Developing Sustainability Balanced Scorecards for ...pascal.iseg.utl.pt/~socius/publicacoes/wp/lina_lucas_paula_2007... · the case of Novar-tis, ... A variety of sustainability balanced

Environmental Quality Management / DOI 10.1002/tqem / Summer 2007 / 13

© 2007 Wiley Periodicals, Inc.Published online in Wiley InterScience (www.interscience.wiley.com).DOI: 10.1002/tqem.20139

This article discusses

a study that in-

volved designing

sustainability bal-

anced scorecards for

the environmental

service units of

three large Por-

tuguese companies.

BackgroundThe balanced scorecard (BSC), as proposed by

Kaplan and Norton (1992), and modifications

thereof, such as the sustainability balanced score-

card (SBSC), can serve as tools for integrating sus-

tainability issues at the strategic level within

companies (Bieker & Gminder, 2001; Dias-

Sardinha et al., 2002; Figge et al., 2002; Johnson,

1998; Zingales et al., 2002).

It is sometimes assumed that a well-defined

corporate-level sustainability strategy is a prereq-

uisite for SBSC development (Bieker & Gminder,

2001). In fact, however, the “bottom up” imple-

mentation of balanced scorecards within business

units can actually encourage development of cor-

porate strategies with respect to environmental

and social matters

(Bieker & Gminder,

2001).

For example, in

the case of Novar-

tis, an SBSC was

first developed for

the environmental

services unit. This

in turn triggered development of a corporate

SBSC and an overall business sustainability strat-

egy (Zingales & Hockerts, 2003).

SBSCs and Value CreationA variety of sustainability balanced scorecard

templates have been developed. The approaches

differ in their definition of value creation.

Kaplan’s (2003) environmental and social BSC

template stresses that companies’ environmental

and social initiatives and results should be evalu-

ated on the basis of their contribution to long-

term shareholder value, productivity, and growth

Idalina Dias-Sardinha, Lucas

Reijnders, and Paula Antunes

Developing SustainabilityBalanced Scorecards forEnvironmental Services: AStudy of Three LargePortuguese Companies

Encouraging companies to

integrate sustainability into

company strategy

Idalina Dias-Sardinha, Lucas Reijnders, and Paula Antunes14 / Summer 2007 / Environmental Quality Management / DOI 10.1002/tqem

strategies. This is in line with other authors such

as Bieker and Gminder (2001) and Figge et al.

(2002). According to this view, an environmental

or social aspect can be considered strategic if it

might contribute to (Reinhardt, 1999):

• increasing customers’ willingness to pay more

(e.g., product differentiation or eco-innova-

tion);

• reducing costs (e.g., reduction of inputs or

pollution prevention);

• improving management of business risk (e.g.,

reducing expected environmental costs);

• redefining markets (e.g., reducing customers’

disposal costs); or

• managing competition (e.g., setting stan-

dards).

Other SBSC templates evaluate results not

only with respect to fi-

nancial value creation,

but also on their con-

tribution to social and

environmental value.

In this context, au-

thors often use the

term “triple bottom

line (TBL) value cre-

ation” (Amanco, 2003; Bieker & Gminder, 2001;

Dias-Sardinha et al., 2002; Kaplan, 2003).

Study Overview

Motivation for the StudyLittle has been published on the design of

SBSCs for companies that have no experience

with the use of business balanced scorecards and

no explicit sustainability strategy (Zingales et al.,

2002). Even less has been written about the de-

velopment and implementation of sustainability

balanced scorecards for company environmental

service units. In addition, there is little existing

literature on the sustainability performance of

Portuguese companies.

Study ProjectIn the study project discussed here, we de-

signed sustainability balanced scorecards for the

environmental service units of three large Por-

tuguese companies. We adapted existing SBSC

and strategy map templates, focusing on factors

that are considered to be risks or benefits to busi-

ness, environmental, and social value. We then

further customized these templates to meet the

needs of environmental service units.

The three companies involved have achieved

“beyond compliance” levels of environmental per-

formance and are fairly similar in terms of their so-

cial-value activities and ambitions (Dias-Sardinha

& Reijnders, 2005). All three are interested in sus-

tainability but have no explicit corporate sustain-

ability strategy. None of the companies currently

has a sustainability department, or any other ef-

fective organizational structure that addresses en-

vironmental and social issues and their integration

into company business strategy.

The business units involved in this study have

no previous experience with balanced scorecards.

Two of the environmental services units are

shared environmental functions, responsible for

providing their services to other business units

and sites within the organization, and covering

all activities and all countries in which their com-

panies operate.

From the companies’ perspective, the ex-

pected benefits of SBSC implementation included

the ability to report on sustainability within a

Global Reporting Initiative format, and the possi-

bility that development of SBSCs for environ-

mental services might facilitate the introduction

of sustainability into the company’s overall busi-

ness strategy.

In developing our sustainability balanced

scorecard, we used as a template a modified busi-

Little has been published on thedesign of SBSCs for companies thathave no experience with the use ofbusiness balanced scorecards andno explicit sustainability strategy.

Environmental Quality Management / DOI 10.1002/tqem / Summer 2007 / 15Developing Sustainability Balanced Scorecards for Environmental Services

discuss how we went about developing and cus-

tomizing sustainability balanced scorecards for

the participating organizations.

We go on to discuss study outcomes at the

three participant companies and describe our

findings with respect to the research questions

outlined above. We conclude with some general

discussion of our study results.

Evaluation of Organizations’ Environmental,Social, and Sustainability Performance

The environmental performance of an or-

ganization reflects how it interacts with the nat-

ural environment. Such performance can be de-

fined in terms of the

environmental impact

or burden created by

the organization’s ac-

tivities, products, or

services.

Similarly, the so-

cial performance of

an organization re-

flects how its activities, products, or services in-

teract with the social environment, particularly

with the relevant direct stakeholders within

that environment (Bennett, James, & Klinkers,

1999).

The environmental management of an orga-

nization can be defined as encompassing mecha-

nisms and actions (including the process of per-

formance evaluation) that are designed to

contribute to improvement of environmental

performance (adapted from Mauser, 2001).

The sustainability performance of an organi-

zation is the aggregate of its environmental, so-

cial, and economic outcomes. Sustainability per-

formance generally reflects (at least in part)

trade-offs among these domains.

In this article, environmental, social, and sus-

tainability performance are defined broadly to in-

clude management activities and outcomes.

ness balanced scorecard format (Dias-Sardinha et

al., 2002). This template was then adapted to

each company’s current performance status, as

described in Dias-Sardinha and Reijnders (2005),

and to the strategic context of each company. It

was further customized through cooperation

with a company team in which members of the

environmental service units participated. Within

the template structure, we also dealt with percep-

tions regarding value creation as it actually ex-

isted within the business units involved.

Research QuestionsThe research questions addressed in this study

were as follows:

• Are the social and environmental values cre-

ated by company sustainability initiatives

considered important for their own sake, or

only important to the extent that they ben-

efit business development and company

profits?

• Is employment of a company-adapted and

customizable sustainability balanced score-

card template and strategy map a useful for-

mat for generating a sustainability balanced

scorecard for a company environmental ser-

vices unit? Are the proposed template’s per-

spectives and categories of performance ap-

propriate?

• What are the potential positive impacts of the

sustainability balanced scorecard, and the

major impediments to its further develop-

ment, within the companies involved in our

study?

About This ArticleThe discussion below begins with a consider-

ation of environmental, social, and sustainability

performance evaluation within organizations.

We then briefly describe how environmental

services are handled at our study companies and

The sustainability performance ofan organization is the aggregate of

its environmental, social, andeconomic outcomes.


Definition of Performance Evaluation Performance evaluation is a process that es-

tablishes the performance status of activities,

products, or services. It includes data collection,

measurement, analysis, comparison of results

with predefined goals, and revision of the total

process to better meet expectations (e.g., Bennett,

James, & Klinkers, 1999; International Organiza-

tion for Standardization, 1999; Mauser, 2001).

Internal and External Utilization ofPerformance Results

Environmental, social, and sustainability per-

formance evaluation within business organiza-

tions can take two

main forms, depend-

ing on the way the re-

sults are used.

