SESSION 8 : CONTROLLING SUSTAINABILITY

I- SUSTAINABILITY & MANAGEMENT CONTROL

Sustainability/Sustainable development : is a development that meets the needs of the

present without compromising the ability of future generations to meets their own needs

MCS enable managers to :

- Manage activities : allocate resources, take decisions, prioritize
- Evaluate the impacts of activities

II- PRIORITIZING OBJECTIVES : THE MATERIALTY ANALYSIS

The materiality analysis : is the process through which an organization identifies the issues
that are the most important to address

An issue is “material” (important) for an organization if :

1) It has an important effect on the economy, the environment and/or society,
And/Or
2) It influences the decisions of the organization’s stakeholders

Uses of the materiality analysis

Realizing a materiality analysis

Example : Danon’s materiality analysis

III- MANAGING ACTIVITIES : THE SUSTAINABILITY BSC

Why use a BSc for sustainability ?

Approaches to the BSC

Integrative approach
The architecture of the original BSC remains the same and sustainability is added within each
of the perspectives. The degree to which sustainability is really taken into account in the BSC
depends on the strategy. It is a continuum ranging from :

The least sustainability-focused

• Business-as-usual strategy and goals
• Sustainability-related measures
• The business orientation is no sustainability-focused, but social and environment
impacts of the activities are measured

The most sustainability-focused

• Sustainability is at the core of the strategy. The perspectives have been refocused
- Financial perspective : do economic outcomes help achieving suitable goals ?
- Customer perspective : how can our customer goals take into account the
expectations of our stakeholders ?
- Internal Process perspective : how can we operate in a more socially-beneficial,
environmentally-friendly way ?
- Learning & Growth perspective : how can we promote sustainability values
culture and skills ?

Add-on approach
The architecture of the original BSC is modified to add sustainability perspectives. Different
alternatives are possible, but the main 2 ones are :
Pros and Cons

IV- EVALUATING SUSTANABILITY PERFORMANCE

Evaluating social performance

Evaluating environmental performance

Measurement and reporting of the impacts an organization’s activities have on the
environment.
Evaluating economic performance differently
Measurement and reporting of the costs that should be borne by an organization if it
accounted for the “hidden cost” of its activities

Hidden costs : are the costs of all the negative externalities caused by an organization’s
activities : damage to the environment, social problems, people’s health
® Organizations do not integrate these costs in their profit measurement

How can organizations pay for those costs ?

- External constraint : True Cost Economics = economic model that includes the cost of
negative externalities into the pricing of goods and services through tax
- Internal change : Accounting = integrating social and environmental costs in the
costing of products/services and in the financial statements of the organizations

V- CONCLUSION

Some of the issues in sustainability control

1. Conflictual management control systems
- no means associated with the action plan (no budget) => needs to “slide into things”
- no support from the hierarchy, no recognition of the manager’s involvement => “voluntary
work”

2. Complex cause-and-effect relationships

Sustainability impacts are very hard to measure and control because
® The cause-and-effect relationships are not always well-known
® The impacts can occur in geographically remote areas
® The impacts can be very long-term