Measuring sustainable performance: A case study at a
financial organization.
Education: Accountancy and Control (Control Track) Student: Vincent Stukart
Student number: 5877474
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Abstract
Purpose
The purpose of this research is to present empirical evidence of why a bank is planning to implement a Sustainability Performance Management System (SPMS) and how they are planning to design this. Further, emphasis will be placed on SPMS issues that were found in previous literature.
Design/methodology
Data on the design of and the reason for a SPMS is gathered with the help of a case study. Several research methods will be used to gather this information. First of all semi-structured interviews were held with managers and employees of the organization, observations were made during an internship at the sustainability department and documentary analysis has been performed.
Findings
The reason for implementing a SPMS seems to match the legitimacy theory. The case organization is planning to implement a SPMS to increase stakeholder awareness of their sustainability activities and to give focus to their global sustainability activities. Further, it seems that the case organization had problems with planning how to implement sustainability into the evaluation process and to integrate the SPMS.
Research limitations
Because this case study is focused on one organization the findings might not be generalizable to other organizations. Further limitations regard the SPMS not being fully designed yet and the researcher being actively involved in the organization. New research should take the findings of this research and investigate whether these are generalizable to other banking organizations and industries.
Value/originality
This is the first paper to use the framework by Otley (1999) to research the design of a SPMS. Further this is the first paper to investigate the design of a SPMS at a banking organization. Until now it has been unclear why such systems are implemented and how they are designed. Therefore this paper adds value to literature and can be considered original.
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Acknowledgements
Because of my beta background from high school I always was interested in courses that focused on science and biology. So when studying Economics and Business at the UvA and hearing I was allowed to follow a minor for a year, I decided to enroll in the ‘Future Planet Studies – Water’ minor. Here is where I became interested in the concept of sustainability. Therefore it was only a logical step to write both my Bachelor and Master theses about sustainability. During my master year the opportunity to write my thesis at the sustainability department of a large bank came by, I had to take it. During this period I was involved in the day to day processes of the department and it was decided I would have a role in the
development of a PMS that focused on sustainability. At that time I did not know more about performance management than what I had already learned at school. But while being involved my interest in performance management grew and grew and I had a good time doing it as well.
For this reason I want to thank all colleagues at the sustainability department. I also want to thank the management team for giving me the opportunity to write my thesis at their department and giving me the time and information I needed to write the thesis. Next to that I want to thank everyone who was kind enough to help me during my research and agreed to me interviewing them. Further I want to thank my supervisor at the UvA, Mister Rui Vieira for guiding my thesis in the right direction and keeping me on track.
I wrote a big portion of my thesis at the place where I got an internship but also a portion was written at home. During my process of writing a thesis I have gotten a lot of support of my friends and family. For that reason I want to thank them.
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Content
1. Introduction ... 5
2. Theoretical background ... 9
2.1 Performance Management Systems ... 9
2.2 Sustainability Performance Management Systems ... 16
3. Research Methodology ... 21
3.1 The Case Study ... 21
3.2 Data Collection Methods ... 22
3.3 Data Analysis ... 25
4. Results ... 27
4.1 Overview of the organization ... 27
4.2 The Importance and Evolution of Sustainability ... 28
4.3 Findings ... 32
4.3.1 Key Objectives ... 32
4.3.2 Strategies and plans ... 35
4.3.3 KPI Selection Process ... 42
4.3.4 Level of Performance ... 44
4.3.5 Rewards and Punishments ... 47
4.3.6 Information Flows, Systems and Networks ... 49
4.3.7 Integration of the SPMS ... 51
4.3.8 SPMS Information and the Decision-Making Process ... 52
4.4 Summary of the findings ... 54
5. Discussion and conclusion ... 57
Bibliography ... 65
Appendix 1 ... 72
Appendix 2 ... 75
Appendix 3 ... 76
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1. Introduction
In the past few decades the global public has made a paradigm shift from environmental protection towards a more sustainability view (Brand, 2002). There has been a realization by the public that environmental protection is not sufficient. Next to environmental protection, organizations should also focus on the economic aspects and social well-being of their employees and society (Brundtland, 1987). This insight led to organizations opting for
sustainable development, the most commonly used definition of sustainable development was described in Our Common Future (Brundtland, 1987, p. 16) as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.
Sustainable development is a topic that has been researched for decades. Often research has focused on the profitability of sustainability strategies (Aupperle et al., 1985; Russo and Fouts, 1997; Waddock and Graves, 1997) or the reaction of investors on
sustainable development and reporting on sustainable development (Posnikoff, 1997; Wright and Ferris, 1997). However, little research has focused on how sustainability performance is measured and managed within an organization (Weber, 2008; Gjølberg, 2009). Although there have been some meaningful contributions on sustainability performance management systems (SPMSs), work remains to be done in the area (Searcy, 2011). Sustainability performance can be categorized in three main areas; social, ecological and economic
performance (Figge et al., 2002). Kates et al. (2001) state that there is need for research which looks into a way to extend operational systems for monitoring to guide towards more
sustainability. One of the ways to monitor the sustainable performance of an organization is through sustainability assessment. According to Ness et al. (2007, p. 499), “the purpose of sustainability assessment is to provide decision-makers with an evaluation of global to local integrated nature-society systems in short- and long-term perspectives in order to assist them to determine which actions should or should not be taken in an attempt to make society sustainable”. In the field of sustainability assessment this study will focus on the purpose and design of a SPMS to monitor the sustainable performance of an organization.
To be able to get insight in the SPMS the performance management framework by Otley (1999) is used as guidance for the interview questions used in the research, the questions will contain additional insights gained by Ferreira and Otley (2009) and Adler (2011). Anthony (1965) laid the foundation of many performance management systems
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(PMSs) when he introduced the first management control framework which was ready to use in practice. His model, however, lacked effectiveness in reality because he distinguished management control from operational control and strategic planning to simplify his model. In 1995 Simons introduced the Levers of Control framework in which he identified four
different systems that manage the tensions “between freedom and constraint, between empowerment and accountability, between top-down direction and bottom-up creativity, between experimentation and efficiency” (Simons, 1995, p. 4). Simons identifies the beliefs system, boundary system, diagnostic control system and interactive control system. Otley (1999) translated some of the levers of control into five central issues that were fitted into a management control framework. Otley introduced a new concept by arguing that performance should not only be measured but should be managed. Although later research has found some flaws in the framework of Otley (see for example Ferreira and Otley, 2009), the framework will be used in this study because it fits best with the case organization combined with the sustainability angle this paper takes. The framework of Ferreira and Otley (2009) will not be neglected by this study, aspects of their study will be used during the case study. Further, insights provided by Adler (2011) will be used in this study as well.
