Sustainability In what way do companies implement the advice of the TCA into sustainable strategy?

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Sustainability

In what way do companies implement the advice of the TCA into

sustainable strategy?

Dorien van der Lee

d.van.der.lee.1@student.rug.nl

S3756637

22-06-2020

Supervisor: J. Gusc Co-assessor: Girdhar Word count: 11,305

Course code: EBM859B20.2019-2020.2 MSc Management accounting & control

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List of Figures

Figure 1: Conceptual framework ... 14

Figure 2: KPMG framework to identify True Value ... 20

Figure 3: What are the motivations for calculating True Value ... 23

Figure 4: Difference in motivation calculating product or the whole company ... 25

Figure 5: What is analysed with True Value ... 26

Figure 6: Wherefore do companies use True Value? ... 27

Figure 7: Implementation of a model ... 31

Figure 8: Focus of the new goals ... 33

Figure 9: New model NS………...56

Figure 10: New model Safaricom to implement SDGs………..56

Figure 11: Value-added statement………..57

Figure 12: Roadmap Heerema 2017………...57

Figure 13: Yorkshire model………58

Figure 14: measurement NN investments SDGs………58

Figure 15: New model Alliander………59

Figure 16: Samsung model True Value………..59

Figure 17: M-use Mitsubishi Elevator group……….60

List of Tables

Table 1: Sample of Companies... 16

Table 2: Strategy elements ... 21

Table 3: A sustainable strategy ... 23

Table 4: Motivations for TV... 23

Table 5: Quotes: where do companies use True Value for ... 27

Table 6: Quotes implemented models ... 31

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Abstract

True Cost Accounting (TCA) can have a significant influence on the sustainable development of companies. Nevertheless, it is not clear if companies will follow the advice the TCA tool gives and if the companies will try to implement this into one’s strategy. So far insufficient attention has been paid to the actual implementation of sustainability into the company’s strategy and practice.

This research will tests what companies do with the TCA advice, and if it is implemented into a sustainable strategy. The results of a multiple case study with data triangulation show that companies do focus on the issues mentioned in the TCA advice. Companies implement the advice into their strategy with the help of new models, goals and stronger stakeholder engagement and communication. This study shows why companies are motivated to apply the True Value methodology and most importantly, what companies do with True Value results. It shows the potential True Value can have within a company and the different ways companies use the technique for.

1. Introduction

Sustainability is defined as making use of resources which are environmental, socially and economically provided without damaging the ability to provide enough resources for the future generations (Blackburn, 2012). Environmental accounting developed in the 1980s, as a response to natural disasters and the noticed impact large corporations had on the environment (Krivačić & Janković, 2017). Environmental accounting is involved in monitoring, measuring and reporting the environmental impact that companies have to manage from within businesses (Krivačić & Janković, 2017). There is increasing pressure for companies to contribute to sustainability while maintaining profits for shareholders. Focusing on financial data is not sufficient anymore (KPMG, 2020). Stakeholders and regulatory demands force companies to be accountable for actions involving environmental and social issues (Engert & Baumgartner, 2015). However, the environmental and ecologically side of environmental accounting is still undervalued (Russel, 2017). Most organizations who are investing in sustainability in today’s economy has little to do with sustainability. The

activities only reflect how organizations want to understand sustainability (Gray, 2010). Used as a tool to improve one’s brand image (Durden, 2008). Environmental accounting still mainly concerned with economic entities (Russel, 2017). There have been many techniques developed to improve

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5 moves beyond the entity’s externalities (Bebbington & Larrinaga, 2014). It shows all the

potential/actual costs and profits which are made. However, this model includes the costs of

environmental and social externalities, which shows a fairer price than when just the market costs are taken into consideration. Because in conventional accounting, not all the consequences of economic activities are considered (Bebbington & Larrinaga, 2014). Therefore a lot of environmental, economic and social benefits can be derived within a company. Through this technique, companies can save costs and have the ability to make more informed decisions. Change in strategy is mainly supported when it also helps in saving costs (Kemp, Stark & Tantram, 2004). The literature shows that applying an environmental accounting method is the most effective for changing one’s strategy towards sustainability (Busco, Fiori, Frigo & Angelo, 2017, Blackburn, 2012, Dwek, 2017, Millar, Hind & Magala, 2012).

