Sustainability and the Balanced Scorecard Essay Example for Free

Sustainability and the Balanced batting order EssayPractices that are good for the environment and society may appear to have a shun impact on somatic favorableness, but use of the balance scorecard lav result in a clearer picture of the relationship among sustainable practices, corporate strategies, and profitability. This article explores three ways that sustainable practices can be incorporated into BSC and discusses issues that should be considered when selecting sustainability related measures, targets, and goals. It also examines ways to enhance both internal and impertinent reporting of sustainability-related performance. Adopting green operating practices is certainly good for the environment, yet the implications of such practices for a businesss profitability may be viewed as both positive and negative. On one hand, by impart to product differentiation in the market- place and enhancing organizational image to investors and customers (both current and potentia l), green practices may join on a companys profitability. On the other hand, green practices may actually reduce profitability because of extra costs that result from implementation and continuation of sustainable practices. For example, installing solar panels on a building may lower monthly electricity bills, but, concomitantly, the reduced electricity bills may be more(prenominal) than offset by the high purchase and installation costs associated with the panels.The sustainability concept now runs rampant in business literature, but, unfortunately, there is no agreed- upon definition of sustainability or its underlying tenets. Sustainable or green practices leave alone be found throughout the operations of a business. These practices can be intromitd in the radiation diagram features of an organizations buildings, vendorselection in the supply chain, production of goods and provision of services, and packaging features and scattering elements of those products and services, and the practices will be a significant consideration in a products eventual(prenominal) disposal.The BSC typically reflect tetrad interrelated spatial relations of a company financial, customer, international business prowess, and learning and growth. each(prenominal) office has a series of performance measures, targets, and goals that reflect the firms long-term strategies. The financial perspective takes the viewpoint of the company shareholders and typically uses traditional financial measures such as operating cash flows, recidivate on investment, and changes in operating income over time.The customer perspective addresses product and firm differentiation strategies as well as value creation from the viewpoint of the organizations client base. The international business processes perspective includes measures of the qualification and the effectiveness of the firms operations. The learning and growth perspective focuses on the creation of organizational value through emp loyees and modernistic practices.The first method is to add a fifth perspective to the BSC. It may be the simplest approach for companies that regard to emphasize sustainability as a key corporate value or a critical strategy. The sustainability perspective consists of social and environmental performance indicators that link with the other four BSC dimensions and highlights the importance of social, environmental, and economic business as a corporate goal. This approach could allow management to establish less definitive measurements without compromising organizational aggregation.The second approach is sustainability-balanced scorecard (SBSC). A separate SBSC is an appropriate for many companies such as those brisk BSC but want to measure or integrate sustainability without the disruption and cost of adopting a full-scale BSC. SBSC include the following four perspectives sustainability, stakeholders, processes and learning. The sustainability perspective would emphasize the t riple bottom line of economic prosperity, environmental quality, and social justice. The stakeholder perspective wouldincorporate measures of business ethics, labor practices, and impact on society. The processes perspective would focus on particularised organizational external and internal processes products, tools, and systems. The learning perspective would stress organizational synergy, training, and research and development. A effectiveness of the SBSC is that a well-defined corporate sustainability strategy is not essential to its development.The third is integrating sustainability measures throughout the four perspectives. Management has to both define the metrics that are important in measuring progress towards organizational sustainability objectives, and how sustainability (or lack thereof) will affect the future. Incorporating new measures are important the firms financial well being as customer satisfaction, manufacturing cycle efficiency, and patent-generating researc h and development. The integration method also works well for companies that have pick out a more all-encompassing definition of sustainable practices that includes environmental, health, and social aspects. This article relates to accounting class because of the topics cover such as sustainability, triple bottom reports, return on investment, and balanced scorecard.The article concludes with developing sustainability metrics. These go out tangible guidance to how the strategies implemented help create shareholder value. There are three ways that sustainable practices can be incorporated into the balanced scorecard adding a fifth perspective to the BSC, a sustainability-balanced scorecard, and integrating sustainability measures throughout the four perspectives. My perspective is, I know how important it is to be not merely more green today, but as cost effective as possible.The three methods dont look too complicated to be implemented. The article states at the end that companie s are being pressured by stakeholders to become more transparent, and such transparency is becoming the norm rather than the exception. The 2008 KPMG international survey of corporate responsibility reporting found that, in 2008, nearly 80% of the worlds largest 250 companies issued some type of responsibility report. These responsibility reports included governance, ethical, environmental and social issues. It is now more important than ever to go green.