate sustainability, depicting of causal
is put in concrete terms (goals, measures, key relationships between single strategic goals as
performance indicators) by lower and middle well as conflicts between them seems valuable
management areas. This is of course time con- (e.g. see the Volkswagen example above where
suming and requires internal discussions. But reinforced ends of the arrow represent conflict-
especially in the realm of sustainability manage- ing goals). In practice this frequently triggered
ment, the engagement of all management levels off normative discussions concerning the prior-
allows to promote the sustainability concept ity of a goal or even a whole perspective. One
widely inside the organisation. project partner stated: “It is our aim to satisfy
Methodological aspects refer to the architecture of our customers’ requirements and not the society
the SBSC, i.e. the definition of goals and key as whole”. So, for this company, customer-
performance indicators as well as suitable per- related goals where of a higher relevance than
spectives. As far as the number of strategic goals society related ones finding expression in a pre-
is concerned, Kaplan & Norton recommend the dominant customer perspective within the SBSC
rule “twenty is plenty” coming up from the fact architecture. How many and which perspectives
that no more than five goals per perspective can of a SBSC should be defined? To answer this
be observed simultaneously. In practice this question depends for example, as has been illus-
frequently implies a reduction respectively ag- trated above, on the strategic orientation of the
gregation of defined goals and is, frequently company. As a general guideline, it is advisable
disapproved. Here, again, cultural and micropoli- that all stakeholders that are strategically relevant
tical influences (fears, loss of power or budget) have been considered. So, referring to sustain-
play an important role. But, nevertheless, such a ability, the integration of a society perspective
reduction of goals is extremely helpful to focus may be sensible. The following figure summa-
on the most important, i.e. strategic goals. As far rises the steps when setting-up a SBSC.
as key performance indicators for the management of


Corporate vision/mission

Clarifying corporate sustainability strategies

Deduction of sustainability objectives

Identification of causal relationships

Integration into the perspectives

Financial Customer Process Learning Society

Definition of indicators, targets and measures

Integration into the core management system

Figure 2: Steps when defining a SBSC

become closer, since strategies are taken into

Sustainability-oriented com- account when defining objectives.
petitive strategies In this chapter, I would like to lay the founda-
The BSC or a SBSC is a tool to transfer strate- tion for the management of corporate sustain-
gies to the operational level of corporations ability with the SBSC. Therefore, sustainability-
(‘from strategy to action’). The tool requires that oriented competitive strategies are discussed as
normative and strategic elements be defined in possible strategic input for a SBSC. Research in
advance. In contrast to this, we frequently ob- various sectors (building, food, chemical, IT,
serve a lack of sustainability policies (“normative freight traffic, mechanical engineering) concern-
gap”) and/or strategies (“strategic gap”). This ing the competitive aspects of environmental
entails that the definition of strategic goals, management, carried out at the Institute for
measures may appear difficult. The following Economy and the Environment at the Univer-
aspects try to explan why visions, strategies and sity of St. Gallen (IWOe-HSG) over the past
concrete objectives are difficult to link to each decade, revealed an empirical body of evidence
other: that sustainability strategies can be classified
As has been stated above, strategies do not according to their strategic orientation (market
exist at all or are at least not explicit. This is or society) and strategic behaviour (reactive or
of course frequently the case as far as envi- proactive) (Dyllick et al. 1997; Gminder et al.
ronmental or social aspects are concerned. 2002 pp. 108-112). They offer five possible
The strategies are very similar to visions sources of benefits a company can realise when
which are rather broad and not understood putting them into practice:
by employees.
Strategy “safe” aims at reducing and manag-
Lack of support from the strategic devel- ing risks
opment department when setting-up SBSC.
Strategies of the type “credible” are tackling
So, the gap between strategy and action is
issues of image and reputation
not entirely bridged. But it might, at least,


