Improving sustainability performance with management information models

Improving sustainability

performance with management information models

Terry Damink & Max Dronkert

Faculty: Karlstad Business School Subject: Marketing

Points: 15

Supervisor: Bertrand Pauget

Examiner: Anders Gustafsson

Date: 2017-06-17

Max Dronkert & Terry Damink

Improving sustainability

performance with management information models

Business Administration Master’s Thesis

15 ECTS

Term: Spring 2017

Supervisor: Bertrand Pauget

Acknowledgements

We would like to make our acknowledgements to people that supported us in our thesis project. At first, we would like to thank all the respondents for participating in our field research. Their experience provided valuable insights from a practical perspective. Also, we would like to thank Henk Hadders for his time to discuss his work. Lastly, special thanks go to our supervisor Dr.

Bertrand Pauget for the support and advice during the research project.

We hope you enjoy reading this thesis.

Terry Damink

Max Dronkert,

June 2017

Abstract Purpose

The purpose of this paper is to discover how management information models provide organizations that have the will to perform sustainable, with a tool that gives them knowledge and practical guidance to reach sustainability and avoid the practice of greenwashing as a result. Therefore, the research question is:

How can management information models serve as a tool to improve the sustainability performance and reduce the practice of greenwashing of an organization?

Methods

The authors approached this research from a balanced and pragmatic view.

The primary data in the research is collected with a qualitative approach in the form of semi-structured interviews. The interviews are conducted with respondents from Swedish organizations in different sectors in order to increase the reliability of the study. The respondents are responsible for sustainability and management information models in their organizations.

Findings

The results present the need to enhance management information models by including the sustainability elements economic, social and environmental, also called the Triple Bottom Line (Elkington 1999). An evolution of the Balanced Scorecard (Kaplan & Norton 1996) is needed to reach a management information models that improves the sustainability performance. In addition, this study shows the importance of including a knowledge section in such models. Also, it is of high importance to place the measured outcomes of sustainability in context in order to provide insight in the true impact of the sustainability performance of the organization.

Implications

The implications of this research consists of three theoretical implications and three practical implications. The three theoretical implications include the three core elements of a sustainability model, simplification of complex knowledge especially on the knowledge performance and prescribing only the essential elements of a model. The three practical implications exists of dividing the implementation into phases, ensure responsibility of sustainability on a high management level and integrate sustainability into culture.

Key words

Sustainability; greenwashing; management information models; context-

Table of contents

Abstract………...4

1. Introduction ... 7

1.1. Background ... 7

1.2. Problem discussion ... 8

1.3. Research objective ... 10

1.4. Research approach ... 10

1.5. Outline of the report ... 11

2. Theory ... 12

2.1. Greenwashing ... 12

2.2. Sustainability ... 14

2.3. Sustainability performance measurement ... 16

2.4. The Balanced Scorecard ... 16

2.5. Knowledge ... 17

2.6. Evolution of the Balanced Scorecard... 19

2.7. Sustainability indicators ... 22

2.8. Conclusion and research gap ... 23

3. Methodology ... 25

3.1. Research approach ... 25

3.2. Research design ... 26

3.3. Construction of questionnaires ... 27

3.4. Case selection ... 28

3.5. Qualitative data analysis ... 32

3.6. Validity ... 32

4. Results ... 34

4.1. Case A (Coffee) ... 34

4.2. Case B (Architecture) ... 35

4.3. Case C (Paper) ... 36

4.4. Case D (Technology paper industry) ... 38

4.5. Case E (Fiber-based material industry) ... 40

4.6. Case F (Energy) ... 41

5. Analysis ... 43

5.1. Case analysis ... 43

5.1.1. Case A (Coffee) ... 43

5.1.2. Case C (Paper) ... 44

5.1.3. Case D (Technology paper industry)... 44

5.1.4. Case E (Fiber-based Material) ... 45

5.1.5. Case F (Energy) ... 46

5.2. Discussion... 46

5.2.1. Theoretical implications ... 47

5.2.2. Practical implications ... 48

6. Conclusion ... 50

6.1. Research question ... 50

6.2. Research contribution ... 51

6.3. Limitations ... 51

6.4. Future research ... 52

7. References... 53

Appendix I: Interview questions first round ... 60

Appendix II: Interview questions second round Case A ... 61

Appendix III: Interview questions second round Case C ... 64

Appendix IV: Interview questions second round Case E ... 69

Appendix V: Interview questions second round Case F ... 72

Appendix VI: First Interview Henk Hadders ... 74

List of tables Table 1 Respondents data collection ... 31

List of figures Figure 1 Balance Triple Bottom Line ... 9

Figure 2 The Adaptive Scorecard (Hadders 2010) ... 20

Figure 3: The Adaptive Triple Bottom Line Scorecard (ATBLSC). ... 21

Figure 4 Process data collection ... 32

1. Introduction

This chapter presents an introduction of the topic of this thesis. A background of information about sustainability and greenwashing is given. Subsequently, the research objective and research question are presented. Finally, the research approach of this study is discussed and the remaining chapters of the report are outlined.

1.1. Background

In 2015, more than two-third of the global consumers said that they are willing to pay more for products and services that come from organizations that are devoted to social and environmental sustainability (Nielson 2015). The term sustainability can be defined as ‘‘meeting the needs of the present without compromising the ability of the future generations to meet their own needs”

(Brundtland 1987, P. 41). This considerable demand resulted in an estimation of global consumer market for green products and services of $845 billion in 2015 (Tolliver-Nigro 2011). Although the rising demand of sustainability among customers sounds promising, radical positive change on the field of sustainability is yet to come. Sachs (2015, P. 2) states that “the gigantic world economy is creating a gigantic environmental crisis, one that threatens the lives and wellbeing of billions of people and the survival of millions of other species on the planet, if not our own’’. Thus, there is a will in our society to perform more sustainable but we have not yet succeeded in improving the sustainability performance.