Personal motivation for this study is that I worked for some large firms and have noticed how polluting they can be. I believe sustainability is an essential topic because organizations can make a huge difference in environmental issues and improving sustainability, by implementing this into the companies strategy. Therefore I would like to contribute to this topic with this research and improve knowledge on how companies can integrate sustainability better.

There are different theories and perceptions about the motives of corporations to become more sustainable. Aguinis & Glavas (2012) found that the motives for companies to invest in social responsibility are the perception that it will increase competitiveness, improve sales and legitimacy. Krivačic & Janković (2017) found that the motives of companies for investing in environmental accounting can be both internal and external, tangible and intangible, financial or ethical. Whatever the motivation is for a company, adopting a sustainable way of working is influenced by their leaders and stakeholders (Babiak & Trendafilova, 2011).

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6 how sustainable goals has to be implemented into the company strategy and practice (Engert &

Baumgartner, 2015). It is not yet studied if companies will follow the advice the TCA tool gives and try to implement this into one’s strategy. Therefore this study will focus on what companies have done with the results of the true cost approach. Different cases where the true cost accounting method has been applied will be evaluated since this will help arrange for a critical analysis of the current knowledge of the procedures of true cost accounting.

Moreover, with this, we can understand the difference in the effect of the TCA on different sectors and see if companies use this to improve sustainability or if it is just a cost-cutting or reputation enhancing tool. Therefore, the motives for improving the sustainability of the companies will be analysed as well. This study would like to identify what effect true cost accounting has. Hence this study will contribute to the research topic of true cost accounting, its effect on companies and its sustainability strategy.

The research question for this paper will, therefore, be: In what way do companies implement the advice of the TCA into sustainable strategy?

The focus of this study will require an understanding of the operations of the companies, motivations within companies and the identification of strategies, in order to see if the TCA advice has an impact on the company. This research will be a multiple case study with data triangulation. This case study is conducted in collaboration with KPMG. Triangulation includes the use of multiple data sources (Leech & Onwuegbuzie, 2007). Multiple case studies give a broader view of different industries. This tool can help capture a better understanding of experiences via text and of the subject. It can get more detailed data. (Leech & Onwuegbuzie, 2007). The TCA methodology will be studied. Different case studies of TCA advice will be compared with the annual reports of the companies who received advice. The goal of these case studies is to discover what companies do with the advice of the TCA methodology. This research argues that companies who integrated the advice of the TCA into one’s strategy will achieve a more significant sustainable development.

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2. Theory

This research uses the framework of the true cost accounting model as a basis. This model is designed in order to enhance development in the accounting profession on an environmental aspect. It accounts for the consumption of environmental resources within individual organizations.

2.1 Sustainable accounting

Sustainability is defined as: “A concept describing mankind’s ability to create a world for humans and non-humans that environmentally, socially, and economically provides for a current population’s needs without damaging the ability of future generations to take care of themselves” (Blackburn, 2012, p.13). The triple bottom line describes sustainability in three dimensions, namely: people, planet, profit. These dimensions influence each other, and they should be integrated in order to achieve sustainable development (Elkington, 2013). The triple bottom line has become more popular in the business world because it improves long-term profitability. However calculating this can be a challenge, since the three dimensions (PPP) do not have the same unit of measure (Slaper & Hall, 2011).

‘Top-down’ and ‘inside out’ are the two main approaches to sustainability. The ‘top-down’ approach is mainly concerned with management, measurement and control. ‘Inside out’ approach is mainly concerned with change and innovation. “Going inside out is about relationships and ‘connectedness. Being connected and responsive to shareholders, suppliers, communities, and customers is the foundation of sustainability. Nevertheless, going inside out can also be uncomfortable. Any creative process embraces risk and uncertainty and the emergence of unexpected outcomes” (Henriques & Richardson, 2013, p.19).