The improvement of productivity and effi- credibility risk. Hence caring for a good image in
ciency is possible by implementing the strat- society and politics in the sense of being a “good
egy type “efficient”
corporate citizen” (Ulrich 2001) is a sound in-
The “innovative” strategy aims at differenti- vestment. The objective of this strategy is to
ating corporation’s products and services in
build up, foster, keep and protect the credibility
the market
or “reputational capital” (cf. Fombrun 2001).
“Transformative” strategies aim at creating
Measures can be either defensive or offensive
new markets by shifting existing institutional
and can be done by acting or communicating.
Rather defensive measures focus on communi-
Strategy "safe" - reducing and managing
cating issues to the relevant stakeholders and are
risks: Sustainability-induced problems and chal-
closer to the above-mentioned type “safe” and
lenges, e.g. climate change, poverty, mobility,
often. Rather offensive measures aim at generat-
bio-technology etc. are tackled by the political
ing sustainable products and services and are in
system, market or the public and, hence, have
fact very close to the “differentiation” type (see
impacts on companies’ risk exposure. These
IV). They are recommended in industries with
risks could affect the financial, managerial or
high credibility opportunities like food, textiles,
reputational sphere of corporations (e.g. Shell
finance, cosmetics, utilities etc. or with tech-
could not get rid off its oil platform in the North
nologies like solar or wind power, organic farm-
Sea; producers of genetically modified organisms
ing, water supply etc.
(GMOs) are criticised by activists and frequently
Strategy "efficient" - Enhancing productiv-
face a deduction on the stock-market, big
ity and efficiency: Regarding environmental
chemical companies bear higher liability and
management this strategy is well-known and
credit risks etc.). Managing sustainability, in this
broadly applied as “eco-effiency” (Schmidheiny
respect, may aim at reducing, avoiding or having
1992). In industries, it seems to be the most
control of these risks. The objective of this strat-
prominent sustainability-related strategy, because
egy is securing the existing markets and the posi-
it has successfully helped to reduce both costs
tion in the markets.
and “the ecological footprint” (Wackernagel &
Strategy "credible" - enhancing and foster-
Rees 1996) by achieving better energy-, water
ing credibility and reputation: Due to the
and material-efficiency. On the social side,
public and political importance of sustainability,
strategies of this kind may try to improve their
the credibility and reputation of a company is a
“socio-efficiency” (Dyllick & Hockerts 2002).
valuable non-tangible asset. It prevents busi-
This can be done by supporting employees in a
nesses from conflicts with authorities and other
way that both their productivity of work as well
stakeholders. It allows to attract suitable em-
as their degree of job satisfaction (e.g. through
ployees and satisfy customers. And it turns out
flexible conditions of work and payment) can be
as credibility capital to live from in situations of
increased. The objective of the strategy “effi-
crisis, e.g. when accidents occur or when critical
cient” is to enhance the eco- or socio-effiency of
business projects are launched. Industries like
the business processes. Measures can be carried
chemicals, pharmaceuticals, military, oil, automo-
out on three different levels: On the level of
tive etc. or technologies like nuclear energy,
operating processes, e.g. if the publisher Axel
mobile communication, chlorine chemistry or
Springer Verlag (ASV) uses paper with less den-
multinationals (just because of their size or
sity and thus less weight when printing its news-
global impact) are bearing a particular high
papers. On the level of products or the product