Due to the growing need and demand of sustainability in our society, an increasing amount of organizations pretend that their products and practices are more sustainable than they actually are in order to profit from these expanding green and sustainable markets (Delmas & Burbano 2011). The practice of misleading customers on the organizations environmental performance or the environmental benefits of a product or service is called greenwashing (Delmas & Burbano 2011). Thus, true sustainability and pretending to be sustainable are two contradictory terms on the same scale.

There is an assumption that all organizations that commit in greenwashing do this deliberately and with full intent (Bowen 2014). The authors of this thesis criticize this assumption and agree with several scholars that not every greenwashing organization does this intentionally (Theeroovengadum 2015;

Howell 2012; Brunton 2015; Ottman 2011). There are organizations that are

willing to contribute to sustainability and want to prevent greenwashing, but

simply lack the necessary knowledge and tools to do so. In many cases, these companies greenwash their products and services unintentionally. This is often a result of insufficient learning capacity to generate effective knowledge and the missing of an effective tool (Hadders 2010). In other words, some organizations want to be sustainable and avoid greenwashing, but they do not know how to do it. This can result in involuntary practice of greenwashing.

1.2. Problem discussion

There are a great number of studies published about the drivers of greenwashing and the communication element of greenwashing (Dahl 2010;

Delmas & Burbano 2011; Coppolecchia 2009). However, there is not much research available on unintentionally greenwashing. Authors only provide brief suggestions on how to avoid greenwashing (Howell 2012; Ottman 2011).

Therefore it is interesting to target the organizations that perhaps desire and try to be sustainable but lack the necessary skills to realize this vision. Since these organizations have the will to be sustainable, it is more likely to succeed in improving their sustainability performance with the help of a management information model. More research on the role of management information models that improves sustainability performance and prevents greenwashing in this particular group is needed.

To reach sustainability, organizations need to find the balance within three

different areas: environment, economy and society (Elkington 1999). This

balance is illustrated in figure 1. In order to find this balance, organizations

need the capacity to learn and innovate (McElroy 2008). An adequate

management information model can provide as a tool to learn and innovate

and find this balance. As the importance of the balance grows between

economic, environmental and social objectives, the market is moving from

separate management information models on those fields towards one

integrated model that covers the measurement of all the areas in the business

(Hadders 2010).

Figure 1 Balance Triple Bottom Line

A balance between different elements of an organization can be measured with The Balanced Scorecard (Kaplan & Norton 1996). However, this model does not yet include sustainability elements (Figge et al. 2002). An evolution of this model is needed to make it more suitable to improve the balance of the sustainability elements.

There are other models that can be used to measure the sustainability performance to find a better balance (GRI 2016; Callado & Fensterseifer 2011;

Perrini & Tencati 2006). However, these models do not place the measurements into context and lead to superficial sustainability reports (Hadders 2017). The organizations have the belief they perform sustainable but this can often not be ensured. An evolution of the Balanced Scorecard that incorporates sustainability elements would offer an adequate management information model that improves the sustainability performance and reduces the occurrence of involuntary greenwashing.

The lack of extensive research on involuntary greenwashing as a result of

insufficient management information models results in a research gap. The gap

includes organizations that want to perform sustainable but lack the tools to

do it. This thesis is focused on crossing this research gap by describing how

management information models can improve the sustainability performance

of organizations from a balanced view that results in a reduction of the

practice of greenwashing. A good sustainable model with the right elements

enables an organization to be truly sustainable and have the correct

information. When an organization has the correct information regarding its

sustainability performance it is less likely to involuntary commit in the act of

greenwashing.

1.3. Research objective

The goal of the thesis is to find out how management information models provide organizations that have the will to perform sustainable, with a tool that gives them knowledge and practical guidance to reach sustainability and avoid the practice of greenwashing as a result. Therefore, the research question is:

• How can management information models serve as a tool to improve the sustainability performance and reduce the practice of greenwashing of an organization?

The research question will be answered by focussing on the organizational perspective on management information models and the role of sustainability in these models.

1.4. Research approach

The approach of this study will not be an idealistic perspective of view, but a balanced and pragmatic perspective. This means that the focus of the research is not about radical change in only the environmental aspects but about finding a balance between economic growth, social justice and a sustainable environment. From a pragmatic point of view we can conclude that our society has to change to offer next generations the same comforts that we enjoy. As Al Gore already mentioned in 2006: “The pace of destruction has worsened and the urgent need for a response has grown more acute” (Gore 2006, P. 8). This is a threat on human kind and human behaviour needs to change to overcome this threat. As time has passed, a radical change did not come and from a pragmatic perspective it is not likely to come soon. The business environment is currently in a necessary transition phase to become a more balanced sustainable ecosystem. This transition comes step by step and this study provides a step in the movement towards sustainability (Hadders 2017).

The step this study makes consists of an organizational perspective of putting

sustainable management information models into practice. Thus so far, no

research has been done to the practical implementation of models that take

knowledge performance measurements into account. This research will

provide data on operationalizing the relative complex and abstract management information models that are focused on a balance in the Triple Bottom Line (Elkington 1999). This research approach shows a fit with the Balanced Scorecard (Kaplan & Norton 1996). An evolution of this model can lead to a sustainable management information model (Figge et al. 2002).

Managers that focus on sustainability and management information models from Swedish organizations are interviewed. Their expertise is used to review the model from a practical perspective. In addition, a dialogue with the founder of a model will provide a better understanding of sustainable management information models and enables the authors to discuss the findings.

1.5. Outline of the report

The thesis contains 6 chapters. Chapter 1 provides a background of

sustainability and describes a research problem in this field. In chapter 2,

different relevant terms are defined and the chapter builds up to a specific

model that supports the problem and research question. Chapter 3 contains an

explanation of the methods that are used in the research. The decisions on the

execution of the research are discussed. Thereafter, the collected empirical

data is showed in chapter 4. The analysis and de discussion are provided in

chapter 5. This chapter connects the literature and theoretical insight with the

collected empirical data. A conclusion of the research will be given in chapter

6. This includes an answer on the research question, limitations of the research

and suggestions on future research.

2. Theory

This chapter provides a theoretical framework that supports the later stages of the process in this study. The first sections start with introducing the concepts greenwashing and sustainability followed by a literature review on sustainability measurement. Subsequently, the literature review moves towards a necessary evolution of a balanced approach on management information models that include sustainability, knowledge and context-based outcomes.