This paper focuses on the purpose and design of a SPMS in a large Dutch Public Bank called The Bank (fictitious name). The management of The Bank is demanding a
sustainability performance dashboard which should give insight in the sustainable
performance of the many different departments of The Bank globally. This case study gives an unique opportunity to get insight in a SPMS in practice and provides insight in the way this is perceived on many different levels in the organization. In his literature review of research on sustainability performance management Searcy (2012) mentions that there is little research in the field of SPMSs and the design of these systems. In his literature review on SPMSs Searcy (2012) gives a list of key gaps that still exist in the sustainability performance
management research. This study will respond to several of those; first of all Searcy identifies need for studies on the design of SPMSs that are applicable to multiple corporate levels, second is the need to study how a SPMS is used to guide decision-making in corporations. Third, this study responds to a call of Gates and Germain (2010), who demand for research that looks into how sustainability measures are used on a top level as well as by lower level management. Gates and Germain also look into the way strategy can be communicated or formulated by the use of SPMSs, they find these systems are hardly ever linked to the
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the way strategy is used in the design of a SPMS. This study responds to that call. Further, this study will look into the integration of the SPMS, research has found evidence that many organizations fail to integrate their SPMS into the overall PMSs (Jenkins et al., 2003; Gibson, 2006).
Conducting a case study will help gain insight in the design and use of a SPMS in practice. Case studies are suitable to study a changing competitive environment (Spicer, 1992). The Bank is in a heavily competitive environment in which sustainability is becoming an increasingly important topic which changes the environment. Further, adopting new overall and sustainability strategies, the restructuring of an organization and implementation of a new measurement dashboard are some of the other changes the investigated organization is going through. Therefore case study is a good method to investigate ‘why’ this SPMS is
implemented and ‘how’ the design will be. As stated before this case study will take place at The Bank with a focus on their sustainability practices. Investigating the design of a SPMS at a bank is interesting because banks are argued to be one of the big players in coming to a sustainable society. They have the possibility to invest in projects that vary in sustainability levels and thus can be very influential in sustainability (Bouma et al., 2001). Although banks are important players in the sustainable society, up till now there has been little research on the implementation of sustainability strategies in the banking sector, this study will help get insight in how sustainability strategies are implemented in the banking sector with the help of a PMS. The Netherlands is a good location for sustainability research, they are one of the leading countries on sustainability, The Netherlands is currently positioned 10th worldwide in the sustainability ranking (RobecoSam, 2013). This means that it is likely that higher quality measurement systems will be put into use when it comes to measuring sustainability, since there is much experience and expectations of stakeholders will be higher. However, the main reason for choosing The Bank is the fact that the management designed the SPMS while this study was conducted, which gave a unique opportunity to be present during the process.
The main research question of this thesis is: Why is a SPMS implemented in a financial organization and how is the management planning to design this system?
The structure of the thesis will be as follows; in the second chapter the theoretical background used in this study will be outlined. First the concept or PMSs is introduced and several of the frameworks that are used to manage performance and analyze PMSs will be outlined. After that the concept of SPMSs is introduced, as well as several of the current gaps in the literature on SPMSs. In the third chapter the reason for conducting a case study will be
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explained, the organization used in this case study is outlined and the different methods used in the case study will be outlined. Next is the result section, in this section the history of sustainability at the case company is described after which the findings will be displayed. The fourth section is divided in sub sections that match the themes of the findings. And finally an discussion and conclusion will conclude this paper.
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2. Theoretical background
In this section the theoretical background regarding the design and implementation of PMSs and the idea behind SPMSs will be explained. First the concept of performance measurement and management will be introduced, after which several performance measurement and management system frameworks will be outlined, such as Simons’ levers of control
framework, Otley’s management control framework (1999) and Ferreira and Otley’s PMSs framework (2009). The framework proposed by Otley (1999) will be used as a guidance during this study with additional information from Ferreira and Otley (2009) and Adler (2011). Second the concept of SPMSs will be introduced, their purpose will be explained and the three phases any SPMS has to go through will be outlined. In this sections several issues found in previous literature are outlined which are used as input for the research questions.
2.1 Performance Management Systems
PMSs are systems that involve understanding and acting on performance issues at each level of an organization, from individuals, teams and directorates, through the organization itself (IDeA, 2003). Whereas performance measurement focuses on measuring objects,
performance management focuses on managing people and the way people within an organization operate and work together based on measurements (Neely et al., 2002). Issues such as leadership, decision-making, involving others, motivation, encouraging innovation, and risk taking are also important factors to bring organizations towards improvement (IDeA, 2003). In a review paper on measurement and management control systems by the Cranfield School of Management (2006) three main categories for managing performance were
identified: strategic, communication and motivational. Managers can use PMSs to manage the strategy implementation and spread the strategy throughout the organization as well as to challenge the strategy (Cranefield School of Management, 2006). Neely et al. (2002) also argue that performance measurement systems can help companies overcome problems with the implementation of strategy. Next to that, managers can choose to implement a PMS to check whether expected performance is achieved, make sure it achieves the minimum standards needed, communicate direction to the rest of the employees, provide feedback and to benchmark the performance (Neely et al., 2002). The final reason for managers to
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To investigate the design and/or use of PMSs there are several frameworks that have been developed over time. An historical overview of performance management frameworks is described below.
Anthony (1965) introduced the original model that was used to tackle management control problems. He distinguished management control from operational control and
strategic planning. Otley (1999) claims that with his framework Anthony had two aims, first, to broaden the scope of considering information beyond just accounting information and second, he tried to bring the issues of managerial motivation and behavior into view. He succeeded to bring the issues of managerial motivation and behavior into view, influencing many of the 1970s and 1980s management accounting work. However, by distinguishing management control from operational control and strategic planning the model Anthony (1965) created was not able to broaden the scope of considering information. Operational control was neglected because it was apparent that different operations were used in different organizations. Because this common information was, unfortunately, accounting information, the aim to broaden the consideration of information did not work. Another main problem with the traditional model from Anthony was the neglecting of strategic planning. Most of the times strategic planning was not mentioned or at best was seen as a given by the framework. Strategic planning, like operational controls, was distinguished from management control to simplify the research questions asked (Otley, 1999). But by doing this the control measures and specifications of control systems were common to all strategies and could not be used when an organization wanted to focus on a sole strategy.