In the first ap-

proach, the perfor-

mance results might

be used for internal

company manage-

ment purposes—that is, for managerial informa-

tion, strategy evaluation, operational control, in-

ternal reporting, self-assessment, and internal

benchmarking, with indicators, categories, and

performance targets customized for each end

user. The aim is to improve (directly or indirectly)

the company’s environmental, social, and overall

sustainability performance.

Alternatively, the organization’s performance

evaluation results may be reported externally or

otherwise disclosed and may be benchmarked

with respect to other companies.

Performance Evaluation ToolsMultiple tools have been created for evalu-

ating the environmental, social, and sustain-

ability performance of companies. The main

characteristics of these performance evaluation

tools are:

• use of qualitative and/or quantitative indica-

tors and indices,

• clustering of indicators into categories or

classes and aspects (often leading to another

level of aggregation that is subject to evalua-

tion), and

• use of structural information that may be or-

ganized in frameworks.

As noted by Olsthoorn et al. (2001), concepts

such as physical aggregation, impacts, and envi-

ronmental categories are social constructs; their

definition and content differ depending on the

contexts within which they are identified.

Many publications have proposed (and

sought to develop) indicators and frameworks for

environmental, social, and sustainability per-

formance evaluation. These frameworks can be

employed for multiple purposes, such as per-

formance reporting (e.g., Global Reporting Initia-

tive, 2002; Investor Responsibility Research Cen-

ter, 1996; United Nations Environment

Programme, 1994), product evaluation (e.g., Ben-

nett, Hughes, & James, 1999; BUWAL, 1991; Hei-

jungs et al., 1992), self-assessment (e.g., Eagan &

Joeres, 1997), internal benchmarking, asset man-

agement, sustainable/responsible investment

(e.g., Dow Jones Sustainability Indexes), and in-

ternal company performance evaluation.

Exhibit 1 summarizes key characteristics of

several performance evaluation frameworks set

out in the relevant literature. The characteristics

emphasized are those we considered the most rel-

evant to our present research.

This exhibit reflects the literature on the topic

that has appeared since the early 1990s. A brief

analysis indicates that, over this time period, the

number and scope of categories has grown larger.

Stakeholder categories have increased, and there

has been an increase in joint performance evalu-

ations with respect to social and environmental

matters.

Performance evaluation is aprocess that establishes theperformance status of activities,products, or services.


Exhibit 1. Key Characteristics of Company Environmental, Social, and Sustainability Performance EvaluationFrameworks, as Set Out in the Relevant Literature

Authors(arranged by publication date) Summary of Aims Frameworks/Measurement Areas/Categories/Measurement Methods

Greenberg and Effective processes that ensure “good” • Key inputs: Personnel, equipment, methods, materials, physical Unger (1992) environmental performance setting, internal support and administrative functions, external

groups, and feedback

Wells et al. (1992) Environmental measurement throughout • Process improvement measurement (existence and efficacy of the company management systems)

• Environmental results measurement (emissions and waste)• Customer satisfaction (perceptions about environmental actions

among buyers and stakeholders)

Piet (1994) Suggestions of environmental indicators for • Operational performance indicators related to materials, energy, companies based on performance levels water, emissions, incidents, and noise, as defined for companies proposed by the European Green Table in on a case-by-case basis1993

Azzone et al. (1996) Framework for environmental performance • Environmental policy (21 key aims)evaluation, which later was tested and • Environmental management system (economic indicators and modified by Young and Welford (1999) noneconomic indicators on commitment, compliance,

stakeholders, input, stock, and output) • “State of the environment” using Dobris (Stanners & Bourdeau,

1995) indicators: emissions, waste, energy, and transportation • Products, processes, and services (applying ecobalance impact

categories)

Young and Environmental performance indicators for • ProcessesRikhardsson (1996) managerial control, strategic advantage, • Product

and performance reporting • Financial• Management

Ditz and Conceptual framework to track corporate • Environmental: Materials use, energy consumption, nonproduct Ranganathan (1997) environmental and social performance output, and pollutant releases

• Social: Employment practices, community relations, ethical sourcing, social impacts of products

Marsanich (1997) Characterization of environmental performance • Environmental management indicators: Investment, indicators (EPIs) from EMAS statements noncompliance, complaints, and general infrastructure

• Environmental indicators: Physical quantities, emissions, waste, and energy use

• Environmental performance indicators: Production, employees, or working hours

• Potential effect indicators: Potential to cause environmental effects

• Environmental effect indicators: Evaluation of environmental conditions

European Chemical 15 standard types of indicators on health, • Safety (fatalities, injuries at work) and occupational healthIndustry Council safety, and environment that chemical • Environment: Emissions to water; emissions to air; wastes (CEFIC) (1998) companies use to inventory and report disposed to land; dispersal incidents; carbon dioxide emissions;

corporate and site emissions fuel and energy

National Round Framework developed and tested in • Materials intensity: Mass of products and by-products per Table on the companies, based on the WBCSD material inputEnvironment and the eco-efficiency framework • Energy intensity: Energy per service unitEconomy (Canada) • Pollutant dispersion: Sum of mass times a weighting factor for all (1998) toxics used

Skillius and Suggestions for development of environmental • Proposal for material accounting (inputs and outputs, energy, and Wennberg (1998) performance management system water)

• Translation of results into financial values

World Business Suggestion for a set of eco-efficiency metrics. • Eco-efficiency form = value-added/environmental impact addedCouncil for Themes of eco-efficiency: Emphasis on • Main indicators on energy, materials, water consumption, Sustainable service; focus on needs and quality of life; greenhouse gas emissions, and ozone depletionDevelopment (1998) consideration of entire life cycle; recognition

of the limits of eco-capacity; process view

(continued)


Exhibit 1. Key Characteristics of Company Environmental, Social, and Sustainability Performance EvaluationFrameworks, as Set Out in the Relevant Literature (continued)


Spangenberg and Sustainability indicators for macro (country) • Environmental indicators: Resource intensity and transport Bonniot (1998) and micro (business) levels, as well as intensity; income creation; resource productivity of investments

interlinkage indicators • Social indicators: Corporate human development index (CHDI)(quality of industrial relations and labor conditions, education, andincome level and distribution)

AA1000 Framework Conceptual management framework to • Indicators on legal compliance; organizational values and (AccountAbility) improve ethical and social accounting, objectives; reporting guidelines; internal and external (1999) auditing, and reporting; standard intended to benchmarking

complement the Global Reporting Initiative guidelines

Bennett and James Conceptual model conforming to ISO 14031 • Environmental condition indicators: Receptors, sustainability, (1999) but adapted to other issues (the environmental proxy/risk

performance evaluation diamond) • Operational performance indicators: Services, energy and materials, facilities and equipment, emissions and waste products

• Management performance indicators: Implementation, conformance, stakeholders, financial

Fiksel et al. (1999) Framework for business to initiate continuous • Triple bottom line leading indicators (business process) and measurement and improvement of triple lagging indicators (sustainability outcome)bottom line, guided by four principles and based on best reporting companies’ practices

ISO 14031 Standard for environmental performance • Environmental condition indicators(International evaluation, with a guide to selecting and using • Operational performance indicatorsOrganization for indicators, and reporting significant aspects • Management performance indicatorsStandardization)(1999)

Thoresen (1999) Conceptual environmental performance • Product life-cycle performanceevaluation for industries • Environmental performance of manufacturing operations

• Environmental conditions

Young and Welford Internal assessment tool to encompass all of • Environmental policy(1999) a company’s activities, referred to as an • Environmental management system area: comparison with ISO

Environmental Performance Measurement 14001 and EMAS; indicators for compliance, commitment, and Framework (EPMF); based on Azzone et al. stakeholder issues(1996) framework and tested with four case • Processes, products, and services management areasstudies • State-of-the-environment management area

SA 8000 (Center for International standard on requirements for • Ethical sourcing: child labor; forced labor; health & safety; union Economic Priorities social (workplace) accountability, including a issues; discrimination; disciplinary practices; compensation;Accreditation Agency/ verification system and public reporting working hours; and management systemsSocial Accountability provisionsInternational) (2000)

Epstein and Wisner Balanced scorecard (BSC) with • Financial(2001) environmental, health, and safety issues • Customer

included in all perspectives • Internal processes• Learning and growth

Jung et al. (2001) Measurement of corporate environmental • General environmental management performance using a framework called • Inputs (materials and energy)Gscore; based on petroleum company reports • Process/operations

• Outputs (desirable and undesirable) • Outcomes (financial and nonfinancial)

Mauser (2001) Framework for environmental performance • Environmental management indicators (policy and strategy, evaluation based on empirical study from the communication, organizational structure, management Dutch dairy industry commitment)

• Environmental performance indicators:❖ Environmental operations indicators (regulation, procurement,

technical processes and products, postproduction issues)❖ Environmental impact indicators (energy, water, other)

(continued)


seek to adopt policies that go beyond compliance

(Prakash, 2001). Thus, there is at least some evi-

dence that companies are beginning to view en-

vironmental and social matters as strategic.