Strong sustainability means that financial aspects and costs are of little importance. The focus is mainly environmental, also called ecological sustainability. Weak sustainability occurs when financial aspects are the primary focus. This will result in trade-offs between the three dimensions:

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8 Environmental accounting is involved with monitoring, measuring and reporting the environmental impact that companies have. Life-cycle costing, cost-benefit analysis, a balanced scorecard for

sustainability, material cash flow and TCA are all tools and techniques for environmental management accounting (EMA). “The purpose of EMA is to assist the internal planning and decision-making process within an organisation by measuring environmental information and making it more visible for decision-makers” (Jasinski et al., 2015, p.1124). Most of these techniques calculate the direct environmental costs of the company, except for the TCA, which measures the external costs as well. Environmental accounting will help firms be more innovative and create significant sustainable benefits. In order to achieve this, environmental costs should be integrated into all companies’ decisions, capital budget, costs allocation and process designs (Nakasone, 2015). “Only when

companies get their prices right and start paying for the external costs of their operations can profit be considered as environmentally and socially sustainable” (Jasinski et al., 2015, p.1124).

2.2 Managerial attitudes towards change

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9 development can only be achieved by when there is a clear vision, and this vision is acted upon

(Millar, Hind & Magala, 2012). Alignment of sustainability and company strategy and business models can create many opportunities, such as: “generate new revenue, increase supply chain resilience, recruit and retain talent, spawn investor interest, and assure license to operate” (Busco, Fiori, Frigo & Angelo, 2017, p.31). “Firms with higher levels of environmental sustainability orientation are likely to have institutionalized in their overall strategies, structures, processes and activities a wide range of measures designed to reduce their negative impact on the natural environment” (Roxas & Coetzer, 2011, p.464). With this, management behaviour is key. Change towards a sustainable strategy needs management involvement in order to ensure new processes are implemented (Durmuşoğlu, McNally, Calantone & Harmancioglu, 2008). Management accounting can help with this because “with their knowledge and expertise they can design measurement systems and tools and provide information for decision making and reporting of sustainability performance” (Epstein & Buhovac, 2014, p.31). CSR and sustainability have become more

important in the business world, because of to the association of brand value and trust, even though it is not integrated fully in the company strategy (Dwek, 2017). However, the environmental and ecologically side of environmental accounting is still undervalued (Russel et al., 2017). Companies tend to try to improve one’s image or reputations with sustainable practices. “Corporate greenwashing refers to the idea that a company deliberately frames its activities as ‘green’ in order to look

environmentally friendly” (De Vries et al., 2015, p.143). “Companies are under increasing pressure to show they make a positive contribution to society as well as generate profits for shareholders.

Focusing on the financials alone is no longer enough” (KPMG, 2020, p.2).

“In the existing system, the cost of external impacts is borne by society and neither companies or customers pay the full cost of production and consumption” (Jasinski et al., 2015, p.1124). Therefore True Cost Accounting is an effective technique to challenge this issue.

2.3 True cost accounting (TCA)

True cost accounting has several terms: full environmental cost accounting, total cost accounting, total cost assessment, True Value or true cost accounting. The true cost model is an accounting technique, which is designed to “get the prices right”. The definition of true cost accounting is: “The

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10 costs and profits which are made. However, this model includes the costs of environmental and social externalities. External costs are defined as: “the damages or negative effects of an entity’s activities and decisions borne elsewhere in the system by parties not responsible for causing these effects in the first place” (Jasinski et al., 2015, p.1124). These costs show a more fair price than when just the market costs are taken into consideration. Because in conventional accounting, not all the consequences of economic activities are considered (Russel, 2011).

“All companies create externalities, both positive and negative, at all points in their value chain: upstream in their supply chain, through their own direct operations and downstream through the use and disposal of their products and services” (KPMG, 2014, p.12).

There are four steps which have to be taken in order to achieve true cost accounting. Step 1 is to define the cost objective. This gives a clear idea about the fuller costs, which can be done for a single

project/process, part of the business or all activities of an organization. Step 2 is to specify the scope or limits of analysis. For this, the externalities need to be determined, peeling off all the layers until the true impact is revealed (Dascalu, Caraiani, Guse, Lungu & Colceag, 2009).