Simons’ Levers of Control System (1995) is a frequently used management control system that draws further upon the framework developed by Anthony (1965). The levers of control consist of 4 different systems that work as opposing forces that manage the tensions “between freedom and constraint, between empowerment and accountability, between top-down direction and bottom-up creativity, between experimentation and efficiency” (Simons, 1995, p. 4). These tensions are managed by positive and negative control systems. Positive control systems reward, motivate, guide and promote learning to the employees. These effects are countered by the negative control systems which are meant to punish, coerce, prescribe and control the workforce. These positive and negative control systems can be managed
through the four levers of control that are described by Simons (1995). These levers of control are: belief systems, boundary systems, interactive control systems and diagnostic control systems. The belief systems and interactive control systems can be used as positive control
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systems, while the boundary systems and diagnostic control systems can be used as negative control systems.
Belief systems encompass “the explicit set of organizational definitions that senior managers communicate formally and reinforce systematically to provide basic values,
purpose, and direction for the organization” (Simons, 1995, p. 34). In other words they can be used by senior managers to communicate the core values of the firm. This way they are supposed to motivate the workforce and stimulate them towards innovative ideas. Boundary systems are, in a way, similar to the beliefs system, they both are used to motivate the
workforce and stimulate creativity. Boundary systems, however, can also do this in a negative way. They “delineate the acceptable domain of strategic activity for organizational
participants” (Simons, 1995, p. 39). Next to communicating which actions are off-limits, boundary systems can also be used to communicate actions which are considered to be desirable to the organization. Boundary systems promote creativity by letting the workforce know in which pre-determined area they are free to move and innovate.
Like boundary systems, diagnostic control systems act as a constraint on employee behavior (Widener, 2007). Diagnostic control systems strive to align the behavior of employees with the objectives of the organization. They report information on the critical success factors of the organization to the managers and let them know how the workforce performs on these factors (Simons, 1995). This way the objectives of the workforce will align with the strategic objectives determined by the management of the organization. Managers can also use diagnostic control systems to benchmark the performance of the workforce against targets. By benchmarking performance the workforce gets incentivized to make the targets set by the management. Next to diagnostic control systems there are also interactive control systems. These control systems are “formal information systems that managers use to involve themselves regularly and personally in the decision activities of subordinates”
(Simons, 1995, p. 95). Interactive control systems do not only have an attention focusing role, they also stimulate search and learning which can stimulate the development of new strategies (Tessier and Otley, 2012).
Although Simons’ levers of control framework (1995) has many different strengths, such as strong focus on strategic issues and its implications for the control system, it also has some weaknesses. Ferreira (2002) argues that the framework is to heavily focused on the top level of management and that it does not cope well with the range of informal controls that particularly exist in smaller organizations. Another weakness is the problem that some of the concepts explained by Simons have diffuse meanings which could lead to subjective
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interpretation of some elements of the framework (Ferreira, 2002). There is also an important ambiguity in the definition of interactive controls which could lead to misunderstandings about the system. And finally the framework is not universally applicable. In, for example, subsidiaries the beliefs and boundary controls may be beyond the domain of control of the subsidiaries (Ferreira, 2002). These systems are most likely adopted from the holding organization.
Otley (1999) drew upon the extant body of knowledge in the field and proposed an inductively generated framework which looks beyond the measurement of performance and focuses on the management of performance (Ferreira and Otley, 2009). His framework is based upon five central issues which, as Otley (1999) argues, are to be considered to come to a coherent structure for PMSs.
The five key questions of the framework are:
1. What are the key objectives that are central to the organization’s overall future success, and how does it go about evaluating its achievement for each of these objectives?
Since the contingency theory suggests there is no single management control technique that fits all organizations, certain circumstances must affect the use of management control techniques (Otley, 1999). Objectives is an example of a contingent variable that is very likely to affect the use of, for example, a PMS. By investigating the objectives of an organization it will become clear what functions the management wants the PMS to fulfill and which mechanisms should be put in place to measure and monitor the achievement of these objectives.
2. What strategies and plans has the organization adopted and what are the processes and activities that it has decided will be required for it to successfully implement these? How does it assess and measure the performance of these activities?
This second question is based on the contingency theory as well. Many suggest that different strategies will lead to different configurations of control systems (e.g. Simons, 1995; Ferreira and Otley; 2009). The purpose of this framework is not to see how strategies are developed and how they are deployed, rather it looks how control mechanisms pursue strategies set by
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the organization and how they monitor progress. This question looks into the way the organization has set means to come to the objectives stated in the previous question.
3. What level of performance does the organization need to achieve in each of the areas defined in the above two questions, and how does it go about setting appropriate performance targets for them?
The setting of targets can have a motivational aspect in the management control system. By setting targets on some of the strategies and objectives of the organization, employees are likely to get motivated to work towards these strategies and objectives. Target setting is a delicate process since targets can be motivational but can also be de-motivating. When targets are set too high or too low employees are likely to not work at an optimal level. Next to the motivational aspect targets will also give the management and employees focus. “What gets measured gets done” (Otley, 1999, p. 368), when targets are set for specific areas it is likely that performance will improve in these selected areas.
4. What rewards will managers and other employees gain by achieving these performance targets or, conversely, what penalties will they suffer by failing to achieve them?
The fourth question is focused on the motivational and incentivizing aspect of a PMS. By setting rewards for the achievement of targets and punishments for not achieving targets, those who are accountable are likely to become motivated. These rewards can range from recognition by the management to financial rewards and can be based on individual performance or on group performance. The same goes for punishments.
5. What are the information flows feedback and feed-forward loops that are necessary to enable the organization to learn from its experience, and to adapt its current behavior in the light of that experience?
To complete the control loop, information flows is the necessary final ingredient. Feed-back information focusses on the comparison of actual performance with preset targets and standards. The deviations between the two are used as a corrective signal towards managers and employees. Similarly feed-forward can be used to predict the need for corrective action
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before negative consequences are observed. The timescales used to communicate this information can be instantly but can also be on a yearly basis. The learning processes range from corrective actions to having to review the current strategy that is in place.
The purpose of Otley’s framework is not to be a best practice prescription for developing a PMS. He rather tries to create a framework which gives structure to examine a PMS in a more holistic way then was previously possible. The framework is focused on the overall control system, while this paper focuses solely on the PMS. Therefore the questions proposed by Otley (1999) are somewhat adapted to fit the performance management
perspective of this study.