The first phase of strategic performance eval-

uation must focus on analysis of stakeholders’ in-

terests. In this context, we note that research has

been conducted to identify the internal and ex-

ternal driving forces that promote action on en-

vironmental and social matters (e.g., Ghobadian

et al., 1998) and stakeholder management (Free-

man, 1984; Grafé-Buckens & Hinton, 1998). The

results of this research were used in the empirical

part of our study but are not extensively dis-

cussed here.

Strategic Objectives and the BalancedScorecard

Strategic objectives are integrated into a bal-

anced scorecard. The business balanced score-

card, which was first proposed by Kaplan and

Performance Evaluation That Focuses onStrategic Objectives

From the business point of view, strategic ob-

jectives are key components for achieving the vi-

sion of the organization. These objectives help

identify actions the company can take to differ-

entiate itself from direct competitors or to en-

hance its business.

The factors that drive environmental and so-

cioeconomic management goals and activities

within organizations have multiple origins.

Among the most relevant traditional drivers for

action are legislation, the need to respond to en-

vironmental accidents, and market pressure

(Reinhardt, 1999).

Empirical findings suggest that companies

have become increasingly aware of inputs from a

range of stakeholders, and that many organiza-

tions now go beyond their traditional focus on

regulatory requirements (Madsen & Ulhøi, 2001).

In addition, individual company leaders often

Exhibit 1. Key Characteristics of Company Environmental, Social, and Sustainability Performance EvaluationFrameworks, as Set Out in the Relevant Literature (continued)


Olsthoorn et al. Standardized categories of environmental • Business activity(2001) performance indicators based on literature • Environmental impact

review; tested within the Measuring • Productive efficiency Environmental Performance of Industry • Monetary aggregate (MEPI) project (Tyteca et al., 2002) • Management effort

Veleva et al. (2001) Conceptual tool for evaluating the effectiveness Five evolutionary levels for categorization of 22 indicators on the of sustainability indicator systems with five basis of:levels of performance indicators: (1) facility • Energy and material usecompliance; (2) material use and performance; • Natural environment (including human health)(3) effects; (4) chain and product life cycle; and • Economic performance(5) sustainable systems • Community development and social justice

• Workers• Products

Tyteca et al. (2002) Quantitative EPIs for manufacturing to • Physical indicatorsencourage standardization, based on data • Business management indicatorsfrom six industrial sectors within six European • Business activity indicatorscountries, and on the Olsthoorn et al. (2001) • Environmental impacts model

Azapagic (2004) Framework of sustainable development • Categories and indicators in triple bottom line formatindicators for the mining and minerals industry, • Sector-specific indicatorsbased on the Global Reporting Initiative (2002) guidelines


Norton (1992), reflects company performance

with reference to four perspectives: financial, cus-

tomers, internal processes, and organizational

learning and growth.

Strategy MapsIn developing a BSC, it is useful to create a

strategy map. Such a map indicates relationships

among critical elements in the BSC and shows

the perspectives used. Kaplan (2003) has devel-

oped a strategy-map template format that incor-

porates environmental and social aspects.

The critical elements in a strategy map relate

to key external pressures, internal capabilities,

and constraints. These elements are summarized

in Exhibit 2.

The Sustainability Balanced Scorecard The balanced scorecard can incorporate the

three aspects of sustainability (financial, social,

and environmental) in several different ways: by

increasing the number of perspectives used

through addition of a fifth, nonmarket perspec-

tive (Figge et al., 2002); by integrating social and

environmental issues into some or all of the four

perspectives outlined by Kaplan and Norton

(1992) (e.g., Bieker & Gminder, 2001; Epstein &

Wisner, 2001; Figge et al., 2002); or through de-

velopment of a specific sustainability balanced

scorecard (Dias-Sardinha et al., 2002; Figge et al.,

2002).

In our study, we opted for a sustainability bal-

anced scorecard that used the following four per-

spectives (Dias-Sardinha et al., 2002):

• triple bottom line (financial, social, and envi-

ronmental) value creation,

• stakeholders (internal and external),

• processes/products, and

• learning and innovation.

We adapted a template strategy map to the per-

formance status and strategy context of each of the

companies involved in our study. The main struc-

Exhibit 2. Critical Factors That Determine Companies’ Environmental and Social Strategic Objectives

Critical External Pressures Critical Internal Capabilities and Constraints

• Industry structure or market in which the company operates • Economic characteristics and capital availability, including financial (e.g., competition, markets, products, type of customers, position of the company, costs of environmental/social suppliers, prices of inputs) management, tangible and intangible assets, firm-specific

advantages, and company strategies (including, e.g., profits, • Other forms of pressure and social expectations (from, e.g., market share, market strategy, degree of vertical integration,

nongovernmental organizations, trade associations, local diversification, internationalization)communities)

• Firm-specific human resources and capabilities (e.g., special • Network in which the company operates (e.g., dependency green and social capabilities, new products/processes)

relationships, product chains)• Organizational structure and adaptability

• Regulations, standards and norms, general requisites, and ongoing evolution in requirements the company must meet • Technological factors

• Local/global environmental and social risks, impacts, and • Internal environmental and social risks, impacts, and opportunitiesopportunities (e.g., local sensibilities, technology changes)

• Leadership characteristics (e.g., style, commitment, concerns, objectives, reward structure)

• Company traditions (e.g., predominant shared behaviors)

• Company ethics

Adapted from Ghobadian et al. (1998) and Kolk (2000).


At EDP Produção, the environmental service

unit deals with matters of quality and local com-

munity relations, but not with other social mat-

ters (e.g., worker health and safety).

Lusotur does not have a single environmen-

tal service department that serves the whole

business unit. Instead, it has an environmental

department at each site, which is also responsi-

ble for quality issues and worker health and

safety matters.

All of the study companies use the services of

scientific and sectoral advisory committees on

environmental matters.

More information about each of the compa-

nies is included in the section entitled “Study

Outcomes at the Participant Companies.”

SBSC DevelopmentDevelopment of SBSCs for our study compa-

nies took place from January through November

2003. The process had two iterative phases, as de-

scribed in the following sections.

Data Collection and SBSC CreationIn the first phase, we collected the data neces-

sary to adapt our SBSC template to each com-

pany’s strategic context and performance status.

We also sought to create awareness about our

ture of the template SBSC that we used (with its

performance categories) is shown in Exhibit 3.

Environmental Services at Our StudyCompanies

The three companies involved in our study

were EDP Produção, Lusotur, S.A., and Sonae

Imobiliária. Our collaboration with these compa-

nies started in 2001 within the framework of an

earlier study (Dias-Sardinha & Reijnders, 2005).

Exhibit 4 describes the main characteristics of

the three companies (which are business units of

larger organizations).

The environmental service units of Sonae

Imobiliária and EDP Produção are shared func-

tions that are responsible for providing their ser-

vices to other business units and sites owned by

their parent organizations, covering all activities

of the company and all countries in which the

company operates. There is no formal relation-

ship between the environmental service unit and

the strategic planning department (where it ex-

ists) within these companies.

In Sonae Imobiliária, the responsibilities of

the environmental service unit include institu-

tional relations and communication. They do not

include quality, worker health and safety issues,

or social concerns.

Exhibit 3. SBSC Template Main Structure (To Be Adapted for Each Individual Company)

Triple Bottom Line Perspectives Value Creation Stakeholders Processes/Products Learning and Innovation

Categories of • Governance • Business Ethics • Management Structure • SynergyPerformance

• Compliance • Labor Practices • Management Systems • Training

• Environment • Wider Society • Tools • Research & Development

• Social • Products and/or Transport

• Financial Aspects of Social and Environmental Matters

• Sector issues


project and encouraged involvement in the SBSC

development process.