life cycle, e.g. when ASV uses more recycled tural changes in the institutional framework of
fibres in the paper. Last but not least, ASV may markets and politics. Possible Measures are the
implement sustainability management systems participation in existing political committees or
inside the organisation. associations (e.g. UNEP, WBCSD), creating or
Strategy "innovative" - Differentiating in the joining sustainability-orientated industry stan-
market: Environmental and social impacts fre- dards and product labels (e.g. Global Reporting
quently offer an opportunity of differentiating Initiative GRI, SIGMA Management System,
companies’ products in the market place. Sus- Forest or Marine Stewardship Council (FSC for
tainable products and services can be found in wood, MSC for fish), Fair Trade Labels etc.).
many markets and sectors (e.g. the food sector, Proactive lobbying in order to change existing
the car industry, fair-trade, management of natu- rules and laws in the competitive field can also
ral resources in the wood or fishing industry) be an appropriate measure.
and contribute to a unique selling proposition (USP). The following table summarises the five differ-
The objective of this strategy is to increase sales ent sustainability-oriented strategic approaches
and margins through developing and selling concerning their strategic orientation (Public vs.
environmentally and socially friendly product market) and strategic behaviour (reactive vs.
innovations. Possible measures can be found in proactive). Please note that the first strategy type
the attributes of the products (e.g. organic food “safe” can be regarded as a “hygienic factor” for
or textiles as healthy, high quality products as any other strategy type and is, consequently, not
long lasting, car sharing as easy, green energy as represented in Table 1.
less risky etc.) with sustainable advantages in the
production, the consumption or the disposal Table 1: The four different types
of sustainability strategies
phase. Sustainable value added products are
better to market on the condition that the value Public Market
is perceived by the customer in the consumption Reactive “Credible” “Efficient”
and disposal phase. What emerges memorably is Proactive “Transformative” “Innovative”
that the latter is quite clear whereas sustainable
value added in the production or supply chain
needs to be strongly communicated. These strategies may apply for a whole company,
selected areas of business, sites, certain products
Strategy "transformative" - Developing
or technologies. However, this classification of
markets and society: This strategy seems to be
strategies seems to be idealistic, since in practice
much more fundamental than the others, be-
these types of strategies may overlap and cannot
cause the transformation of existing or creating
always be clearly distinguished from each other.
of new markets requires institutional changes
Of course, companies, offering only a few sus-
within human needs, politics or institutional
tainable products do not necessarily behave in
framework (e.g. cf. Hoffman 1997). Such trans-
the same way concerning all their Strategic Busi-
formations can be found in the field of mobility
ness Units, sites or technologies employed. Nev-
(e.g. car sharing), energy (by decentralised elec-
ertheless, the order in which these strategies are
tricity production) or housing conditions (by
presented provides companies with a possible
designing low-energy houses ) etc. In many
sequence for getting acquainted with the man-
cases, human needs or consumption patterns
agement of sustainability. This implies, that
may be modified. The objective of this strategy
companies of the “innovative” type, for in-
is, consequently, to create or participate in struc-


stance, are highly recommended to have care- ing their business (i.e. production sites, tech-
fully institutionalised a risk management to stay nologies, products or services) as “green” and
credible as a provider of sustainable products or socially responsible to the public in order to
services. Gminder et al. 2002 hypothesise that maintain a “license to operate”. Focusing on
different strategic approaches imply different legal compliance and on regular dialogues with
types of a SBSC (e.g. architecture, causal rela- the public, this strategy tries to enhance trust and
tionships). This is discussed in the following acceptance both in public and in politics. Means
paragraph. of self-limitation such as communicated business
principles or codes of conduct intend to cover
From strategy to action existing fields of business. Moreover, this strat-
This chapter analyses how sustainability-oriented egy may intend to pre-empt public demands for
strategies may be transferred to the operating sustainability or stricter regulations which might
level of a company. For two strategies a particu- impose higher costs than any early voluntary
lar “architecture” (number and name of perspec- action. A sustainability-related image strategy, of
tives), possible generic strategic goals and corre- course, can also be relevant for the market place:
sponding causal relationships are discussed. As far as products are concerned, image and
Here, I would like to present the “credible” and credibility aspects should be emphasised to fos-
“transformative” strategy type for illustrative ter the marketing of ecological and social prod-
purposes. This appears reasonable, since a rather ucts or services. However, companies trying to
proactive (transformative) approach may include improve their image in the public, should con-
far-reaching strategic goals and another structure sider issues of safety and cleanliness also inside
within the SBSC than a rather reactive (credible) their internal processes in order to stay credible.
impetus. In order to illustrate the relationship Below selected perspectives of a SBSC as well as
between the strategic impetus and the “architec- corresponding goals and indicators are illus-
ture” of a SBSC two examples of the companies trated. As these may appear rather idealistic or
Volkswagen and Unaxis are presented (using generic, the SBSC concept for the management
the strategy types “credible” and “transforma- of social aspects of the Unaxis corporation (site
tive”). Last but not least, possible key perform- Balzers/Trübbach, Switzerland) is presented (for
ance indicators are given as an example bearing a detailed case study see Bieker, Wyss & Hollen-
in mind that indicators depend on the context stein 2002).
(e.g. the industry sector, the relevance of sus- The learning perspective may contain strategic goals
tainability for the company, scope of application that enable a sustainability-related knowledge
inside the company etc). inside the organisation. In the Unaxis example
given below, this is reflected by goals such as the
SBSC for enhancing and foster- acquisition of graduates, supporting networks of
ing credibility and reputation co-operation as well as facilities for research and
Such a strategy may, on the one hand, aim at training. The customer perspective tries, in general,
preventing possible image or reputational risks to maintain or to improve the corporate image,
or at creating an image as a “good corporate to buffer existing products and services of the
citizen” (Zadek 2001). The aim of this strategy firm and to attract further demand in market
type (“credible”) is to buffer or to improve the segments that are highly ecologically or socially
company’s image of a “good corporate citizen”. exposed (e.g. development of sustainable prod-
Firms using such a strategy, aim at demonstrat- ucts in R&D). Possible objectives are a rather