Although Otley’s framework (1999) was inspired by the levers of control by Simons (1995) and he tried to overcome some of the weaknesses of Simons, the framework of Otley has some weaknesses of its own. First, it does not consider the mission and the vision of the organization, which Simons did (Ferreira and Otley, 2009). Second, the framework seems to focus on the diagnostic control systems of Simons (1995), this way it misses the importance of considering all four levers of control of Simons to understand the nature of management control systems (Ferreira, 2002; Henri, 2006; Widener, 2007). Third, the framework does not mention the way information gathered by control systems is used by organizations (Ferreira and Otley, 2009). Fourth the framework ignores the dynamics of control system change and development (Ferreira and Otley, 2009). And finally, interactions between different parts of the PMS are not explicitly addressed (Malmi and Granlund, 2009; Stringer, 2007).
Ferreira and Otley (2009) developed a framework based on the five questions of Otley (1999) they extended his five questions with another seven questions, making it ten ‘what questions’ and two ‘how questions’ (see figure 1). In their framework Ferreira and Otley make use of twelve questions that “yield significant insight into the various aspects of performance measurement systems design and use, and (…) form a coherent framework that can be used to structure enquiry in this field” (2009, p. 267). These questions do not only try to explain the way performance is measured and the focus of the PMS but also take into account the external contextual factors that are related to performance management.
For this case study, however, it seems the framework proposed by Otley (1999) is more in line with the research. The framework proposed by Otley is a better fit because most of the SPMSs are not yet integrated into the everyday activities of an organization (Searcy, 2009) therefore the vision and the mission of the organization, which are missing in Otley’s (1999) framework, are not likely to be linked to the sustainability aspects (yet). Ferreira and Otley (2009) argue that Otley’s framework only touches aspects of the vision and the mission
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of the PMS by asking the objectives of the organization. It is more likely that there are objectives formulated that focus on sustainability aspects of the organization and therefore focusing on the objectives would make more sense. Another problem with the framework proposed by Ferreira and Otley (2009) is the fact that they focus on the evolution of a PMS. Since the organization used in this case study is implementing its first SPMS, questioning the evolution of this systems seems pointless to investigate. Overall it seems sustainability is not developed enough for more sophisticated PMS frameworks to fit the research.
Even though the framework of Otley (1999) is used for this case study, some aspects of Ferreira and Otley’s framework (2009) are used. For example the decision on which Key Performance Indicators (KPIs) will be used in the system is investigated to assess how the organization is planning to monitor progress. According to Ferreira and Otley (2009) KPIs are essential in the strategic implementation process. Further, the question provides insight in the alignment of strategies, objectives and the PMS. Next to the twelve questions that are used in the framework of Ferreira and Otley (2009), they also focus on external contextual factors and culture, these two elements will influence any control system in its design and use. Culture and external contextual factors, such as, “external environment, culture, strategy,
organizational structure, size, technology, and ownership structure, have an impact on control system design and use” (Ferreira and Otley, 2009, p. 267). Therefore it is important to take these factors into account when researching a PMS. Of these factors strategy is incorporated in the framework of Otley (1999) since this is significantly influenced by the organization itself.
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Figure 1. The Performance Management Framework (Ferreira and Otley, 2009)
Adler (2011) draws further upon the research of Ferreira and Otley (2009) and has found a weakness in the framework. Although addressed, Ferreira and Otley (2009) do not pay enough attention to the internal and external contextual factors. Adler (2011) argues Ferreira and Otley (2009) do not pay enough attention to the culture as a contextual factor. Ferreira and Otley do mention the culture and explain the importance of it, but they then put it in a list of contextual factors that might be important. Therefore Adler (2011) splits culture into several internal contextual factors while adapting the external contextual factors as a source that might influence control mechanisms. According to Adler (2011) external contextual factors are industry, national culture, global economy, and natural environment, while organizational size, organizational life cycle stage, characteristics of organizational ownership, and leadership style are internal contextual factors. These internal and external contextual factors can influence the organization’s structures, processes, and outcomes.
2.2 Sustainability Performance Management Systems
Like PMSs, SPMSs are used to overcome management control problems regarding the sustainable performance of an organization. Since sustainability is becoming an increasingly
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important subject for most organizations and research has shown that there is a business case for sustainability (e.g. Székely and Knirsch, 2005; Weber, 2008), it is important to be able to monitor and manage the sustainable performance of the organization and the several sub-units within the organization. SPMSs help strengthen the link between sustainability and business strategies (Székely and Knirsch, 2005; Parmenter, 2010). The idea behind any PMS is that the ability to measure performance on any level is a perquisite for business improvement
(Lohman et al., 2004), the same holds for measuring sustainability performance. Gadenne et al. (2011) find supporting evidence for this idea, they find that the use of sustainable
performance measurement systems is positively correlated with the sustainable performance of the organization. To be able to monitor sustainable performance, SPMSs have become a widely accepted tool at the corporate level (Searcy, 2011). SPMSs can be used to measure progress towards identified sustainability goals, inform the decision-making process and to enhance legitimacy among internal and external stakeholders (Searcy, 2011).
Although there is no single accepted definition for a SPMS, Searcy (2011) uses specifications for a regular PMS created by Bititci et al. (2005), and adds some extra
specifications that are linked to sustainability. According to Searcy (2011) SPMSs should be balanced, be integrated, inform strategy, deploy strategy, focus on business processes that deliver value, be specific to business units, include competencies, include stakeholder contribution, have a long-term focus and address issues that are associated with the triple bottom-line.
According to Bourne et al. (2000) there are three phases any SPMS should go through; design, implementation and evolution. SPMSs can be designed in many different ways. For instance, an organization can choose to adopt a preselected indicator set, such as the
indicators included in the GRI guidelines. But organizations can also choose to compose their own set of indicators to fit the organization or the objective of the SPMS (Searcy, 2012). Organizations that choose to compose their own set of indicators might have difficulties in selecting which indicators to use (Keeble et al., 2003). Staniskis and Arbaciauskas (2009) note the problem that organizations tend to focus on selecting indicators that can be used in external reporting, while organizations should focus on the internal information needs that can be fulfilled. By doing so the SPMS can be used to improve the overall sustainability
performance instead of giving useful information for the reporting on sustainability. Keeble et al. (2003) give some guidelines for selecting performance indicators to use. They argue indicators should reflect the business realities, values and culture of the organization.
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Searching for the perfect set of indicators will take a long time and will be a difficult process. Keeble et al. (2003) argue that organizations should not get lost in searching for the ideal set of indicators, when a small set of good indicators is established, the real effort should be put into building the review process and to ensure that the selected indicators form the basis for frequent, focused, constructive dialogue between different levels in the organization and across functions, on how to improve.