After sending a working agenda to each study

company, we arranged semistructured interviews.

We then conducted these interviews with key peo-

ple within each organization: EDP Produção’s head

of environmental services, Lusotur’s environmen-

tal board representative, and Sonae Imobiliária’s

technical head of environmental services. We also

spoke with one or two environmental profession-

als at each service or site.

The interviews covered several topics: busi-

ness scenario analysis; stakeholder pressure; cur-

rent company environmental, social, and busi-

ness strategy practices and guidelines; and

short-term strategic and operational objectives,

initiatives, measurement methods, and perfor-

mance targets. The interview results were supple-

mented with information from published re-

search papers (including Dias-Sardinha & Reijn-

ders, 2005) and company reports and documents.

We prepared reports for each company con-

taining strategic analysis results, a company-

adapted SBSC, and a strategy map. The criteria

used in clustering and filtering the objectives,

measurement methods, and initiatives to be in-

cluded in each company-specific SBSC were the

following:

• urgency of action (that is, actual importance

of factors with respect to the company’s path

toward future profitability, social responsibil-

ity, and environmental soundness);

• saliency to the business unit, and to its envi-

ronmental service unit and site departments

(e.g., contribution to competitive advantage,

Exhibit 4. Companies Studied: Business Unit Characteristics in Brief

EDP Produção(owned by EDP—Electricidade de Portugal, S.A.)

• EDP—Electricidade de Portugal, S.A., is a Portuguese multinational holding company. It is a leader in the national electricity sector, andhas extended its business activities to the telecommunications, information technology, and multiutility areas.

• Within Portugal, EDP—Electricidade de Portugal, S.A., generates and distributes electricity through EDP Produção, which employs ap-proximately 9,000 people and had revenue of 6,386,508 euros in 2002.

• The companies comprising EDP Produção in Portugal own and utilize 57 hydroelectric stations, 6 conventional fossil-fuel power stations,4 wind farms, 1 biomass power plant, and 2 cogeneration power plants, achieving a total in-service (operating) system capacity of ap-proximately 7,600 megawatts (60 percent of national consumption in 2002), and serving 5,665,005 customers (2002).

Lusotur, S.A. (owned by Planfipsa)

• Lusotur, S.A., is the master developer of Europe’s largest privately managed seaside resort, Vilamoura, in the south of Portugal. The re-sort covers 1,700 hectares and includes a 1,000-berth marina, 3 kilometers of beaches, and 5 golf courses, among other facilities.

• Vilamoura has around 10,000 villas, townhouses, and apartments. It accommodates 6,000 permanent residents and 450,000 visitorseach year.

• Lusotur, S.A., is also developing Belas Clube Campo (near Lisbon), a 460-hectare residential area with a championship golf course.

Sonae Imobiliária(owned by Sonae SGPS)

• Sonae SGPS, a multinational holding company, manages a portfolio of five subholdings: retail, industry, tourism, commercial centers, andmultimedia.

• Sonae Imobiliária is a leading European investor in, and developer and manager of, shopping and leisure centers. The company is veryactive in Portugal (where it has 50 percent of the market), as well as in Spain, Greece, Italy, Austria, Germany, and Brazil.

• During 2002, its shopping centers received 377 million visitors. At year-end, its net asset value was 1,037 million euros.


Study Outcomes at the ParticipantCompanies

In the discussion that follows, we summarize

the results of our SBSC development efforts at the

three participant companies.

The study interviewees saw the Portuguese

sustainability-related regulatory context (that is,

the requirements regarding environmental,

health, safety, and labor issues) as similar to those

of other European countries. However, interview-

ees reported that there is no systematic control

and monitoring of compliance with the applica-

ble laws. To the extent that control is present, two

companies complained that it sometimes creates

difficulties in their

pursuit of environ-

mental improvement.

The three compa-

nies represent different

industry sectors and

are of different sizes.

They are, however,

rather similar in terms

of environmental and social operationalization

issues (Dias-Sardinha & Reijnders, 2005). All

stated that their missions were focused on be-

coming national and/or European business lead-

ers. Main goals for all three companies included

increasing shareholder value, enhancing prof-

itability, and improving the quality of customer

service.

Business strategies were different for each

company, and were specific to their industry sec-

tors. The current business strategies of the two

largest parent companies do not explicitly deal

with environmental, social, or sustainability mat-

ters. Rather, these issues are addressed in specific

policies or guidelines.

EDP Produção EDP Produção is a major producer and dis-

tributor of electricity in Portugal. At EDP Pro-

cost reduction, or achievable reduction of

negative environmental impacts); and

• incorporation of leading and lagging indica-

tors based on the DPSIR framework, which

emphasizes driving forces of environmental

change (D), pressures on the environment (P),

state of the environment (S), impacts on the

human population and ecosystems (I), and re-

sponse indicators (R) (Smeets & Weterings,

1999).

We sent our completed reports to company par-

ticipants for their comments.

SBSC CustomizationIn the second phase, we customized the SBSC

that was developed for each business unit in the

first phase. The focus at this stage was on more

accurately choosing, clustering, and filtering the

specific strategic objectives, initiatives, measure-

ment methods, and targets.

We again conducted semistructured inter-

views, this time focusing on strategic decision

making, as well as on operational matters and

capabilities. In this phase, we spoke with a

board member responsible for environmental

matters at Lusotur, with two directors of busi-

ness-unit environmental service units at Sonae

Imobiliária and EDP Produção, and with the di-

rector of environmental services at Electrici-

dade de Portugal, S.A, the parent company of

EDP Produção.

We also collected additional data that we

found to be useful for SBSC customization (on

subjects such as the parent company’s business

strategy and environmental plans).

In addition, we asked participants about the

topics involved in our research questions. Based

on their answers, we prepared a second, cus-

tomized set of strategy maps and sustainability

balanced scorecards, working with participants

from each of the environmental service units.

Main goals for all three companiesincluded increasing shareholder

value, enhancing profitability, andimproving the quality of customer

service.


dução, the main external critical factors that

might influence environmental and social strate-

gic decisions are:

• transition to a liberalized Iberian competitive

electricity and gas market (as of July 2004)

and to a new parent-company holding struc-

ture;

• sector and regulatory pressure related to re-

quirements regarding renewable energy and

carbon dioxide emission targets and trading;

• increasing competition among national pro-

duction sites; and

• increasing customer pressure regarding prod-

uct quality and quan-

tity.

A case can be made

for viewing the devel-

opment of sustainable

energy supplies and

investment in sustain-

ability-related market

differentiation (by offering energy-efficiency

services and premium-products such as renew-

able energy) as matters for strategic decision mak-

ing at EDP Produção. However, there is no indi-

cation that these matters are actually viewed as

such at the company. Instead, EDP handles envi-

ronmental issues, worker health and safety, and

other social concerns (such as local community

relations) through a set of operational principles

that guide production-site decision making.

At EDP Produção, the main environmental

strategic guidelines concern certification of envi-

ronmental management systems (EMSs) at fossil-

fuel and hydroelectric power plants, along with

continuing preparation for meeting the require-

ments of the European Union’s Eco-Management

and Audit Scheme (EMAS, 1993).

Other objectives and initiatives included in

the company’s balanced scorecard are cost reduc-

tion and optimization, increasing internal and

external communication, sustainability report-

ing, maintaining a good company image, devel-

oping a sustainability strategy, and creating a

clear sustainability functional structure.

Social strategy is not formalized at EDP Pro-

dução, but company practice aims at compliance

with worker health and safety requirements and

prevention of detrimental health effects. In addi-

tion, at site level the company supports several

initiatives involving local communities.

The strategy map that we created for the en-

vironmental service unit of EDP Produção is

shown in Exhibit 5. It reflects critical strategic

objectives regarding environmental and social

matters (and related financial aspects) under the

four perspectives of the sustainability balanced

scorecard.

At the end of the SBSC development process,

the representatives of the EDP Produção environ-

mental service unit stated they were ready to start

a pilot project aimed at implementing a sustain-

ability balanced scorecard.