product-oriented eco- or social sponsoring, the velopment of a sponsoring concept“. Measures

publicly-declared renunciation of aggressive that help the company to achieve a better sus-
marketing techniques (e.g. Nestlé’s baby food tainability-oriented image, could be dialogues
scandal, cf. Dyllick 1989) or even comprehensive with relevant stakeholders or activities for the
communication campaigns dealing with issues of purpose of Public Relations. Leading indicators
sustainability such as energy consumption for could be the relative budget for such activities or
domestic appliances. Appropriate leading indica- the number of people employed in these de-
tors may be the relative budget for sustainability partments. Selected lagging indicators that may
marketing. Sales figures, the number of new illustrate the success of such measures could be
customers obtained, company’s goodwill among the frequency of negative articles or TV-reports.
customers or cross-selling effects realised in Finally the financial perspective may comprise issues
relevant segments can be useful lagging indica- of corporate value, risk exposure (“value at
tors in order to control the success of image- risk”) or reputation on the capital market or the
related measures. The fact that the SBSC is a costs for hiring new employees (see the Unaxis
flexible tool is reflected by the Unaxis example example below). Reputation in general seems to
given below. Here, strategic goals such as be important as it may largely influence the rat-
“communication of contribution of regional ing of the company by financial investors and
development” and “communication of the ef- analysts and, consequently, the capital costs.2
forts for cooperation” are included inside the The following Figure 4 illustrates possible causal
process perspective – and not as one may as- relationships of strategic goals derived from the
sume inside the customer perspective for the strategy type “credible”. Here arrows visualise
creation of goodwill – arguing that the communica- causal relationships between different strategic
tion process and not the final goals stand in the goals.3 Goals like a “good partnership to suppli-
forefront. ers”, or “gaining employees as image carriers” or
As the objective at Unaxis was to develop a a “friendly and good relationship to the
SBSC for the management of social responsibil- neighbourhood” are – in the terminology of the
ity at the Swiss site Balzers/Trübbach, the cus- EFQM-model – “enablers”, because they con-
tomer perspective has been replaced by a society tribute to a good reputation and, consequently,
perspective. Inside the society perspective, firms in reduces Unaxis’ value at risk (cf. EFQM 1999).
general may like to assess their public image as a The goal “improvement of quality of life inside
“good corporate citizen“ (Zadek 2001). Impor- the region” as a “result” is achieved by “net-
tant selected strategic society-related goals at works of co-operation”, “good partnership to
Unaxis’ are a ”good relationship to the suppliers” or the “development of a sponsoring
neighbourhood” or an “improvement of the concept”.
quality of life in the region” as well as the “de-


Value at Risk Cost for the
acquisition of new
D employees D

Friendly and good Improvement of Gain employees as Development of a


relationship to the quality of life inside image carriers sponsoring concept

neighbourhood the region DD

Acquisition of Encouraging/sup- Supporting facilities

graduates porting networks of for research and
D cooperation D training D

Good partnerhip to Communication of Communication the

suppliers contribution of re- efforts for co-
gional development operation

Figure 3: Management of social responsibility at Unaxis (site level Balzers/Trübbach)