Strategy is an important factor in the design of a SPMS, the selection of indicators can help organizations to align their strategy with their everyday activities (Parmenter, 2010). Ferreira and Otley (2009) also mention a relation between strategy and PMSs. They argue that PMSs’ design and use are dependent of the strategies chosen by the organization. Different strategies and plans require changes to control configurations to ensure the proper functioning of the PMS (Otley, 1999). Gates and Germain (2010) support the idea of Parmenter (2010) and also argue that it is important for organizations to communicate their strategies with the help of PMSs. They argue organizations can use SPMSs and the selection of indicators to implement or to alter their sustainability strategy. In their research, however, they find that sustainability measures are hardly aligned with the sustainability strategy of organizations. This is because sustainability is a new topic in organizations’ strategies. Therefore “the link between the strategic planning process and the creation of the performance measurement system needs to be very close to not disconnect the measurement system from the organization’s sustainability strategy” (Gates and Germain, 2011, p. 6-7).
Two of the main challenges of implementing SPMSs are the integration of the sustainability aspects into the mainstream business processes and to ensure that it is actually used in the decision-making process (Searcy, 2012). For an organization to move towards a sustainable management system it is important to integrate the sustainability aspect with current business infrastructure at the organization (Jørgensen, 2008). For instance, the environmental improvement of a product must be considered in relation to the impacts on quality and health and safety. Gibson (2006) mentions that for organizations to recognize sustainability opportunities and threats they should make sure that sustainability is integrated in the regular assessment method. If this is not the case there is a chance that sustainability issues may disappear in the trade-off or that they are neglected in the decision making process.
There are several ways SPMSs can be integrated in the existing assessment
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in the balanced scorecard. One of the options is to integrate the environmental and social aspects in the existing four perspectives of the balanced scorecard. Through the integration of the sustainability measures the (often financial) measures that are existing can get an
additional measure which is focused on the sustainability side. However, the balanced scorecard remains mainly in the financial sphere through its four perspectives, because the balanced scorecard is focused on market systems and sustainability is a non-market system, it is difficult to integrate the sustainability measures in the balanced scorecard. The second option is to add a non-market perspective to the balanced scorecard and to implement the sustainability performance measures in that perspective. Because the balanced scorecard’s perspectives focus on the market system, Figge et al. (2001a, 2001b) propose the introduction of an additional non-market perspective in order to integrate sustainability measures that are not (yet) incorporated in the market system. The third option according to Figge et al. (2002) is to derive a balanced scorecard that focuses on the sustainability aspects of the organization. Instead of integrating sustainability aspects into the existing balanced scorecard this third option proposes to separate the sustainability performance measurement and to create a separate balanced scorecard that focuses on sustainability. Like with the balanced scorecard these sustainability aspects of performance measurement can be integrated in other
performance management or measurement systems as well (e.g. Seghezzi, 1997). Besides the way SPMSs are integrated in the mainstream business there are also differences in the level of integration. In their empirical research paper Bernardo et al. (2009) identify different studies that have researched the level of integration of management systems. For their own typology Bernardo et al. (2009) use the terms not integrated, partially integrated and fully integrated. Not integrated means the systems are used as separate systems so in this case the SPMS being used as a separate system from the PMSs. Partially integrated can range from a simple collaboration between the two systems to alignment and harmonization of objectives, processes and resources of the systems. Fully integrated means that the different systems work as a new harmonized system incorporating all common elements.
Although many organizations have implemented sustainability measures, many of them still struggle to apply these sustainable policies in their day-to-day decision-making processes (Searcy, 2009). To be able to apply sustainability in decision-making organizations must develop “practical, cost-effective ways to assess performance and measure progress” (Schwarz et al., 2002, p. 63). Searcy (2009) argues that sustainability performance
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focus on that which will provide value on the long-term, such as sustainable development. Ricart et al. (2006) support this idea and believe that board members should keep sustainable development in mind to satisfy stakeholder needs and to gain long-term value. Searcy (2009) investigates the level of sustainability measures that is used in the board’s decision-making process. He finds that, although organizations are interested in sustainability issues, they do not seem to incorporate sustainability indicators and measures in their decision-making process. “This leaves the question open with regard to how boards ensure that their decisions are rooted in facts and evidence about the corporation” (Searcy, 2009, p. 12).
While the importance of research going into the evolution of SPMSs is widely acknowledged (e.g. Searcy, 2005; Staniskis and Arbaciauskas, 2009), there is little research that provides insight in how the evolution process should be executed (Searcy, 2012). When companies decide to use a SPMS the system could become outdated over time, it is therefore necessary to evaluate the effectiveness of the system and to update the system. Searcy et al. (2006) identify nine key steps that should be followed to keep the SPMS up-to-date: (1) confirm usefulness of indicators, (2) determine level of assessment, (3) conduct assessment, (4) evaluate findings, (5) communicate findings, (6) develop integration plan, (7) integrate findings, (8) monitor system, and (9) review and improve. When followed, these steps will help the management identify the strengths and weaknesses of the SPMSs in place.
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3. Research Methodology
This section will explain the methodology that is used to gather evidence to support this study. The first subsection will explain why a case study fits with the objective of this research, what the advantages and disadvantages of conducting a case study are and how the case study is performed. The second subsection will explain the different data collection methods that will be used in conducting this research. Finally the data analysis method will be briefly outlined.
3.1 The Case Study
To be able to answer the ‘why’ and ‘how’ questions of this research, a case study is performed and an interpretive methodology is adopted to help understand the reasoning (Chua, 1986). The interpretive methodology suits this case study well because the results of the case study are subject to the interpretation of the researcher, the case study observes actors in their everyday situations and the case study seeks to explain how SPMSs create order (Chua, 1986). Furthermore conducting a case study is a good way to bridge the gap between existing theory on sustainability performance management and reality (Berry et al., 2009). Spicer (1992) argues that one of the main reasons for conducting a case study is the changing competitive environment. One of the major changes in the competitive environment over the past few decades might have been the introduction of sustainable performance (Stead and Stead, 1994). To be able to see how the shift towards sustainability takes place and, in this case, specifically focus on the management of sustainable performance and the perception of sustainability by different business units, a case study has to be conducted. A case study will help give insight in the way SPMSs are designed and how these systems will be used to measure sustainable performance (Yin, 2009). Studying this in practice will provide clear insight in the reasoning of the management that will come to deciding how to manage
performance on a sustainability level, choosing how sustainability is measured and what areas are of importance.