Lusotur, S.A.Lusotur, S.A., is the developer of Europe’s

largest private seaside resort, and also has sub-

stantial interests in real estate. It is owned by

Planfipsa, a major holding company. Several crit-

ical factors could potentially influence the strate-

gic environmental and social decisions to be

made at the Lusotur business unit:

• the change to a parent-company holding

business structure, and consequent changes

in investor pressure;

• the need to differentiate the company from

competitors, operate in a manner that is ac-

ceptable to both customers and local environ-

mental activist groups, and contribute to

quality tourism in Portugal (to accomplish

this, the company needs to maintain a good

EDP handles environmental issues,worker health and safety, and othersocial concerns through a set ofoperational principles that guideproduction-site decision making.


Green Globe 21 program (a worldwide sustain-

ability benchmarking and certification program

for the travel and tourism industry), as well as the

European Blue Flag eco-label (which covers mari-

nas and beaches).

Lusotur company targets for 2006 included

establishing a shared environmental and quality

function at the parent-company level and inte-

grating the respective systems. By 2010, the com-

pany aims to have its environmental and quality

management systems certified for all business

units and activities.

Lusotur’s social strategy is not formalized. Its

current and future priorities focus on improving

stakeholder dialogue and company transparency.

The Lusotur board representative whom we

interviewed did not want to implement an SBSC

at the company in the short term. We did, how-

image and achieve high visibility for its envi-

ronmental activities);

• the need to maintain equilibrium between

quality tourism and urban development;

• the need to enlarge and formalize environ-

mental, social, and quality management

within the business unit and in other business

areas (e.g., real estate) at all organizational

levels (e.g., the parent-company level); and

• the need to increase board-level awareness

about issues relating to sustainability and

company goodwill.

At Lusotur, implementation of an environ-

mental strategy started in 2001 with certification

of an EMS for its golf activities. Current annual

objectives at the company include maintaining

EMS certifications and recognition under the

Exhibit 5. Strategy Map for the Environmental Service Unit of EDP Produção


ever, work with representatives from two Lusotur

site environmental departments on customizing

the SBSC. Our efforts focused on what could po-

tentially be implemented at each site.

Exhibits 6 and 7 reflect the SBSC develop-

ment efforts for the two Lusotur sites. These ex-

hibits show, respectively, the second and fourth

SBSC perspectives (stakeholders and learning/in-

novation). They include sustainability objectives,

measurement methods, and initiatives.

Sonae ImobiliáriaSonae Imobiliária is a leading investor in, and

developer and manager of, shopping and leisure

centers in Europe and Brazil. It is owned by Sonae

SGPS, a multinational holding company.

Sonae SGPS’s 2000 environmental policy

(Sonae SGPS, 2002) stated that the company

will evaluate its position as to sustainability and

responsible practices and foster a periodic re-

view of its environmental principles and strate-

gic goals.

At the time of our study, Sonae Imobiliária

had no formal sustainability strategy and no busi-

ness strategy with respect to environmental and

social matters. However, activities aimed at ad-

dressing these issues were taking place at the par-

ent-company level. For instance, at the end of

2002, workshops were held in each of the busi-

ness units to develop strategic thinking regarding

sustainability and to implement the Sonae SGPS

environmental vision (Baptista et al., 2002). At its

workshop, Sonae Imobiliária proposed a sustain-

ability strategy with the following elements:

• Develop and operate the business in an envi-

ronmentally sustainable way.

• Contribute to stakeholder awareness about

what the organization does regarding the en-

vironment and encourage contributions to

this effort.

• Actively promote an image of environmental

leadership that differentiates the organization

from competitors.

Exhibit 6. Lusotur SBSC: Stakeholder Perspective (Potential Initiatives for 2006)

What environmental and social aspects should the Lusotur business unit focus on and measure in order to meet the expectations of internal and ex-ternal stakeholders regarding the company’s main environmental and social strategic objectives?

Stakeholders Objectives Measurement Methods Initiatives

Business ethics • No objectives on this matter -- --

Labor practices • Increase satisfaction of • Percentage of employees that • Develop H&S policy and planningemployees report positively about job • Establish survey on employee

satisfaction satisfaction (with regard to, e.g., • Developed H&S policy safety, medical insurance,

(yes/no) promotions, training, involvement • Worker turnover in decision making, performance

evaluations)

Wider society • Extend current H&S standards • Percentage of suppliers/ • Develop extended H&S and to builders and suppliers builders that follow H&S environmental requirements for

• Maintain transparency and standards suppliers and buildersdialogue about activities • Publication of business • Analyze current survey results on

• Contribute to local unit (golf) environmental/ local community satisfactioncommunity welfare social reports (yes/no) • Transform current EMS reports to

• Awards disclosure and environmental business unit reportsmarketing (yes/no) • Define plan for contribution to local

• Percentage of local community social support (e.g., donations, that report satisfaction investment in community

development)

Abbreviations: H&S = Health & Safety; EMS = Environmental Management System


The Sonae Imobiliária study participants

stated that the company’s current environmental

policy and social guidelines were particularly

helpful in maintaining and extending joint ven-

tures with the organization’s national and inter-

national partners. Environmental issues were also

seen as being important to the creation of the re-

cently established investment fund.

Sonae Imobiliária’s environmental ambitions

have been operationally supported by the imple-

mentation of noncertified EMSs for all company

activities in all countries. In addition, the com-

pany has developed programs for eco-efficiency

measurement, focusing on operational indicators.

Sonae Imobiliária does not currently have a

formalized social strategy, although a responsible

person at each site manages social issues involv-

ing the local community. The company also is

undertaking a study regarding social responsibil-

ity at the parent-company level.

Sonae Imobiliária did not foresee implemen-

tation of an SBSC within the short term but did

anticipate gradually implementing one in the fu-

ture. SBSC customization at Sonae Imobiliária

was based on the company’s environmental plan-

At the Sonae Imobiliária environmental ser-

vice unit, critical factors that can influence envi-

ronmental and social strategic decisions include

the need to:

• continuously contribute to increasing the ac-

tivities or assets of the business unit;

• maintain (and continuously improve) the

company’s environmental and social image

among shareholders and investors (particu-

larly those participating in the organization’s

recently created investment fund);

• enhance the company’s differentiation from

competitors;

• contribute to fulfillment of the promises

made by the chief executive officer of Sonae

SGPS (e.g., the promise to issue a sustainabil-

ity report in 2005);

• increase the business credibility of the organi-

zation’s environmental actions (e.g., by mea-

suring the contribution of environmental ac-

tivities to financial value creation within the

company); and

• establish and formalize a sustainability service

for the organization.

Exhibit 7. Lusotur SBSC: Learning and Innovation Perspective

What learning and innovation skills should the Lusotur business unit focus on and measure relevant to the company’s environmental and socialstrategies, and the financial aspects thereof?

Learning Objectives Measurement Methods Initiatives

Synergy • Increase sectoral and • Number and type of networks • Identify and participate in relevant environmental networking/ and successful projects that projects regarding eco-social partnerships (e.g., with the business unit is involved in tourismuniversities) • Exchange workshops on • Promote follow-up meetings

results of EMS with partners (e.g., hotels) (yes/no)

Training • Increase sustainable tourism • Percentage of employees with • Establish plans for personal training of employees (e.g., training skills development associated with in water quality management) • Raise awareness (through, performance evaluation

• Increase awareness of e.g., meetings, surveys, mini- • Create awareness plan builders and homeowners manuals) (marketing) on “eco-building” and

building improvements

Research & Development • Promote adequate R&D • Project development and • Identify priority areas of interest for projects demonstration (yes/no) R&D (e.g., traffic, noise, waste,

and effluent management)


ning for 2004 (which received positive input

from the SBSC development efforts that were car-

ried out within the framework of this study).

Parts of the SBSC developed for Sonae Imobil-

iária are shown in Exhibits 8 and 9. These ex-

hibits deal with, respectively, the first SBSC per-

spective (triple bottom line value creation) and

the third perspective (internal and external

processes/products).