2.1. Greenwashing

This section starts with the contradiction of sustainability: Greenwashing. This is the opposite and negative result in sustainability performance for a company with the will to perform sustainable. Greenwashing and sustainability are therefore linked to each other. These terms are both on one side of the scale of sustainability, where greenwashing is on the negative side and sustainability on the positive (Lyon & Montgomery 2015).

Reducing greenwashing by measuring sustainability performance starts with defining the term greenwashing. Greenwashing can be seen as behaviour of organizations that spend more time and money claiming to perform green than actually implementing business practices that minimize the environmental impact (EnviroMedia Social Marketing 2017). In other words, companies pretend to perform better on social and environmental aspects than they actually do. This definition suggests that greenwashing is always done on a deliberate basis. Some researchers argue that this is not always the case and that greenwashing can be an involuntary outcome of wrong actions and inadequate management (Theeroovengadum 2015; Howell 2012; Brunton 2015; Ottman 2011). Therefore, a broader and more comprehensive definition is necessary to support this research approach.

Scholars tried to define greenwashing more precise, but so far there is no

consensus on the term Greenwashing (Lyon & Montgomery 2015). All these

definitions of greenwashing reflect concern with communication that misleads

people into holding overly positive beliefs about an organization’s

environmental performance, practices, or products (Lyon & Montgomery

2015). Thus, communication and sustainability performance seem to be two

major parts of the term greenwashing. Delmas & Burbano (2011, P. 65) define

greenwashing ‘‘as the intersection of two firm behaviours: poor environmental

Although this definition is very understandable, it presumes that it is possible to summarize the aggregate environmental and communication performance as positive or negative (Lyon & Montgomery 2015). Communication is obviously an important part of greenwashing. However, this research does not specifically focus on the communication part of greenwashing but on the knowledge part of greenwashing. For that reason we try to find a definition that does not emphasize the communication element.

Bowen (2014, P3) defines greenwashing as: “A specific subset of symbolic corporate environmentalism in which the changes are both ‘merely symbolic’

and deliberately so”. This is a promising definition but it assumes that greenwashing is always deliberately done. As described earlier, this is not always the case. Environmental proactive organizations do not want to engage in greenwashing. The reason they sometimes do it anyway is because of the lack of a strong governmental system or established self-system (Ottman 2011). In addition, the lack of human and financial resources and the lack of understanding the greening process can lead to unintentional greenwashing (Brunton 2015).

The definition of Lyon and Maxwell (2011, P. 9) will be followed in this research: “Selective disclosure of positive information about a company’s environmental or social performance, without full disclosure of negative information on these dimensions, so as to create an overly positive corporate image”. This definition is selected for its profound support it does not specifically exclude organizations that unintentionally engage in greenwashing.

The main driver of greenwashing is the pressure on organizations to demonstrate conformity with societal expectations around environmental sustainability and to constantly show external stakeholders that business decisions are made with respect to green issues (Markham et al. 2014). There are three important factors that make organizations ecological responsive:

competitiveness, legitimacy and ecological responsibility (Bansal & Roth 2000).

Ecological responsibility is a direct result of the willingness to contribute to a more sustainable society. Competitiveness and legitimacy are factors that put pressure on having ecological responsible products (Markham et al. 2014). The ecological responsibility is related to the target group of this research.

Ecological responsibility is not the only factor that is important for

sustainability. Two other factors are economic and social elements (Elkington

1999).

The pressure often comes from beyond competitiveness and legitimacy only.

Important stakeholders often pressure organizations to increase their sustainability performance. Freeman (1984, P. 46) describes stakeholders as

“any group or individual who can affect or is affected by the achievement of the firm's objectives”. To illustrate, financial institutions can pressure organizations to communicate a compelling sustainability narrative at the risk of not being able to access financial capital (Ramus & Montiel 2005). Also industry associations can make a certain level of demonstrated sustainability as a requisite condition for a membership (Delmas & Burbano 2011).

Environmental regulators can be a motivation for greenwashing too. The perception of positive environmental performance can help firms in influencing the regulators from taking action on a certain environmental issue of the organizations´ interest (Walker & Wan 2012). This pressures organizations to be sustainable and increases the chance on unintentional greenwashing.

There is a strong positive correlation between firms that practice superior environmental performance and profitability (Ambec & Lanoie 2008). This means that a true sustainable performance is the desirable outcome from the pragmatic approach. Not only does the sustainability of an organization benefit the environment and society, it improves its own position as well. The next section provides a theoretical support of the term sustainability.

2.2. Sustainability

The positive contradiction of greenwashing on the other side of the scale is

sustainability. Until today there is no consensus on the term sustainability and

there are currently more than 50 definitions of sustainability available (Faber et

al. 2005). The first established and well-known definition is founded at World

Commission on Environmental and Development (WCED) in 1987: ‘‘Meeting

the needs of the present without compromising the ability of the future

generations to meet their own needs (Brundtland 1987, P. 47)’’. The definition

of the Brundtland report is a very neutral orientated definition that can be

used by environmentalists and developmentalists (Norton 1992). This neutral

definition is widely adopted and would fit in the balanced approach on

sustainability in this research. However, more details are needed about the

components of sustainability to understand what true sustainability means.

Norton (1992, P. 25) describes sustainability as “a relationship between dynamic human economic systems and larger, dynamic, but normally slower changing ecological systems, such that human life can continue indefinitely, human individuals can flourish, and human cultures can develop—but also a relationship in which the effects of human activities remain within bounds so as not to destroy the health and integrity of self-organizing systems that provide the environmental context for these activities.” This comprehensive approach is interesting because it includes the balance between economic aspects, environmental aspects and social aspects. These three aspects where later centred in a theory called the Triple Bottom Line (TBL) (Elkington 1999). This theory argues that sustainability is about ‘‘finding a balance between economic prosperity, environmental quality, and social justice, moves organizations in an absolute state of sustainability (Elkington 1999, P2)’’. An absolute state of sustainability is in other words, 100% green.