The case study was performed at the sustainability department of The Bank (fictional name), which is a large Dutch Public Bank. The choice of The Bank has been made for several reasons. First of all little research has been performed on sustainability measurement
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in the banking sector. Many of the case studies performed so far have focused on production companies (e.g. Warhurst, 2002; Keeble et al., 2003) or on national sustainable performance (e.g. Nourry, 2008; Hanley et al., 1999). Second, banks have a big responsibility in leading the society towards becoming more sustainable. Banks can have a big positive impact on sustainability by investing in projects that are sustainable (Bouma et al., 2001). Another reason for choosing The Bank as the organization to perform this case study is the fact that it is a Dutch organization. Since the researcher is a native Dutchman there will be no language barrier and furthermore the Netherlands scores good in the sustainability indexes
(RobecoSam, 2013). This high notation on the sustainability indexes makes it likely that a high quality SPMS will be implemented by The Bank. The final argument for choosing The Bank as the organization for this case study is the fact that the management was planning on developing their first sustainability strategy and further was planning to implement a
sustainability management system. This way it was possible for the researcher to be as close to the process of implementing the sustainability management system as possible, engaging in the case study is one of vital points for case studies mentioned by Yin (1989). One of the limitations of this close involvement of the researcher is the fact that the researcher might become biased, although this problem is offset by many (e.g. Yin, 1989; Flyvbjerg, 2006).
According to Spicer (1992) there are two different types of case studies; the
descriptive/exploratory and the informing/explanatory case study. Exploratory case studies are case studies “which are used either indirectly to help inform other forms of non-case empirical research or directly to explain the reasons for observed practices” (Spicer, 1992, p. 11). While “the objective of explanatory case research is not to draw inferences to some larger population based on sample evidence, but rather to generalize back to theory” (Spicer, 1992, p. 12). This case study fits best with the typology of an informing/explanatory case study. In this case the purpose and design of the SPMS’s use will be linked to theory that is outlined in the second chapter of this paper.
3.2 Data Collection Methods
Obtaining information through various methods will lead to triangulation of data (Yin, 2009). Triangulation will make the findings of a research more reliable and increases the construct validity. Therefore several different methods for gathering data will be used in this research.
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Semi-structured interviews will be used as the main method for obtaining information,
furthermore, observation and documentary analysis will also be used as methods for obtaining information.
Interviews were conducted with different employees and managers of The Bank. The interviewees included managers of the sustainability department, managers of other
departments who will be involved in providing information on their performance and employees that are either involved in the designing of the SPMS or are held accountable for the information they provide (see table 1). Interviewing several people from different business units of the organization allowed me to get insight in the way sustainability is perceived throughout the organization, the importance of the sustainability dashboard and of course the design of the SPMS. Semi-structured interviews ensure that similar questions are asked to different people and that information that is obtained is comparable (Ryan et al., 2002). This allows the researcher to compare the data that is gathered from the interviews by asking the same questions to different people. Further, conducting semi-structured interviews allows the researcher to diverge from the questions if thought necessary and they will allow the
researcher to go into more depth if this is deemed necessary (Scapens, 2004). Before going into the interviews an interview guide was prepared (see appendix 1). In this guide the main issues and topics that could be discussed were outlined and some exemplary questions were written down. This interview guide helped to stay focused on the topic but also allowed the researcher to be flexible regarding the topics and the way questions were posed. The interviews were recorded and transcribed afterwards. After each interview thoughts were recorded on the interview as well. This allowed the researcher to be reminded of how the interview went and if anything important or noticeable happened during the interview. The interviews encompassed questions that were composed by previous literature. The framework of Otley (1999) was used as a basis for the interview questions, additional information
provided by Ferreira and Otley (2009) on the design of a PMS was used as input for the interview questions as well. The questions focused on the purpose, design and the expected future use of the SPMS. By questioning these topics a clear view of what the management of The Bank wanted to achieve with implementing this SPMS and how the SPMS will be designed was obtained.
For the interviews eight interviewees were selected. These interviewees represented staff of The Bank that ranged in their position in the organization as well as their professional view towards sustainability. This was to ensure that a full picture of the organization and their
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acceptance of sustainability, the strategy and the dashboard was obtained. Interviewing people from different hierarchical levels was difficult since the knowledge of people in lower
positions on the subjects was very limited. Therefore all interviewees were in management position. Out of the eight interviewees four were chosen because of their specific knowledge of the sustainability strategy and how the dashboard will be designed. These interviewees helped a lot by providing much information on the sustainability strategy and the coming dashboard. Because the working environment was very open at The Bank, and the internship supervisor was very open towards the researcher, some information on the strategy and the dashboard was obtained upfront, many of the discussions were held in the office and weekly informal meetings with the supervisor helped a lot. This information made it much easier to ask the right questions to those who were involved in the development of the sustainability strategy and the dashboard, as well as those who were less informed on the sustainability strategy and dashboard. The semi-structured interviews that were used during the interviews proved to be a really good starting point, after each interview a few new questions that were asked during the interview were added to the list of questions. After conducting each
interview the interviewee was asked whether he or she had some extra input that wasn’t asked yet, this proved to be a good source for adapting the interview questions. Most of the
interviewees felt they had to add something to the interview, sometimes irrelevant yet interesting, but most of the times it was useful information.
Table 1. Interviewees
FUNCTION DURATION
1 Head of Marketing and Communication 55
2 Sustainable Lending Assistant Manager 60
3 Head of Structured Finance: Power, Utilities & Renewables 45
4 Member of the Strategy Development Team 25
5 Global Head of Sustainability 60
6 Manager Business Ethics 55
7 Manager Sponsoring and Events 25
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The second method for data gathering was documentary analysis. By analyzing documents the data that is obtained from the interviews and the observations can be triangulated. Data triangulation refers to the comparison of one set of data on a particular phenomenon with another set of data on that same phenomenon, the data will have to be obtained with the help of different methods (Ryan et.al., 2002). The Sustainability Report 2013, the Annual Report 2013 (hereafter Sustainability Report and Annual Report) and all the Quarterly Reports were analyzed as well as any additional documents that were obtained during the study. Documentary analysis proved to be a good method to gather information before conducting the interviews and check whether certain answers were also represented in documents that were used for, for example, the strategy and the dashboard. The main problem with the documentary analysis was the fact that this case study is conducted at a bank that has used its right to remain anonymous. Therefore limited figures or tables from documents were added to this case study.
Information was also gathered through observation, this includes observation during several meetings and observation on the work floor. Since the researcher was present at the organization for several days a week there a lot of information was obtained with the help of observation. Observing, including direct observation will help understanding the reality and the context of this case (Yin, 2009). Observation helped to understand the daily activities of the sustainability department and their position in the organization. Further observation helped to get an understanding of both the reason why certain aspects were chosen to be included in the sustainability strategy that was developed while the researcher was present and the purpose of the sustainability dashboard and the importance of it. Next to observations the researcher also engaged in some small talk with the employees of the sustainability
department. Talks covered topics such as the sustainability processes that were already in progress in The Bank, their everyday activities, but also about the SPMS. This allowed the researcher to get an insight in sustainability practices before the sustainability strategy was designed. Further it helped to get a general understanding of the reason why The Bank was concerned with promoting sustainability activities. This turned out to be a great help while conducting the interviews.