Findings on Research Questions

• Are the social and environmental valuescreated by company sustainabilityinitiatives considered important for theirown sake, or only important to the extentthat they benefit business developmentand company profits?In the opinion of the participants involved in

this study, environmental and social activities are

mainly important to

the extent that they

benefit company busi-

ness development and

profit, either directly

or indirectly. It was

also suggested that the

business sectors in-

volved in the study

(e.g., electricity and

tourism) have a positive social value when con-

trasted with, for instance, the liquor industry.

The interviewees also stated, however, that

they did not need to translate all outcomes into

financial values. A positive social effect (such as

increased employment) could be seen as value

creation in itself. With regard to the Sonae Imo-

biliária investment fund, participants noted that

one-third of the factors affecting the fund’s in-

vestment decisions were based on nonfinancial

information, including data on environmental,

security, and health and safety issues.

Representatives of the study companies’ envi-

ronmental service units viewed indicators such as

audit results, impact measurements, and resource

consumption as relevant data that should be com-

municated to company boards, irrespective of

their contribution to financial value creation. This

view derived from the participants’ perceived

need to demonstrate internal efficiency, establish

that financial and human resources were being

correctly allocated, and justify continued opera-

tion of their environmental service units.

The environmental service unit participants

indicated a strong need to identify the contribu-

tions their environmental activities were making

to financial value creation within the company.

This task was considered very difficult to achieve.

Overall, the interviewees saw environmental

and social management as an intrinsic part of

“good” company management, necessary for the

success and further development of their busi-

nesses.

• Is employment of a company-adapted andcustomizable sustainability balancedscorecard template and strategy map auseful format for generating asustainability balanced scorecard for acompany environmental services unit? Arethe proposed template’s perspectives andcategories of performance appropriate?The study participants stated that using a cus-

tomizable SBSC template and strategy map

adapted to their companies seems useful in de-

veloping a company-specific SBSC because it re-

duces the amount of time they would need to de-

vote to future SBSC development.

The participants also noted that using the

SBSC template and strategy map helped them get

an overview of their current sustainability-related

activities. This approach allowed them to identify

“good” goals and pinpoint elements that poten-

tially were missing from their programs. They

The interviewees saw environmentaland social management as anintrinsic part of “good” companymanagement, necessary for thesuccess and further development oftheir businesses.


Exhibit 8. Sonae Imobiliária SBSC: Triple Bottom Line (TBL) Value Creation Perspective

What are the key environmental and social matters, and the financial aspects thereof, that contribute to triple bottom line value creation and thatSonae Imobiliária should focus on, considering its main sustainability objectives?

TBL Value Creation Objectives Measurement Methods Initiatives Targets (2004)

Leadership • Be a leading business • Number of defined • Establish annual • Sustainability integrated unit in sustainability for environmental and sustainability objectives into business strategythe shopping sector social objectives/total at strategic, planning,

business strategic and project levelsobjectives

Compliance • Achieve conformity • Number and type of • Inventory with national, relevant compliance noncompliances that • Zero violationsinternational, and violations and penalties generate penalties • Zero penaltiessectoral requirements, incurred • Describe measures codes, and standards and expenditures

applied to solving cases of noncompliance

• Maintain systematic regulation forecasting

Environment • Increase efficiency • Resource use and • Maintain systematic • Institute representative of resource use reduction: Amount of inventory to calculate monitoring

• Reduce emissions energy used per year; indicators for • Reduce environmental and waste produced amount of energy used site/business unit burden by 33 to 75 percent by shopping centers per tenant/customer; • Identify projects to

percentage of internal reduce use of energy savings per resources and year; water used per eliminate pollutionyear • Define critical moments

• Emissions and waste in the development production and and operation of a reduction: percentage projectof waste produced, recycled, reduced;hazardous/other per year

Social • Enhance and • Percentage of stake- • Survey relevant stake- • Achieve contact with [X] systematically promote holders with whom there holders (e.g., visitors, percent of stakeholdersgood brand image and is direct interaction local community, tenants,awareness among • H&S indicators (e.g., and NGOs) regarding stakeholders number and severity company image and

• Promote motivation of employee stakeholder satisfaction among employees accidents; rate of (on, e.g., accessibility,

• Maintain security and security incidents; comfort, urban H&S conditions in indoor air quality integration, business shopping centers parameters; number ethics, security,

of H&S complaints) prestige, quality)

Economic • Contribute to local • Local indicators of social • Define local • Information on 100 percent sustainable value (e.g., number of sustainability indicators of main partners at each development jobs and percentage of • Establish format for center

local employment evaluating contributions created by each to local economy shopping center per (through, e.g., year; amount of taxes employment and paid per year) investment in

infrastructure)

Sector issues • Be innovative within • New type of shopping • Research to identify --the sector center with new needs and

products /services consumption trends (e.g., home services) in shopping and new type of centerstenant mix

The information in bold indicates elements that are not currently within the responsibility of the environmental service unit, but that are tasks for the businessunit. Abbreviation: NGO = nongovernmental organization


also believed that this approach helped ensure

that they were working in the “right” way.

Participants stated that the performance cate-

gories used in the SBSC template (e.g., “gover-

nance,” “social,” and “environment”) were help-

ful, and even “logical.” However, participants

thought that the second phase of the study

(which stressed strategic matters) should have fo-

cused more on how environmental and social ac-

tivities can contribute to financial value creation.

Participants suggested that the SBSC template

needed a separate category to deal with business

financial performance.

• What are the potential positive impacts ofthe sustainability balanced scorecard,and the major impediments to its furtherdevelopment, within the companiesinvolved in our study?The environmental service unit personnel in-

volved in this study were willing to participate in

large part because they believed that the study’s

Exhibit 9. Sonae Imobiliária SBSC: Processes/Products Perspective

What internal and external processes should Sonae Imobiliária maintain with respect to environmental and social issues, and the financial aspectsthereof, in order to achieve its main environmental and social strategic objectives?

Processes Specific Objectives Measurement Methods Initiatives Targets

Management structure • Consider integration • Proper fit of • Define and provide --of EH&S management organizational resources for structure at site/ structure to integration of EH&S business unit sustainability structure

management (yes/no)

Management systems • Maintain and extend • Number of EMSs • Implement improved • Implement [X] percent of EMSs and, when implemented within systems EMS procedures (in 2004)necessary, improve the business unitimplemented EMSs at site/business unit

Tools and technology • Be at forefront with • Established information • Standardize • Disclose information in all (e.g., communication, respect to best update system for communication countries where shopping evaluation, marketing, practices in the reporting from all sites procedures and centers are in operation or benchmarking) sector to business unit (yes/no) intranet use under development

• Number of internal and • Include sustainable external audits that objectives and results required corrective in periodic reports action • Develop plan for

• Implemented new and implementation of effective best practices performance evaluation (yes/no) system

• Define tool for systematic inclusion of stakeholder interests in new projects

• Discuss business scenarios, including environmental considerations

Transport • Promote reduction of -- • Study traffic evolution --local congestion and traffic due to each shopping center

The information in bold indicates elements that are not currently within the responsibility of the environmental service unit, but that are tasks for the businessunit. Abbreviation: EH&S = environment, health, and safety


Discussion of Study Results

Strategic Importance of Sustainability IssuesOur first research question sought to under-

stand the strategic importance of environmental

and social issues within business organizations.

We found that, among our sample companies, fi-

nancial value creation was viewed as being far

more important than environmental and social

value creation, at least for purposes of business

development.

This aligns with the expectations of the World

Business Council for

Sustainable Develop-

ment, of which one of

our study companies

(Sonae) is a member

(Sonae SGPS, 2002). It

also is in line with pre-

vious findings regard-

ing the performance

status of these compa-

nies (Dias-Sardinha & Reijnders, 2005).

However, our participants also stated that ad-

equate management of environmental and social

matters contributed to the evolving business

strategy of their companies. This finding suggests

that the format of the SBSC should be enlarged to

include a separate category for business financial

performance. This can be accomplished using the

template format proposed by Kaplan (2003).

Some may doubt whether development of a

sustainability balanced scorecard for an environ-

mental services unit can contribute toward inte-

grating sustainability into company strategy. As

pointed out by Orssato and Clegg (cited in Zin-

gales et al., 2002), the power of company envi-

ronmental departments typically is limited, and

balanced scorecard implementation is not a

guarantee that environmental or sustainability

issues will be taken seriously by the organiza-

tion’s leaders.

results might help increase interest in sustainabil-

ity among top managers within their companies.