The many definitions of sustainability may differ in various ways but they share a common component. All the definitions include: maintenance, sustenance or continuity of a certain resource, system, condition or relationship and the goal is always to keep something at a certain level and avoiding decline (Hadders 2010). We argue that ‘something’ refers to the three aspects of the Triple Bottom Line (Elkington 1999). In this thesis the definition of sustainability of Elkington (1999) is adopted because fits the balanced approach of the thesis. This balance between economic prosperity, environmental quality, and social justice is well represented in the TBL of Elkington (1999) and links to the approach of the research.

Recently, academics began to argue that it is important to put sustainability

into context, also called “context-based” or “Sustainability Context”. These

terms mean that the measurement and reporting of organizations should

compare the impact of the output from the organization with the economic,

environmental and social thresholds instead of only measuring your own

output (Thomas & McElroy, 2015). Thomas and McElroy (2015) go further

and state that all companies should apply a context-based approach to

sustainability reporting. Existing sustainability measurement methods, should

integrate sustainability context more explicitly. Hadders (2017) agrees with

other scholars and his frustration with the lack of sustainability context has led

him to create his own approach in measuring sustainability performance in

2010 in which context plays a vital role.

Thus, the balance between economic, environmental and social elements must be a threshold for organizations to reach the objective of being sustainable and avoid greenwashing. A context-based approach enables organizations to express the true impact of their results. Reaching sustainability requires a management information model that includes a context-based approach.

2.3. Sustainability performance measurement

If an organization has the objective to perform sustainable, the measurement and management of sustainability performance and improvements becomes crucial (Maas & Liket 2011; Schaltegger & Burrit 2010). The integration and coordination of business processes aligned with sustainability is fundamental to achieve effective results (Crittenden et al. 2011; Hubbard 2009; Porter &

Kramer 2006). This can be enabled by a solid strategy aligned with sustainability elements and an adequate sustainability performance measurement system (Azapagic 2004; Figge & Hahn 2004; Labuschagne et al.

2005; Veleva & Ellenbecker 2001).

There is still challenge to corporate sustainability regarding the integration of sustainability into the business strategy (Gond et al. 2012). Sustainability is often not used in corporate management models (Tung et al. 2011). If organizations separate sustainability performance measurement from their overall management information model, there will not be a contribution to solutions and sustainable development and it will not create value for the society (Frankental 2001; Keim 1978; Margolish & Walsh 2003; Walker & Wan 2012). When organizations do want to contribute to a better society and improve their sustainability performance, internal actors need management tools to align the organization (Maas et al. 2016). Thus, however there is a need for the integration of sustainability in management models, it is often not the case.

2.4. The Balanced Scorecard

A widely adopted management model to measure operational performance is the Balanced Scorecard (Kaplan & Norton 1996). This is one of the worlds most used performance scorecard for measuring financial and non-financial performance. The holistic framework comprises indicators from four perspectives: financial, customer, internal business process and learning &

growth (Kaplan & Norton 1996). The Balanced Scorecard brings separate

elements of a business together and protects managers from sub optimization,

where improvements in an element can lead to decline in another element (Kaplan & Norton 1996).

As the title implies, the Balanced Scorecard is a tool that enables reaching the right balance in an organization. Therefore, it fits with the balanced and pragmatic approach of this study and the Triple Bottom Line approach on the concept of sustainability (Elkington 1999). Other sustainability measurement models such as GRI, Sustainability Evaluation and Reporting System (SERS) and the Corporate Sustainability Grid (GRI 2016; Perrini & Tencati 2006;

Callado & Fensterseifer, 2011) are lacking context in sustainability measurement and the results do not have the desired effect (Hadders 2017). In addition, these sustainability models are not integrated in the general management model of organizations. Considering the importance of integrating sustainability in the overall management process (Azapagic 2004;

Figge & Hahn 2004; Labuschagne et al. 2005; Veleva & Ellenbecker 2001), the Balanced Scorecard is a suitable starting point for reaching sustainability performance in organizations.

The Balanced Scorecard can serve as a starting point for sustainability management information models. However, the basis needs one major additional element to be able to apply in sustainability context. This element is knowledge. McElroy (2006) states that organizations that strive to be sustainable need two things: knowledge of its impacts on the world and the capacity to learn and innovate.

2.5. Knowledge

Simply measuring key performance indicators does not provide an organization a profound guidance in reaching true sustainability. Organizations need understanding of their practices to reach their objectives (Hadders 2010).

For example, if the operational performance measurement shows a gap in the environmental performance and the environmental objective in an organization, the organization needs knowledge on how to cross this gap.

Hadders (2010) argues that knowledge is among the key elements in making a

business perform in a more sustainable way. To perform sustainable,

organizations need the knowledge “how” to pursue this desire. Therefore, it is

necessary to define the term knowledge and discuss how this can be

incorporated in management models. This transition from ordinary

management models towards management models that not simply measure

certain business components but incorporate knowledge will provide organizations with an adequate tool in the process towards sustainability.

Knowledge is a concept that is, similar to sustainability, difficult to define.

Different scholars have several perspectives on knowledge. A definition that can be found in English dictionaries is: “knowledge is understanding based on experience” (James 1907). But it can be questioned if experience is always required to reach knowledge. New knowledge can be created through innovations without experience in the specific field (Hadders 2010). Another definition of knowledge, created by Aune (1970) is: “information in context”.

This definition can be criticized by arguing that knowledge is information in context doesn't distinguish knowledge from information. Information can contain the same level of context as knowledge (Firestone 2001). Knowledge can be distinguished from information by the content of the validation context of knowledge (Firestone 2001).