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After conducting the interviews, they were transcribed into Word documents and imported into a coding program called Atlas.ti. With the help of this software quotes from the different interviewees were categorized by coding them, for a list of codes used please refer to
appendix 2. The transcribing of the interviews helped getting an overall idea of the different opinions of the interviewees. While transcribing, an understanding of how the interviewees’ position in the organization might have affected their answers and how this might differ from other people was obtained. When the interviews were fully transcribed, they were read and searched for evidence. Atlas.ti proved to be a very helpful program to relate and compare the different findings to each other. After importing the interviews in the program the coding process could start. By coding the interviews a good overview of the answers of de different interviewees could easily be obtained. Differences in answers of the interviewees was a good source for discussing these topics. The results that were filtered out of these interviews can be found in the next chapter.
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4. Results
This section will first give a brief description of the organization that was selected for this case study. In the second subsection the importance of sustainability and the reason for the implementation of the sustainability strategy and dashboard will be outlined. After that the questions posed in the framework of Otley (1999) and the problems found in previous literature are explored with evidence from the interviews.
4.1 Overview of the organization
The Bank is a large Dutch multinational banking and financial services corporation. Its primary businesses are commercial banking, retail banking, investment banking, asset
management and insurance services. After having to receive governmental funding, as a result of the financial crisis, The Bank has been and is currently still working on repaying this debt to the government. The Bank is often mentioned as one of the leading banking and/or
financial institutions worldwide. They have a customer base of 48 million and is active in 40 different countries. Furthermore they currently have more than 75,000 employees and they have managed to achieve over € 15 billion revenues over 2013 which had a underlying net income of over € 3 billion.
According to the Annual Report the vision of The Bank is to set the standard in helping customers manage their financial future and to deliver financial products and services with exemplary service, convenience and at competitive price. According to the Annual Report, one of the goals of the bank of The Bank is to become more sustainable. The Bank has been reporting on its sustainability activities for nearly 20 years and during that time the organization has implemented many different sustainability practices, such as green investing, green savings, NGO donating and many more (see appendix 3). In its Sustainability Report The Bank focuses on five different topics; enhancing customer centricity, promoting responsible lending and investment practices, improving environmental performance,
engaging their employees and creating positive change in communities. This corresponds with the actions being taken in the office. All of the topics that are present in the report were also actively promoted by the sustainability department. The sustainability department of The Bank consists of three different teams; marketing and communication, business ethics, and
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community investment. These teams are concerned with the active and evolving approach of The Bank towards sustainability.
Recently The Bank has appointed a new CEO whose task it was to implement a new revised strategy for the organization. Next to the new overall strategy, the board has decided there is also need for a strategy that focuses specifically on sustainability. To monitor the sustainability performance of all the departments of The Bank, the sustainability department has decided a sustainability dashboard should be put in place. This study will focus on why the management wants to implement this SPMS and how this system is designed.
At the moment of conducting this study the sustainability strategy has been fully developed and is awaiting implementation, the strategy has not been communicated to the employees. Next to that the management team has been thinking about the sustainability dashboard that will be put in place but no concrete actions have been taken towards creating the dashboard.
4.2 The Importance and Evolution of Sustainability
Sustainability has been an important topic at The Bank for a long time, the organization has been reporting on their sustainable performance for almost two decades and is still evolving towards the optimal way to do this (see appendix 3). Over the past decades the organization has developed a large environmental and social risk policy framework. The Bank continues to look for policies that need to be revised and new policies that can be added to the framework. During one of the conversations on the work floor an employee explained that policies were created as a way to protect the organization from risk at first, but more recently the
organization has gotten the insight that there is also a business opportunity in the
implementation of sustainable policies. This is shown by the fact that The Bank is working on the transparency of their policies (Annual Report). By making the policies visible on their website The Bank tries to retain and possibly attract customers by showing their standpoints on controversial topics.
Recently the board of The Bank has decided the organization should present a new overall strategy in 2014 to keep in touch with the changing environment of the industry. With this strategy the organization is trying to increase its ‘impact’. The term impact can be heard
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and seen a lot throughout the organization and in the reports, it is often used in combination with different aspects of sustainability. For example, creating impact is mentioned as one of the key targets of the sustainability activities of The Bank (Sustainability Report). Further, the website of The Bank mentions reducing environmental impact and increasing social impact are two topics that are important to them. The board has decided that to keep up with
competition and to increase impact, The Bank should create a separate sustainability strategy that increases the focus on sustainability within the organization. One of the interviewees explained there were several reasons why sustainability should get a more dominant position in the organization:
“First of all there is reputation management, the risk-perspective, damage to the reputation is very costly, you want to avoid that from happening. (…) Then there is the part of cost reduction, very simply put, when you put on the lights less often the energy bill will become less high as well. And then there is the business opportunity, it is clear that there is a shift in focus of organizations (…) and the better you understand these changes [in focus] as a bank the easier it becomes to be a good partner for those organizations.” (Head of Marketing and Communications)
His idea of why sustainability is important to The Bank and any organization in general, was shared by the Manager Business Ethics who explained sustainability in almost the same way. The main difference was the fact that the Manager Business Ethics added more focus on reputation management. This shows how different employees at The Bank have a different focus on sustainability in the organization. The Head of Marketing and Communications is a hands-on person with a big marketing background, therefore the focus is more on the financial performance. The Manager Business Ethics is a more ethical educated and oriented person with a focus on the ethical aspect of sustainability. That is one of the reasons why during this case study interviewees with different backgrounds were chosen. This helps to get a holistic view of sustainability in the organization.
The timing of the sustainability strategy was no coincidence. Because The Bank had recently appointed a new CEO whose task it was to create a new revised strategy the time seemed right to create a sustainability strategy to go with it. When asked whether this was the right time to implement such a strategy the Product and Formula Manager answered:
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“Yes (…) we now have the new strategy from [the CEO] and that’s a revised version of the old strategy. (…) this is a good opportunity to create a sustainability strategy that fits with this [overall] strategy.”