Specifically, participants believed that the study

project might be able to develop a sustainability

performance evaluation tool that could help con-

vince management to include sustainability

among their companies’ business objectives.

Participants perceived the sustainability bal-

anced scorecard as having several potential bene-

fits, including possible utility in designing a com-

pany sustainability strategy and reporting on

sustainability under the Global Reporting Initia-

tive guidelines, as well as providing evidentiary

support for dealing with current and long-term

sustainability issues.

Participants also stated that they had realized

several benefits from taking part in the study, in-

cluding:

• clarification regarding how well environmen-

tal and social matters were integrated into

current company practice;

• a better understanding of what sustainability

is, what their companies have accomplished

with regard to sustainability, and what is

missing from their sustainability programs;

and

• guidance on planning environmental service

unit activities over the short term, along with

help in establishing long-term sustainability

objectives.

The interviewees suggested that they would

take a careful, step-by-step approach to implement-

ing SBSCs, stressing a need to maintain the right

balance between achievements and procedures.

Impediments to short-term implementation

of the SBSC mentioned by participants included

lack of interest on the part of company boards,

shortage of qualified staff, and lack of the defined

sustainability structure necessary to manage the

SBSC tool.

We found that financial valuecreation was viewed as being far

more important than environmentaland social value creation, at least for

purposes of business development.


On the other hand, there is the example of

Novartis (Zingales & Hockerts, 2003), where an

SBSC developed for an environmental service

unit was helpful in integrating sustainability into

overall company strategy.

The chief executive officers of the Sonae and

EDP parent companies have expressed interest in

corporate responsibility and sustainability report-

ing. Hence, their environmental service units are

already faced with a need to design sustainability

strategies and integrate environmental and social

issues into business performance. Moreover, fu-

ture market and regulatory developments may in-

crease interest in sustainability at the company

board level.

Usefulness of the SBSC Template andStrategy Map

Our second research question asked about the

utility of employing a company-adapted, cus-

tomizable SBSC template and strategy map. We

found that this approach can help solve one of

the key problems inherent in SBSC implementa-

tion: the time needed for company staff to de-

velop the scorecard.

Apart from the perceived need to include a sep-

arate category for financial performance, the SBSC

format we used (with its modified perspectives,

performance categories adapted to performance

status, and strategy context) was found to be ade-

quate in dealing with the multiplicity of sustain-

ability issues found within the study companies.

This fits with the finding of Gminder and

Bieker (2002) that it would be helpful to have a

reference framework for classifying strategies,

goals, and measurements based on their contri-

bution to corporate sustainability. Such a frame-

work is useful in analyzing the extent of com-

pany sustainability achievements and as a

possible methodology for gradually implement-

ing sustainability or social responsibility pro-

grams within corporations.

AcknowledgmentThe study discussed here was funded by the

Fundação para a Ciência e a Tecnologia (FCT)

[Science and Technology Foundation], Programa

Operacional Ciência, Tecnologia, Inovação

(POCTI) [Science, Technology and Innovation

Operational Program], Portugal.

SourcesAccountAbility. (1999). AA1000 Framework. Standard, guide-lines, and professional qualification (draft). London: Instituteof Social and Ethical AccountAbility, http://www.accountabil-ity21.net/aa1000/default.asp

Amanco. (2003). Amanco reporte de sostenibilidad. Seehttp://www.amanco.com/Holding/USA/amus0019.nsf/

Azapagic, A. (2004). Developing a framework for sustainabledevelopment indicators for the mining and minerals industry.Journal of Cleaner Production 12(6), 639–662.

Azzone, G., Noci, G., Manzini, R., Welford, R., & Young, C. W.(1996). Defining environmental performance indicators: Anintegrated framework. Business Strategy and the Environ-ment, 5(2), 69–80.

Baptista, I., Vasconcelos, L., Santos, E., Tente, H., Simões, S., &Caser, U. (2002). Reflexões sobre os Desafios de Desenvolvi-mentos Sustentável para a Sonae. Lisboa: WTeamUp.

Bennett, M., Hughes, A., & James, P. (1999). Evaluating thewhole-life environmental performance of products: A com-parison of eco-points, eco-compass and eco-costing ap-proaches. In M. Bennett, P. James, & L. Klinkers (Eds.), Sus-tainable measures: Evaluation and reporting of environmentaland social performance (pp. 283–311). Sheffield: GreenleafPublishing.

Bennett, M., & James, P. (1999). ISO 14031 and the future ofenvironmental performance evaluation. In M. Bennett, P.James, & L. Klinkers (Eds.), Sustainable measures: Evaluationand reporting of environmental and social performance (pp.76–97). Sheffield: Greenleaf Publishing.

Bennett, M., James, P., & Klinkers, L. (1999). Introduction. InM. Bennett, P. James, & L. Klinkers (Eds.), Sustainable mea-sures: Evaluation and reporting of environmental and socialperformance. Sheffield: Greenleaf Publishing.

Bieker, T., & Gminder, C.-U. (2001). Towards a sustainabilitybalanced scorecard. Paper presented at Oikos PhD SummerAcademy 2001: Environmental Management & Policy and Re-lated Aspects of Sustainability.

Bundesamt für Umwelt, Wald und Landschaft (BUWAL) [SwissAgency for the Environment, Forests and Landscape]. (1991).Oekobilanz von Packstoffen, Stand 1990. SchriftenreiheUmwelt. Nr. 132. Bern: BUWAL.

Center for Economic Priorities Accreditation Agency/SocialAccountability International (CEPAA/SAI). (2000). SA 8000(Social Accountability 8000). Available online at http://www.cepaa.org/sa8000.htm

Dias-Sardinha, I., & Reijnders, L. (2005). Evaluating environ-


mental Life Cycle Assessment of Products: Guide (Part 1) andBackgrounds (Part 2). The Netherlands: Centre of Environ-mental Science—Leiden University (CML), Netherlands Or-ganisation for Applied Scientific Research (TNO), and Fuels &Raw Materials Bureau (B&G).

International Organization for Standardization (ISO). (1999).ISO 14031: Environmental management—Environmentalperformance evaluation—Guidelines. Geneva: ISO.

Investor Responsibility Research Center (IRRC). (1996). Envi-ronmental Reporting and Third Party Statements. Washing-ton, DC: IRRC/Global Environmental Management Initiative.See http://www.irrc.org/index.html

Johnson, D. S. (1998). Identification and selection of environ-mental performance indicators: Application of the balancedscorecard approach. Corporate Environmental Strategy, 5(4),34–41.

Jung, E. J., Kim, J. S., & Rhee, S. K. (2001). The measurementof corporate environmental performance and its applicationto the analysis of efficiency in oil industry. Journal of CleanerProduction, 9(6), 551–563.

Kaplan, R. S. (2003). Using the balanced scorecard to link en-vironmental performance to strategic objectives. In INSEAD,Proceedings of the Balanced Scorecard and Sustainability Con-ference (November 2003), Fontainebleau.

Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard:Measures that drive performance. Harvard Business Review,70(1), 71–79.

Kolk, A. (2000). The economics of environmental manage-ment. London: Prentice Hall.

Madsen, H., & Ulhøi, J. P. (2001). Integrating environmentaland stakeholder management. Business Strategy and the En-vironment, 10(2), 77–88.

Marsanich, A. (1997). Environmental indicators in EMAS envi-ronmental statements. Milan: Fondazione Eni Enrico Mattei.

Mauser, A. (2001). The greening of business—Environmentalmanagement and performance evaluation: An empirical studyin the Dutch dairy industry. Delft: Eburon Publishers.

National Round Table on the Environment and the Economy(Canada). (1998). Measuring eco-efficiency in business. Seehttp://www.nrtee-trnee.ca

Olsthoorn, X., Tyteca, D., Wehrmeyer, W., & Wagner, M.(2001). Environmental indicators for business: A review of theliterature and standardisation methods. Journal of CleanerProduction, 9(5), 453–463.

Organisation for Economic Co-operation and Development(OECD). (1994). Environmental indicators: OECD core set.Paris: OECD Environment Directorate.