concepts and levering the know-how of con-

SBSC for developing markets and sumers and distribution partners represent pos-
society sible basic objectives and measures. Preserving
The objective of this strategy is to create or par- or initiating industry standards or label criteria as
ticipate in structural changes of the institutional well as the co-operation with other partners
framework (e.g. markets or politics). It is highly along the value chain are suitable measures of a
recommendable that companies, adhering to transformative marketing approach (cf. society
such a strategy, have gained experience with perspective). So Unilever was one of the driving
other “underlying” sustainability strategies types forces regarding the institutionalisation of the
(“safe”, “credible”, “efficient” and “innovative”) „Marine Stewardship Council“ label that ob-
so that products and internal processes are pre- serves catching fish in a sustainable way. By
pared towards these changes. The following labelling and marketing renewable electricity, a
paragraph outlines selected relevant perspectives, new market was created (cf. Wüstenhagen 2000).
possible strategic goals as well as selected indica- Another example are the so-called "Wolfsberg
tors and measures. In order to put these rather principles" that several banks published in 2000
general aspects in rather more concrete terms in order to establish an industry standard against
and to illustrate the strategic type "transforma- bribery.
tive", the SBSC concept for the research de- Inside a research department as a starting point
partment of the Volkswagen AG is referred to of new future products, the “development of
on the side (for a whole case study see Bieker, innovative solutions” both in applied and basic
Herbst & Minte 2002). research is of utmost importance (see Volk-
In the customer perspective objectives may focus on wagen example below). Innovations can be gen-
developing markets for sustainable products or erally found by carefully analysing human needs
on changing existing markets. Instruments of a and determining corresponding functions of
“transformative marketing” (Belz 2001, pp. 91- appropriate future products. By defining objec-
99), the orientation towards functions, service tives, indicators, targets and measures in the


different perspectives, a company has to enable (EMAS), private organisations (ISO-Norms),

itself inside in order to institutionalise changing foundations (Max Havelaar), church organisa-
market frameworks quickly and successfully. In tions (Rugmark, Gepa) and NGOs (FairTrade,
general, on the basis of a “high degree of moti- Demeter, Bioland/BioSuisse, SA 8000 etc.).
vation and performance” (see Volswagen’s learn- Leading indicators may seize the number and ex-
ing perspective) as well as innovations of prod- penditures for co-operations and research, lagging
ucts or services, a company may be prepared to indicators may be the number and value of gained
realise turnovers in new or further developed know-how and inputs for R&D. Measures com-
markets.4 This is supported by “shaping of insti- prise lobbying in favour of ecologically and/or
tutional frameworks”, i.e. actions developing socially friendly concepts of doing business, e.g.
politics and society as well as by “exploring sus- by building pro-active industry association like
tainability-related chances and risks” and is ad- “oebu” in Switzerland or “UnternehmensGrün”
dressed inside the society perspective (see Figure in Germany. Also companies in the area of re-
3). newable energies have been creating such asso-
The society perspective seems to be, generally speak- ciations in order to act as counterbalance to the
ing, of utmost importance if a company aims at huge nuclear and coal power lobby. “Real” sus-
shifting institutional frameworks. Here, in gen- tainability-oriented lobbying must be responsible
eral, the development of society regarding its as well as transparent. If not, it may run counter
awareness towards sustainability appears sensible to shifting existing frameworks. Developing
(e.g. through campaigns). This is a necessary politics may consist of cancelling subsidies and
prerequisite for the hundreds and thousands frameworks with negative environmental impact,
daily decisions of consumers and politicians. e.g. subsidising nuclear power, tax free aircraft
Possible leading indicators are the number or fuel, obligation to create parking space when
expenditures for co-operations, lobbying, know- setting up a new building. In addition, subsidies
how campaigns. Lagging indicators may consist for "clean" technologies like the “development
in the number and relevance of changed legisla- of integrated mobility concepts” is extremely
tion and market conditions the sustainability sensible within the strategy type “transforma-
image of the company and the know-how in tive” (see Volkswagen example below).
society regarding particular sustainability prob- What are important chains of causes and effects
lems. Co-operations with research institutions or within Volkswagen’s strategy map? The “devel-
NGOs may help developing solutions to sus- opment of innovative solutions within basic
tainability problems and bring know-how and research” is, for instance, achieved by a “high
competence into the company. This applies degree of motivation and performance” of em-
particularly for small and medium sized compa- ployees, by “exploring of chances and risks
nies which can do usually not have sufficient within ‘sustainable mobility’” and depends on a
resources for huge R&D departments. So, the certain “volume of budget”. The “exploring of
development of CFC-free refrigerators was car- chances and risks” leads for example to an “im-
ried out in public research institutions and provement of internal customer satisfaction” (i.e.
bought and developed further by the private the engineering or marketing departments) as
sector after a Greenpeace campaign. The devel- well as the “development of integrated mobility
opment of sustainability standards and labels is concepts”. Another (methodological) lesson that
mostly done by societal institutions, e.g. research can be learnt from the Volkswagen case is the
institutions (Öko-Tex 100), governments possibility to depict conflicting goals. This is


extremely helpful within the realm of sustainabil- conflict can be analysed and solved according to
ity management. It is certainly true that the fi- their relative strategic importance. In Figure 3,
nancial goal to “ensure budget discipline” con- situations of conflict between goals are visualised
flicts with the “development of innovative solu- with reinforced ends of the arrows.
tions within basic research”. These situations of