Next to that it seems that the new CEO is much more sustainability oriented than his predecessor. This can be seen in the new overall strategy that is launched:
“With our previous [overall] strategy the main idea was to go back to basics and to keep everything the way it is. (…) The main goal was to improve our financial performance. The new strategy is very forward thinking and is leading us into a new [sustainability] phase.” (Member of the Strategy Development Team)
The previous CEO of The Bank was seen a very conservative and old fashioned person. He is also a lot older than the new CEO. The new younger and more progressive CEO was open to new and progressive ideas. This can also be seen in the new overall strategy of The Bank. Part of the new strategy is to become a bank that is mainly focused on online services. This focus on online services shows that the new CEO is not afraid to be progressive. The new CEO and the new overall strategy were seen as a good opportunity to implement a sustainability
strategy.
This new sustainability strategy should lead to increased focus on sustainability within the organization. The Bank has promoted sustainability to its employees for a long time. There were, however, still employees that were not sure how they could contribute to the sustainability performance of The Bank. The Sustainable Lending Assistant Manager explained the way sustainability is currently incorporated in the thinking of commercial banking units of The Bank:
“Everyone understands the term sustainability, everyone is familiar with the term, a lot of people talk about it and they know [The Bank] is actively promoting
sustainability. However, there still is a lot of skepticism and doubt about what sustainability will mean for their daily work and customer base.”
This shows that people are aware of the importance of sustainability and becoming a more sustainable business but are not sure how to do this or what areas they should focus on. This can also be heard throughout the organization. Whenever talking to people about
sustainability at The Bank, they would automatically refer to the specialized business units that are in place, for example the business units that promote sustainable lending or the
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environmental and social risk department. Very rarely would any employee refer to sustainability within their own business unit or daily activities. This insight was shared by some of the interviewees:
“A lot of people see sustainability as windmills, solar energy and those kind of things that either do not have an impact or a positive impact on the environment. With that in mind there are a lot of people who argue that this is irrelevant to their ‘world’ [i.e. business] (…) there are still a lot of people that need to be convinced of the business case and business sense to make this a really important topic. A lot of people see it as a marketing tool, you have to comply to gain investors, but there is a lack of impact.” (Sustainable Lending Assistant Manager)
“I personally believe that there are a couple of people who take [sustainability] very seriously but there are also some people who don’t take it seriously at all [in their daily work]. I think (…) we need to make people accountable for their own
[sustainability] performance” (Head of Structured Finance: Power, Utilities & Renewables)
This view was also shared by the board and the team that was responsible for the
sustainability strategy. The sustainability strategy should make employees of The Bank even more aware of the importance of sustainability and give them insight in how they can
contribute to the overall sustainability performance of The Bank.
Overall the sustainability strategy was seen as a first step towards having a global sustainability agenda within the organization. One of the concerns of the sustainability strategy team was the fact that different countries, and even departments, used different sustainability strategies. These different sustainability strategies lead to countries and departments differing in sustainability activities performed. Not only did this lead to a lot of different sustainability activities without having a real impact, it also lead to the stakeholders of The Bank not understanding what The Bank’s activities are on a sustainability level.
“When we ask our [stakeholders] what [The Bank’s] sustainability activities are, we very often find they have no clue. The problem is we never made any choices, so we are doing a lot of different things on an average level (…) To create a sustainability profile we need to choose a couple of themes that will represent the sustainability activities of [The Bank].” (Head of Marketing and Communication)
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It seems The Bank is regarding their relatively low perceived performance as a serious issue that needs to be solved by implementing a sustainability strategy. This seems to be the main reason why the sustainability strategy and the dashboard will be implemented. With the help of the SPMS The Bank hopes to make sure the activities of all different departments
worldwide are focused on the same sustainability topics. That should lead to stakeholders becoming aware of the sustainability activities of The Bank.
Next to the new sustainability strategy, the sustainability department is demanding a sustainability dashboard to be designed and implemented throughout the organization. This dashboard should give insight in the sustainability performance of the different departments of The Bank in the different countries. The sustainability department wants to create the dashboard to get periodical indications on the sustainability performance of the organization and progress made on the sustainability strategy. The dashboard will be designed to measure the impact the organization has on both society and the environment:
“The current trend is to create an impact in society. The problem, however, is that impact often is very difficult to measure up front, so you have to find indicators, a sort of early indicators, that can assess the impact you create.” (Head of Marketing and Communications)
Next to measuring the progress on the sustainability strategy, the dashboard can also be used to integrate sustainability more into the business and to give lower management guidance in their choices and their initiatives.
4.3 Findings
In this section the evidence gathered from the interviews on the questions from the framework of Otley (1999) will be explored, additionally the topic of KPI selection is explored, further the issues of integrating the sustainability dashboard and using sustainability information in decision-making will be explored as well. All subjects explored in this section were covered by the interview questions.
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According to Otley (1999) organizational objectives are part of the main contingent variables that influence the design of a PMS. Objectives are partial goals that lead to the achievement of the mission. Therefore when looking at a SPMS it is important to get insight in the
sustainability objectives of the organization. The Bank however has not formulated objectives regarding sustainability issues. The Bank states that their mission is to deliver financial products to the customers in the way they want. Clearly, there is no sustainability aspect in the mission of The Bank. In their purpose, however, The Bank states that it will help people by making banking clear and easy, will be available at any location and at any time, will empower people to make smart decisions and stay ahead in life and that it will keep
improving to help people stay ahead in life. The Global Head of Sustainability summarized this as:
“We have a purpose as [The Bank] in which we say that we think it is important to achieve improvement in society.”
A purpose statement can be seen as an organization’s right to exist.
Further the words simpler, stronger, sustainable can be found a lot in the different offices of The Bank, many of the walls inside the offices are decorated with these words. This alliteration can be found throughout the organization and in both the internal and external communication of the organization. Simpler, stronger, sustainable was also the name of the latest presented Annual Report and the Sustainability Report. This shows that, although not mentioned in the objectives, improving sustainability on a business level plays a big role at The Bank and that there is a strong focus on the topic. Solidifying sustainability in the business model is also mentioned as one of the key targets for the coming reporting period. The Bank also has a section in their Annual Report which focusses on the corporate
responsibility of the organization. Therein it states that The Bank wants to build its future on sustainable profit based on sound business ethics and respect for its stakeholders.
Furthermore, The Bank mentions that they act with integrity, are open and clear, respect each other and are socially and environmentally responsible (Annual Report).
The sustainability purpose of The Bank is communicated in many different ways; “(…) both internal and external. For example, we have websites on which customers, but also employees can see what our sustainability policy and purpose is. We are very transparent in publishing where, for example, the savings of people are invested, those policies can also be found online. (…) Every employee that enters the office in the