A high sustainability performance is a result of high quality actions (McElroy 2002). Making high quality actions is directly related to high quality knowledge, which depends on high quality learning, which depends on high quality epistemology (McElroy 2002). Thus, knowledge is key to recognize the right actions to take in improving the sustainability performance. If the results of sustainability are negative, we need learning, intelligence and knowledge as a process of sustainable innovations and adaption to re-establish sustainability (Hadders 2010). An adequate tool in the form of a management model can provide support to gain this knowledge. Not integrating, using and learning from sustainability performance data offers limited business value for firms (Friedman, 1970; Ramos et al., 2013; Vance, 1975)

Sustainable organizations need to be effective and adaptive. This means that leaders need to make the right decisions on a consistent basis (Hrebiniak &

Joyce 1985; Burgelman 1991). Many organizations are, however, not capable in

dealing with extreme environmental complexity due to the lack of insufficient

knowledge for action and to the inadequate learning capacity to generate

effective knowledge (Hadders 2010). To become sustainable, an organization

needs knowledge of its impacts on the world, and the capacity to learn and

innovate in response to problems (McElroy 2006). This is all linked to the

need of providing companies with a knowledge-creating system that holds

economic, social and environmental aspects of the Triple Bottom Line

(Hadders 2010; Elkington 1999).

2.6. Evolution of the Balanced Scorecard

The balanced approach of the Balanced Scorecard is promising but is does not contain a profound knowledge element. An evolution of the Balanced Scorecard is needed to provide the necessary tool to reach sustainability (McElroy 2006, Hadders 2010). The Balanced Scorecard (Kaplan & Norton 1996) is originally not designed for indicators such as: sustainability, adaption and knowledge management (Hadders 2010). These topics may be of importance in today’s business but where not seen as crucial when the Balanced Scorecard was introduced in 1996. To include these topics, the model needs to be transformed (Figge et al. 2002).

In addition, the Balanced Scorecard is not comprehensive enough and therefore not adequate as a guide to specify key performance indicators (Firestone 2006). Another point of improvement of the original Balanced Scorecard is the measurement of its elements. In many cases there are too many indicators or the set of indicators does not obtain important variation for the organizational behaviour (Firestone 2006).

Management information models can be deployed as guidance and a tool to measure sustainability performance and could act to encourage companies in their sustainability practices (Parguel et al. 2011). A new model that complements the balanced approach of this research is the Adaptive Quadruple Bottom Line Scorecard (Hadders 2010). The objective of this model is to enable organizations to reach a balance between the environmental, social and economic bottom line (Elkington 1999), without being a result of activism.

Although the Balanced Scorecard is not completely suitable for measuring

sustainability performance, its structure is used as a basis to create a new

model. As mentioned before, knowledge is an important element in measuring

sustainability. The first step in the process to transform the Balanced

Scorecard to a suitable management model that includes sustainability goals is

to distinguish routine learning and creative learning (Firestone 2006a). Routine

learning is about making new knowledge by applying old knowledge in the

form of rules or models that are already developed (Hadders 2010). Creative

learning can be described as learning new general rules and models to chance

the way to execute operational process activity (Hadders 2010). The distinction

between routine- and creative learning leads to a new category that can be

applied in the basic Balanced Scorecard framework. Routine learning, which is

the ordinary method, will fall under operational performance measures.

Creative learning falls under a new category called ‘Intelligence performance measures’ (Hadders 2010). The adjustment can be seen in figure 2. Because knowledge is such an important component in sustainability performance, it is a necessary step in making a sufficient model for sustainability performance.

Figure 2 The Adaptive Scorecard (Hadders 2010)

The operational performance measures are focussed on improving the relation with the different stakeholders, where the intelligence performance measures focusses on the learning and innovative progress (Hadders 2010).

Subsequently, two more levels are introduced that will be measured in the eventual Adaptive Quadruple Bottom Line Scorecard (AQBLSC). The difference between the business process and business management is distinguished and applied in the model (Firestone 2006). The third level is created to see the difference between the outcome and the impact of operational performance measures and intelligence performance measures (Hadders 2010).

In addition, more changes have been made on the y-axis of the model.

Hadders (2010) links the Adaptive scorecard with the Triple Bottom Line theory (Elkington 1999). This replaces the original four perspectives of the Balanced Scorecard with four bottom lines that are each differentiated by an external and internal field of impact (McElroy 2008). By incorporating the financial bottom line with the non-financial Triple Bottom Line, a Quadruple Bottom Line arises (Calvaleri et al. 2012).

All the adjustments of the initial Balanced Scorecard resulted in a performance

measurement system that provides a new strategic map to enable leaders to

improve the measurement of organizational performance to accomplish a

higher sustainability performance. This is the AQBLSC (Hadders 2010). The

AQBLSC provides leaders of organizations with a more dynamic knowledge-

based framework to reach competitive advantage on the field of sustainability

where many organizations currently aim for (Hadders 2010).

A dialogue with the researcher of the AQBLSC (Hadders 2010) pointed out the model needs some adjustments. The financial bottom line should be removed and the KPIs of the financial bottom line should be included in the Economic bottom line. This fits better in the theory of Elkington (1999) and the balanced approach of this study. Since the model changed into a triple bottom line model instead of quadruple, the name Adaptive Triple Bottom Line Scorecard (ATBLSC) would make the model more understandable (Hadders, 2017). By adding the knowledge performance measurement into the model it ensures that organizations can be innovative and make the model adaptive. The ATBLSC model is presented in figure 3.

Figure 3: The Adaptive Triple Bottom Line Scorecard (ATBLSC).

The ATBLSC is one of the most comprehensive models to measure sustainability performance. This model has the best fit with this research because there is a high focus on knowledge and intelligence in the model. In addition, the model also places the measurements into context, which is extremely important to sustainability. Without placing those measurement or results into context a company cannot be sustainable because the outcome are meaningless for the society (Hadders 2017).

These aspects are not only in our eyes important to be truly sustainable, but

also in the eyes of academics and the working field. This attributes makes the

ATBLSC unique and gives it the following benefits; it builds the infrastructure

for more complex business strategies, it focuses on internal and external

impacts of the business, it offers high change of accomplishing organizational

sustainability and adaptability and because of its flexibility it is highly adaptable

in different typology and different firm sizes (Cavaleri et al. 2012).

Furthermore, the ATBLSC links with the balanced approach of the thesis because it does not focus exclusively on the environment but includes all elements of the triple bottom line (Elkington 1999). It advocates our pragmatic vision since it includes all sustainability elements.