Development of Improvement of Development of

innovative solutions (internal) customer innovative solutions
within applied research satisfaction within basic research

Development of Exploring chances and Supporting the shaping


integrated mobility risks within of institutional

concepts „Sustainable Mobility“ frameworks by VW

High level of knowledge High degree of Gain ideas for

inside the Research motivation and innovations from outside
department performance

Ensure volume of Ensure budget discipline


Quick transfer of

research results in
products and services

Figure 4:Concept for the strategy map of Volkswagen’s Research department

tors and measures. It is rather a complex, highly

Conclusions micropolitical process requiring a lot of patience,
The concept of a “Sustainability Balanced Score- power and persistence. People pushing these
card” offers a possibility for companies to trans- processes need to be aware of cultural implica-
late sustainability visions and strategies into ac- tions when introducing a SBSC. If it is not top
tion. This approach seems to be interesting for management itself that pushes, powerful “pro-
both researchers and practitioners because it moters” of the project are a grant for success.
shows how intangible assets may contribute to Moreover, the broad participation of employees
the sustainability of companies. Moreover the in the development process combining a top-
SBSC provides high potential for the integration down and bottom-up approach, an attitude of
of environmental and social aspects and objec- being open and willing to learn, a skilful project
tives into the core management of companies. management and a good placement of the tool
This is a huge step forward for the environ- within the management tools and processes
mental and social management. But, according seem important success factors. These factors
to practical experiences, developing and imple- are typical for change management processes,
menting such a SBSC does not simply refer to but what is particularly for sustainability? It is
the definition of perspectives, objectives, indica- the mindset of the powerful persons who are


able to influence corporate culture. It is the way tems in order to preserve their positions, de-
of acting by the sustainability managers: do they partments or working spheres? If sustainability
try to keep the subject within their power sphere managers manage to overcome these “conserva-
or do they allow that objectives and measures tive” attitudes, if they are aware of cultural as-
are determined by other people? Do they foster pects and able to discover "windows of oppor-
the project as their “child” and are afraid if other tunity", they may achieve a sound integration of
colleagues hop on a project train that runs suc- sustainability in the traditional management. But
cessfully? Do they really support the idea of it may represent a long, hard and winding road
integrating sustainability into traditional man- to go.
agement? Or do they rather prefer keeping their
own environmental and social management sys-

1 I would like to acknowledge financial support from the „German Ministry for Education and Research“
(Bundesministerium für Bildung und Forschung, BMBF) that has made this qualitative research possi-
ble (Project No. 01RU0001). Frequently, within qualitative research, the variety of data collected from
practice ensures both reliability and applicability. So, within this research project, the participation of
six companies from different branches and with different strategic impetus has enriched the empirical
findings. Therefore I am also thankful for the committed and open participation of managers from the
Berliner Wasserbetriebe (BWB), United Bank of Switzerland (UBS), Unaxis and Volkswagen. Finally I
would like to thank Kai Hockerts (INSEAD), whose enthusiastic support in developing the research
project „A Management Cockpit for Corporate Sustainability “ has been invaluable.
2 As a possibility to quantify the reputational capital, Fombrun (2001) suggests a “reputational quotient”, that
considers “traditional” variables (e.g. products, financial bottom line, vision or management) as well as
aspects of social responsibility, the internal working conditions or company’s transparency.
3 A „D“ inside Unaxis‘ strategy map indicates that these site-oriented goals may also serve as strategic
goals on the division level and might be integrated in a corresponding SBSC concept.
4 The realisation of turnovers due to innovative concepts has not explicitly included inside the financial
perspective of Volkswagen’s SBSC concept for two reasons. First of all, the research department is
rather budget-driven and secondly turnovers from inventions and innovations are only generated in the
remote future.

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