Step 3 is to identify and measure the external impact. Generate all the data which is appropriate for the cost objectives which have been chosen. Nevertheless, it is not always easy to acquire this data. First, the data on the cost objectives have to be acquired. After this, the data of the associated externalities need to be acquired. All transactions are tracked for this step. Step 4 is to cost an external impact so that the externalities are measurable. So that all aspects can be converted into some form of currency (Dascalu et al., 2009). With these steps, all externalities can be recognised, and all costs can be taken calculated and taken into consideration.

The benefits of this approach are that it helps companies make more effective and efficient use of one’s resources, it is an economical way to reduce costs and environmental damage, it is improving revenue, and it improves decisions making. Therefore, TCA might influence the approach of a company’s sustainable strategy.

Externalities are quickly becoming more internalized, either through taxes, changing market dynamics or stakeholder pressure. Therefore companies need to understand one’s externalities better.

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2.4 Sustainable strategy

A strategy is: “a unified, comprehensive, and integrated plan designed to ensure that the basic

objectives of the enterprise are achieved” (Kumar & Bansal, 2014, p.412). A strategy helps companies coordinating. It helps as decision support and as a target. If a company wants to achieve sustainable development, then sustainability should be integrated into the strategy (Busco, Fiori, Frigo & Angelo, 2017). The perspective of a strategy is that it has shared norms, values and commitment to ways of acting and responding (Grant, 2010). Sustainable development happens when environmental issues are integrated into the culture, decision making, strategy and business operations and

communication with stakeholders (Roxas & Coetzer, 2011). Sustainable development depends on the commitment of the management in enacting proactive strategy choices (Millar, Hind & Magala, 2012). Sustainability should have; “organizational support (including top-management support, bottom-up

support), that it includes all business units, that stakeholders are intrinsically and extrinsically

motivated, and that the sustainability performance data can be tracked” (Székely & vom Brocke, 2017, p.3). Because a strategy brings: “organizational cohesion and focus of resources to high-priority objectives, improving the chances of accomplishing them with the least time, effort, and money” (Blackburn, 2012). So therefore if a company would like to become more sustainable, an effective strategy is essential (Blackburn, 2012).

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2.5 Organizational change

“Implementation and organizational change are the key issues in achieving sustainability” (Millar, Hind & Magala, 2012, p.491). Internal drivers are essential to improve sustainability. Organizational systems and leadership help create a sustainable culture and reduce environmental impact. (Sroufe, 2017). Organizational change is often underestimated and therefore fails frequently. Individuals play an essential role in the change process, and this is essential in order to create change (Choi, 2011). “To implement any form of corporate sustainability requires that managers understand their objective and the cultural and psychological barriers of organizational change” (Appelbaum, Calcagno, Magarelli, & Saliba, 2016, p.16). The purpose and goal must be clear in order to achieve change. Engagement and clear goals are the keys to success. “It is important to consider first “why” a firm seeks sustainability and then “how.” Additionally, it is best to view the path to sustainability as a change initiative that can transform its culture and relationship with community, country, and/or world” (Appelbaum et al., 2016, p.17).

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2.6 Difficulties after calculating TCA

“TCA is a tool that highlights the current unsustainability of our collective economic activities and provides an indication of the source of that unsustainability. Once that is achieved, the truly hard work of doing something about that unsustainability begins” (Bebbington & Larrinaga, 2014). Several literature streams explain that sustainability is not easy to achieve, and implementing it into the company’s strategy is key. TCA advice has to be linked to changes in the systems, such that sustainable development can be achieved. Just calculating the results of the TCA is not enough. So what effect TCA truly has is difficult to tell. Many companies face difficulties in achieving real change in organizational and social practices after applying sustainable accounting (Brown & Dillard, 2013). “Isolated sustainability tactics don’t guarantee the achievement of sustainable performance” (Busco et al., 2017, p.35). So far, insufficient attention has been paid to the actual implementation of

sustainability into the company’s strategy and practice (Engert & Baumgartner, 2016).