Other models that measure sustainability performance are less suitable to use in this research because they remain too simplistic. Most of the other sustainability methods only evaluate the TBL and the reporting of it, while the ATBLSC goes more in depth by placing the results in to context. This is, according to Hadders (2017) the biggest downside of the existing management information models such as GRI. This model shows results and organizations report the results but they do not emphasize what impacts their outcomes have on the world (Hadders 2017). By using “context-based” sustainability and making the model adaptive it is currently the only model that can help companies become truly sustainable and exterminate unintentional greenwashing within an organization. The ATBLSC is not yet tested in an organization and practical data on the ATBLSC is still to come.

2.7. Sustainability indicators

The “what” and the “why” of creating a model that measures sustainability performance and prevents greenwashing are clear. The main problem is “how”

a model can be implemented and operationalized (Vouzas 2009). The relatively abstract concepts need to be applied in day-to-day business with improving the sustainability performance as a result. If an organization has a serious intention on improving the sustainability performance, the strategic relevance of sustainability must be converted into operational implementation activities and the measurement of sustainability (Maas & Liket 2011; Schaltegger &

Burrit 2010).

There are multiple sustainability indicators that can be used but they are not always useful. The indicators have to be adjusted to the specific case, decision situation and objectives of performance improvement to be useful (Burrit et al. 2002). In addition, placing the indicators in context is of high importance (Hadders 2017). Current adopted sustainability indicators such as GRI measure the outcome of certain processes but they are not placed in context and therefore often meaningless (Hadders 2010).

McElroy (2008) introduced ‘social footprint’ in the form of a quotient to

managers to fully operationalize the TBL and place the measurement in to context (Hadders 2010; McElroy 2014). His quotient can be calculated using the following formula: S=A/N. In which S stands for sustainability that is a measure for its actual social and environmental impacts (A) on the normative impacts (N) on the same carrying capacity of vital capital would have to be in order to be sustainable (McElroy 2008). For impacts on the environmental bottom line, quotient scores equal to or smaller than 1.0 are sustainable and scores larger than 1.0 are unsustainable. For impacts social and economic bottom lines, quotient scores equal to or larger than 1.0 are sustainable and scores smaller than 1.0 are unsustainable (McElroy 2014).

The quotient-based method takes the context and sustainable norms into account. Also, impact on vital capitals is linked with organizational stakeholders that are separated in the ATBLSC on internal and external stakeholders providing clear distinction and more detail in the sustainability performance of a company (Hadders 2010).

2.8. Conclusion and research gap

Greenwashing is: “Selective disclosure of positive information about a company’s environmental or social performance, without full disclosure of negative information on these dimensions, so as to create an overly positive corporate image” (Lyon & Maxwell (2011, P. 9). There is an assumption that greenwashing always done on deliberate basis (Bowen 2014). But, other scholars argue that this is not always the case and that wrong actions and inadequate management can lead to involuntary greenwashing (Theeroovengadum 2015; Howell 2012; Brunton 2015; Ottman 2011).

On the positive side of the same scale as greenwashing is sustainability. There is still no consensus on a clear definition of the concept of sustainability. One of the most adopted definitions is provided by the Brundtland Report (1987):

‘‘Meeting the needs of the present without compromising the ability of the

future generations to meet their own needs. A more recent and comprehensive

definition is: ‘‘finding a balance between economic prosperity, environmental

quality, and social justice, moves organizations in an absolute state of

sustainability” (Elkington 1999, P2). This definition is often called the Triple

Bottom Line. The Triple Bottom Line shows fit with the balanced and

pragmatic approach of the study.

The Balanced Scorecard is a suitable framework that could be built upon the balanced approach of the Triple Bottom Line (Elkington 1999). However, knowledge is not an incorporated in the Balanced Scorecard and it is too static. Knowledge is a necessary element for an organization to reach sustainability (McElroy 2006). Therefore, an evolution of the Balanced Scorecard (Kaplan & Norton 1996) is needed to reach an integrated sustainability management model. A recent evolution of the Balanced Scorecard that incorporates the Triple Bottom Line (Elkington 1999) is the ATBLSC (Hadders 2010).

This adaptive scorecard is the most comprehensive model for sustainability performance measurement. The reason for this is the context-based approach and the incorporation of knowledge in the model. The described transformation that the model has gone through is as follows: Balanced Scorecard + Knowledge + Sustainability Context = Adaptive Triple Bottom Line Scorecard (Calvaleri et al. 2012).

A practical research gap exists in adaptive sustainability Balanced Scorecards

such as the ATBLSC. The literature seems promising but practical data is still

scarce. The incorporation of knowledge is the gap towards a better

sustainability performance but this needs to be applied in a model. Empirical

data will most likely shine new light on sustainable management information

models and present insights that reach beyond the theoretical approach.

3. Methodology

As mentioned in chapter 1, the goal of the thesis is to find out how management information models provide organizations, with the will to perform sustainable, a tool that gives them knowledge and practical guidance to reach sustainability. This chapter describes how the objective will be reached by explaining which methods are used and how the data is be analysed.

3.1. Research approach

This research is conducted out of a deductive approach. This means that the research builds upon earlier developed theories and knowledge (Ritchie et al.

2014). The goal of this research is to confirm if and how the sustainability models can be implemented within different organizations and where possible challenges can arise. An inductive approach therefore is not applicable because the goal of the research is not to develop new theories.

The data collection is conducted with a qualitative approach. The decision of this approach is based on the complexity of the research question. A qualitative approach enables researchers to examine the views and perspective of the respondents, uncover the conditions within the environment of the respondents and enables the researchers to use multiple sources of evidence instead of one (Ritchie et al. 2014). Also, a qualitative approach is not limited by responding on a pre-established questionnaire (Yin 2011). The complexity of the research also leads to the desire to for exploration, context and explanation of the research problem. Qualitative methods give the researchers the possibility to understand the perceptions and behaviour of the target group on the research problem (Ritchie et al. 2014).

In order to study the use of a complex sustainability model it is necessary to

gather empirical qualitative data from different organizations. Therefore,

multiple cases are used and every case contains one organization. This is in line

with the definition of a case “the case as a thing, a single entity, a unit around

which there are boundaries” (Merriam, 1998, p. 27). In the upcoming

paragraphs the data collection and the case selection will be described in detail.