Piet, J. (1994). Milieu prestatie-indicatoren [Environmentalperformance indicators]. Holland Management Review, No.41.

Prakash, A. (2001). Why do firms adopt beyond-complianceenvironmental policies? Business Strategy and the Environ-ment, 10(5), 286–299.

Reinhardt, F. L. (1999). Down to earth: Applying businessprinciples to environmental management. Boston: HarvardBusiness School Publishing.

mental and social performance of large Portuguese compa-nies: A balanced scorecard approach. Business Strategy andthe Environment, 14(2), 73–91.

Dias-Sardinha, I., Reijnders, L., & Antunes, P. (2002). From en-vironmental performance evaluation to eco-efficiency andsustainability balanced scorecards. Environmental QualityManagement, 12(2), 51–64.

Ditz, D., & Ranganathan, J. (1997). Measuring up: Toward acommon framework for tracking corporate environmentalperformance. Washington, DC: World Resources Institute.Available online at http://www.igc.org/wri

Dow Jones Sustainability Indexes. See http://www.sustainabil-ity-index.com/

Eagan, P. D., & Joeres, E. (1997). Development of a facility-based environmental performance indicator related to sus-tainable development. Journal of Cleaner Production, 5(4),269–278.

Eco-Management and Audit Scheme (EMAS). (1993). Euro-pean Council Regulation (EEC) No. 1836/93. See http://ec.eu-ropa.eu/environment/emas/about/summary_en.htm

Epstein, M. J., & Wisner, P. S. (2001). Using a balanced score-card to implement sustainability. Environmental QualityManagement, 11(2), 1–10.

European Chemical Industry Council (CEFIC). (1998). Seehttp://www.cefic.be

Figge, F., Hahn, T., Schaltegger, S., & Wagner, M. (2002). Thesustainability balanced scorecard—Linking sustainabilitymanagement to business strategy. Business Strategy and theEnvironment, 11(5), 269–284.

Fiksel, J., McDaniel, J., & Mendenhall, C. (1999). Measuringprogress towards sustainability: Principles, process, and bestpractices. In 1999 Greening of Industry Network Confer-ence—Best Practice Proceedings. Columbus, OH: BattelleMemorial Institute. Available online at http://www.greeningofindustry.org/gin1999/Fiksel_McDaneil_Mendenhall.pdf

Freeman, R. E. (1984). Strategic management: A stakeholderapproach. Boston: Pitman Publishing.

Ghobadian, A., Viney, H., Liu, J., & James, P. (1998). Extend-ing linear approaches to mapping corporate environmentalbehaviour. Business Strategy and the Environment, 7(1),13–23.

Global Reporting Initiative. (2002). Sustainability reportingguidelines. Amsterdam: Global Reporting Initiative.

Gminder, C.-U., & Bieker, T. (2002). Managing corporate so-cial responsibility by using the “sustainability – balancedscorecard.” Paper presented at the Greening of Industry Net-work Conference 2002, Göteborg, Sweden.

Grafé-Buckens, A., & Hinton, A.-F. (1998). Engaging the stake-holders: Corporate views and current trends. Business Strategyand the Environment, 7(3), 124–133.

Greenberg, R., & Unger, C. (1992). Improving the environ-mental process. Total Quality Environmental Management,1(3), 269–276.

Heijungs, R., Guineé, J. B., Huppes, G., Lankreijer, R. M., Udode Haes, H. A., Wegener Sleeswijk, A., et al. (1992). Environ-


Skillius, A., & Wennberg, U. (1998). Continuity, credibilityand comparability: Key challenges for corporate environmen-tal performance measurement and communication. Reportcommissioned by the European Environment Agency. Avail-able online at http://www2.bren.ucsb.edu/~delmas/courses/esm210/SKILLIUS%20AND%20WENNBERGT.pdf

Smeets, E., & Weterings, R. (1999). Environmental indicators:Typology and overview. Technical report no. 25. Copenhagen:European Environment Agency. Available online at http://re-ports.eea.europa.eu/TEC25/en/tech_25_text.pdf

Sonae SGPS. (2002). Relatório Ambiental. Maia, Portugal:Sonae SGPS. Available online at http://www.sonae.pt/files/ambiente/relatorios/RelatorioAmbiental2002.pdf

Spangenberg, J., & Bonniot, O. (1998). Sustainability indica-tors: A compass on the road towards sustainability. Wuppertalpaper no. 81. Wuppertal, Germany: Wuppertal Institute.

Stanners, D. A., & Bourdeau, P. (Eds.). (1995). Europe’s envi-ronment: The Dobris assessment. Copenhagen: European En-vironment Agency.

Thoresen, J. (1999). Environmental performance evaluation—A tool for industrial improvement. Journal of Cleaner Produc-tion, 7(5), 365–370.

Tyteca, D., Carlens, J., Berkhout, F., Hertin, J., Wehrmeyer, W.,& Wagner, M. (2002). Corporate environmental performanceevaluation: Evidence from the MEPI project. Business Strategyand the Environment, 11(1), 1–13.

United Nations Environment Programme. (1994). Companyenvironmental reporting: A measure of the progress of busi-ness and industry towards sustainable development. Techni-

cal report series no. 24. Paris: United Nations EnvironmentProgramme.

Veleva, V., Hart, M., Greiner, T., & Crumbley, C. (2001). Indi-cators of sustainable production. Journal of Cleaner Produc-tion, 9(5), 447–452.

Wells, R., Hochman, M., Hochman, S., & O’Conell, P. (1992).Measuring environmental success. Total Quality Environmen-tal Management, 1(4), 315–337.

World Business Council for Sustainable Development (1998).How companies measure and report their eco-efficiency.Geneva: World Business Council for Sustainable Development.

Young, C. W., & Rikhardsson, P. M. (1996). Environmentalperformance indicators for business. Eco-Management andAuditing, 3(3), 113–125.

Young, W., & Welford, R. (1999). An environmental perfor-mance measurement framework for business. In M. Bennett,P. James, & L. Klinkers (Eds.), Sustainable measures: Evalua-tion and reporting of environmental and social performance(pp. 98–116). Sheffield: Greenleaf Publishing.

Zingales, F., & Hockerts, K. (2003). Balanced scorecard andsustainability: Examples from literature and practice. Workingpaper 2003/30/CMER. Fontainebleau: INSEAD Centre for theManagement of Environmental Resources. Available online athttp://ged.insead.edu/fichiersti/inseadwp2003/2003-30.pdf

Zingales, F., O’Rourke, A., & Hockerts, K. (2002). Balancedscorecard and sustainability: State of the art review. Workingpaper 2002/65/CMER. Fontainebleau: INSEAD Centre for theManagement of Environmental Resources. Available online athttp://ged.insead.edu/fichiersti/inseadwp2002/2002-65.pdf

Idalina Dias-Sardinha is a postdoctoral researcher at IN+, Center for Innovation, Technology and Policy Research, Tech-nical University of Lisbon (IST), and professor of corporate social responsibility at the High Institute of Management (ISG),Lisbon, Portugal. She can be contacted as follows: Instituto Superior Técnico (IST), Center for Innovation, Technology andPolicy Research, IN+., Av. Rovisco Pais, 1049-001 Lisboa, Portugal; phone: + 351 218 419 405; fax: + 351 218 496 156;e-mail: [email protected]

Lucas Reijnders is a professor of environmental science at the University of Amsterdam (IBED) in The Netherlands. Hecan be contacted as follows: University of Amsterdam, IBED, Niewe Prinsengracht 130, 1098 VZ Amsterdam, The Nether-lands; phone: +31 20 5256269; fax: +31 20 5255850; e-mail: [email protected]

Paula Antunes is a professor of environmental management at the New University of Lisbon, Faculty of Sciences andTechnology. She can be contacted as follows: Universidade Nova de Lisboa, Faculdade de Ciencias e Tecnologia, Depar-tamento de Eng. do Ambiente, Quinta da Torre, 4º Piso, Gab. 439, 2825-114 Costa da Caparica, Portugal; phone: +351 212948300; e-mail: [email protected]

Documents

Developing Sustainability Balanced Scorecards for ...pascal.iseg.utl.pt/~socius/publicacoes/wp/lina_lucas_paula_2007... · the case of Novar-tis, ... A variety of sustainability balanced