3.2. Research design

The empirical qualitative data is collected through interviews in the targeted group. This target group consists of Swedish organizations that are committed to sustainability. The target group is further discussed in section 3.4. The goal of the interviews is to get insight in the perception of sustainability in different types of organizations. Also, the interviews collect data on the perspective of organizations on management information models that include sustainability.

Since these topics are complex, they require an in-depth method in order to maximize the value of the data. This means that selected respondents from different organizations are interviewed at least two times with exception of two cases. One case showed little fit with the research problem and a second interview was not considered as valuable. In another case, practical complications made it impossible to conduct the second interview. The necessary missing information is collected with desk research. The respondents in these cases are interviewed once.

The interviews are semi-structured. Semi-structured in-depth interviews allow the researchers to have the flexibility to ask additional questions and ask further on certain topics (Ritchie et al. 2014). The interviewers also have the opportunity to direct the interview towards the most important issues in the research problem (Ritchie et al. 2014). In addition, semi-structured interviews reduce the chance of socially desirable answers (Ritchie et al. 2014).

Because the research problem contains a difficult and complex topic, it is of high importance that the respondents are carefully selected. Also, the organizations are delicately selected. The requirements of the respondents and the organizations in the case selection of this research are presented in section 3.4. The interviews are conducted face-to-face or via Skype, depending on the location of the researchers and respondents.

In total 12 interviews were conducted. These interviews are spread over 6 different organizations and one independent individual. The independent individual is the researcher that created the ATBLSC (Hadders, 2010), presented in chapter 2. The timespan in which the interviews were taken stretches from the middle of April until the beginning of May.

The first interview is focused on the experience of sustainability, challenges

with implementing sustainability measures, importance of a management

information model and challenges regarding sustainability in the future. The

respondents will not receive any information in advance regarding the interviews in order to avoid influenced interviews.

The second interview is focused on the possible implementation of the model.

The goal of the second interviews is to gather feedback to detect if there are any difficulties and challenges regarding the implementation of the model.

The interviews will be recorded for the efficiency of the data analysis. Race, gender and nationality will not be taken into account in the process of making the data sample. Coding the transcripts of the interviews ensures the anonymity of the respondents.

3.3. Construction of questionnaires

As mentioned before, the empirical data collection consists of qualitative interviews. Hence, two types of questionnaires are used in the qualitative data collection process. These questionnaires are semi-structured. This enabled the interviewers to emphasize more on the topics that were of high importance of the respondents (Ritchie et al. 2014). The objective of the first interviews was to gain a general insight of the view of sustainability of the organization. The topic guide consists of the following topics:

 Background of the business case.

 Perspective on sustainability.

 Current method of including sustainability in the business.

 Exploration of implementation, challenges and key issues of sustainability topics.

The full questionnaire for the first interviews can be found in Appendix I.

The objective of the second interviews was to gain further insight in the sustainability measurement methods of the organization. In addition, more data is collected on the vision of sustainability in the organization. The topic guide was build op with the following topics:

 Discussion of current sustainability model.

 Discussion of the AQBLSC.

 Discussion of the realization of the sustainability goals of the company.

 Future of sustainability in the business environment.

This is the main structure of the questionnaire of the second interviews.

However, the cases in the research differ from each other. Therefore, every questionnaire is modified to the particular situation in order to maximize the value of the data. The full questionnaires for the second round of interviews can be found in Appendices II to V.

In addition to the interviews with the organizations, two interviews with the founder of the ATBLSC are conducted. The objective of this first interview is to get more in detail of the model. The topics that are discussed are:

 The cause of building the ATBLSC.

 The goal of the ATBLSC.

 Using the ATBLSC.

 The future of the ATBLSC.

The full questionnaire for the first interview can be found in Appendix VI.

The objective of the second interview is to discuss the findings and recommendations of the research. The topics that are discussed are:

 Discuss the empirical data from the research field.

 Discuss how the model can be adjusted.

The full questionnaire for the second interview can be found in Appendix VII.

3.4. Case selection

The case study consists of carefully selected organizations that are active on

the Swedish market. The reason for this decision is that Sweden is one of the

leading countries in sustainability (Korosec, 2013). The Swedish carbon tax,

renewable energy and the big scale of the recycling process make an example

for other countries (Wilde 2016). More important, the engagement of Swedish

citizens in sustainability is high (Wilde 2016). Sweden is a leading country in

terms of legalisation and the engagement of the citizens in sustainability

(Swedish Government offices 2016). This makes Sweden an excellent research

field for innovative sustainability development. The vision of the respondents

and the Swedish organizations can make a good prediction for the vision of

markets in other countries in the near future and in the long run. This is

valuable because a management model for sustainable performance must have

possibilities for global implementation.

Being a Swedish organization is not the only requirement of the case selection in this research. Each company represented in the case selection is active in a sector where there is a significant importance of sustainability. Their expertise and experience in sustainability measurement is valuable for other companies in the same sector or other sectors in the future. Specific sectors that serve as an example on sustainability for other sectors are selected. As a result, the study will provide a representative answer on the research question that later can be applied for other sectors.

The sectors that are selected in the case selection are: the paper industry, the coffee industry, the energy industry and the architecture industry. After the first interviews the architecture industry proved to be useful in providing insight in sustainability. But for the reason that it is more a service-oriented sector, selling ideas; drawings and expertise, sustainability is not the highest priority in the daily business. Sustainability within the different projects depends highly on the wishes and demands of the clients. Therefore, a second interview was not necessary for this firm. The following section elaborates on the relevance of the selected sectors in this research.

The paper industry

The paper industry is inseparable with sustainability by its core ingredient trees. Making paper has a tremendous impact on the environmental bottom line (Matthews 2016). The paper industry accounts for 10% of the total global deforestation (UCS 2017). Because sustainability is an urgent matter in the paper industry, the sector has a high responsibility to adapt a more sustainable business performance. For that reason, the paper industry is an exceptional relevant industry to include in the case selection. The leading position on sustainability of the sector can provide a good prediction of what will happen to other sectors in the future.

The coffee industry

Every day 2,25 billion cups of coffee are consumed around the world (AB

Anders Löfbergs 2016). A great scale of coffee farms is necessary to meet this

demand and the coffee industry is therefore a great case for sustainability

research. Not only environmental issues make the coffee industry a suitable

case for this study. The social impact of the industry is also significant because

of the big amount of labour of the sector in underdeveloped countries mainly

in Africa and South-America (International Coffee Organization 2017). The

balance between economic, environmental and social sustainability in the

coffee sector is of high importance. This is in line with the balanced approach of this thesis. Therefore it is an interesting case in this research.

The energy industry

Energy is needed to empower our society. How that energy is produced can make a major difference in the sustainability performance of a society. The measurement of sustainability is not only necessary for companies but also for societies (Hadders 2017). A local Swedish energy plant is included in the case selection. This sector makes the research more complete by adding a public organization in the case selection.

Selection of respondents

The respondents in this research are selected on their positions and

experience. The selected employees were required to be responsible for the

sustainability management of the company and to have experience in the field

of sustainability. This led to a selection of Sustainability Managers, a

Sustainability Director, an Executive vice-president of sustainability, a

European Sales Director and a Financial Director. The respondents where the

most connected to the research question of this thesis and also more involved

in moving towards a more sustainable performance than other employees of

the company. The respondents per case are presented in table 1.

Table 1 Respondents data collection

In four of the six cases, two qualitative interviews were conducted with one selected employee of the company. In two cases, the researchers interviewed two different employees of the company because the first respondent pointed out that another person was more suitable for the second interview. The fact that, in four of the six cases, the interviews where held with one employee of the company can be seen as a limitation. But, including multiple cases in this study reduces the risk of misunderstanding the data and the problem in this research. Selecting the best possible respondents also reduces this risk.

Managers who are responsible for sustainability within their company are the most engaged in our research problem and their information is highly plausible.

In addition of the interviews with professionals from the field, two interviews were conducted with the creator of the ATBLSC, Henk Hadders. This provides a scholars point of view on the problem of this research and justification of the recommendations. His collaboration contributed to the

Respondent Case Sector Nr. Of employees

Position Nr. Of

interviews

1A A Coffee 300 Sustainability manager 1

1B A Coffee 300 Financial director 1

2 B Architect 600 Sustainability

Manager

1

3 C Fiber-based

material industry

6.200 Senior Vice President Sustainability

3

4 D Technology

paper industry

70 European sales director

2

5 E Paper

industry

25.000 Executive Vice President Sustainability

2

6A F Energy 160 Environmental

manager

1

6B F Energy 160 Chief Executive

Officer (CEO)

1

7 - - - Scholar/researcher 2

completeness of the research. The described process for the data collection is illustrated in figure 4.

Figure 4 Process data collection

3.5. Qualitative data analysis

As mentioned before per case there are two interviews conducted. All interviews are recorded and transcribed in order to analyse the data adequately.

After the first interviews the data is processed and analysed to discover what the main concerns are with management information models. Subsequently, the organizations will be interviewed for a second time. In this interview the emphasis lies on management information models that include sustainability.

The collected data is analysed by processing the data in Excel diagrams per topic. The results of the data are presented in chapter 4. The data is discussed and linked to the theory in chapter 5.

3.6. Validity

The method of semi-structured in-depth interviews can oppose some risks in validity, especially in the external validity and the ecological validity. Around 12 interviews with highly professional respondents are conducted.

Every respondent has at least a management position in his or her

organization. This means that the expertise and knowledge of sustainability is

high, which mitigate the risk of external and ecological validity as much as

possible for this research. It is important that the right persons are interviewed and that the risk of miscommunication is avoided. Therefore the questions in the first interview started about the career of the respondent, general definition of sustainability, how the organizations measures sustainability and how the organization implement sustainability measurements. In two cases this led to a different respondent for the second interview. In these cases, the questions and answers of the first interviews were discussed with the second respondent to make sure that the information need is saturated. There is also a possibility of anonymity that assists in avoiding social desirable responses.

Internal validity is not of substantial importance in a qualitative research (Ritchie et al. 2014).

It can be argued that the validity and reliability could increase if there would be an observation of the model in practice and if more interviews would have been conducted. Nevertheless, for the timeframe of this thesis project the validity and reliability are maximized.

The fact that in four of the six cases, the interviews where held with one employee of the company can be seen as a limitation. But including multiple cases in this study reduces the risk of misunderstanding the data and the problem in this research. Selecting the best possible respondents also reduces this risk. Managers that are responsible for sustainability within their organization are the most engaged and connected to the research problem.

Therefore, the information they provided is highly plausible.

“Today we work with the Balanced Scorecard. Which is our framework and tool that we use you have different perspectives and different themes. In the different perspectives. Co-workers, financial perspectives, customer and market, and you also have internal processes.”

“We also integrate another perspective, which is the sustainability perspective into the strategic map”

4. Results

This chapter presents the empirical data that was collected with the in-depth interviews. The results are presented per case.

4.1. Case A (Coffee)

The organization in case A interprets sustainability as a balance between the environment, social aspects and economics. This is measured with an adjusted Balance Scorecard (Kaplan & Norton 1996) that fulfils their specific needs.

The organization included a sustainability perspective besides the other elements co-workers, financial perspectives, customer and market and internal process perspective of the original BSC. Each element of the organization is measured with two Key Performance Indicators (KPIs). The KPIs on sustainability perspective are measured for five years on a quarterly bases. This model is created with the help of third company. The data collection is based on own resources and from stakeholders and suppliers.

Respondent 1b, Case A

The organization is not keeping track on the knowledge perspective. The respondent did not know if they would like to track it in the future. The reason for this is that the respondent did not exactly understood how to measure knowledge and how to implement this in their existing model.

However, the organization wants to improve their sustainability performance.

Their model also differs from the ATBLSC by not making the distinction

between external stakeholders and internal stakeholders and it does not follow

the KPIs on both doing and managing.