Implementing sustainability management successfully into the organization takes much effort. The company needs to manage several changes. “Thus, managing organizational change effectively is a critical requirement for successful sustainable organizational management” (Stead & Stead, 2017, p.15). Calculating the TCA is not enough in order to improve one’s sustainability development. It takes effort to implement the outcomes of the TCA into the strategy of the company.

Moreover, companies do not always succeed in this. “Successful integration of sustainability into strategic management requires coherence across corporate sustainability strategies and organizational structure. In the implementation phase of corporate sustainability strategies, the fit between strategies, organizational structure and organizational processes is essential” (Engert & Baumgartner, 2016, p.828). Companies struggle with the difficulty to interpret sustainable development to an

organizational level (Bebbington, 2014).

Further research is needed on the patterns of the adoption of sustainable practices (Babiak & Trendafilova, 2011). Krivačic & Janković (2017) found that there is more study needed on the managerial attitudes towards environmental accounting and the underlying factors which influence this practice. Do companies take the effort to implement sustainability into one’s strategy? Or is calculating the TCA just a manner to improve one’s reputation? Therefore this research will tests what companies do with TCA advice, and if it is implemented into a sustainable strategy.

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3 Research Design

The focus of this study will require an understanding of the operations of the companies, the

motivations within the companies and the identification of strategies, in order to see if the True Value advice has an impact on the company. The master thesis research will be conducted in cooperation with KPMG, which enables access to data. KPMG assisted multiple companies in their efforts to uncover the true costs of the products or services by assessing their True Value. KPMG has done this for more than 100 companies over 20 countries. Some of these trials have been published and serve as perfect study material for exploration of the strategic developments. All companies that published the reports will be included in the current study. Each company will be treated as a separate mini-case study. Since KPMG uses the terminology True value, this term will be used from here on. The goal of this case studies is to discover what companies do with the advice of the True Value methodology. This research argues that companies who integrated the advice of the True Value into one’s strategy will achieve more significant sustainable development.

3.1 Data collection

Because this research wants to answer a how question, qualitative research is needed. This research will be a multiple case study with data triangulation.“Typically, triangulation involves the use of multiple data sources, multiple researchers, multiple theoretical perspectives, and/or multiple methods” (Leech & Onwuegbuzie, 2007, p.579). For this study, True Value case study reports, annual/sustainability reports and interviews will be used as data sources. Different case studies which have been published publicly by KPMG about the True Value advice will be compared with the annual reports of the companies who received advice. For every company, the True Value report and the annual/sustainability reports will be collected. The annual report of the year before the advice has been given will be analysed. After this, the yeas after the advice has been given will be analysed. The study is cross-sectional since there are different samples involved at one point in time.

Beforehand the True Value reports are collected to analyse. These reports are companies to which KPMG has given advice to using the True Value method and have been published on the KPMG website. The reports include motivations and an explanation of the True Value applied in the company. Advice for the follow-up steps is included in these reports.

At the start of the thesis research process, an orientation interview had been conducted. This interview was approximately 20 minutes. This interview was conducted via Skype in Dutch with the

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16 methodology at KPMG will be realised. Furthermore, this will help us select potential cases for the research. Thirteen companies have been identified as suitable for current research. The industries are diverse: transport, telecommunication, animal feeds, cement, water suppliers, contractors, paint, investment, energy supplier and infrastructure. This way the results of the True Value in different industries can be observed. Table 1 presents an overview of the companies and the date of the reports which have been collected.

Company Description Date of the True

Value analysis performed by KPMG

The reports used in the current study

1. AkzoNobel Making paints and coatings. Headquartered in the Netherlands, active in over 150 countries and employ over 34,500 people.

2014 Annual report 2015

Annual report 2016 Website

2. Aliander Alliander is a group of companies. Alliander is responsible for adequately distributing energy across all grids. Qirion is concerned with developing sustainable technologies and intelligent energy infrastructures. Metering business Kenter offers innovative solutions for energy metering and energy management. They offer innovative and sustainable solutions and services. 2017 Annual report 2016 Annual report 2017 Website 3. Ambuja Cement Ltd. “Ambuja Cement Ltd, headquartered in Mumbai is one of India’s leading cement manufacturers and a subsidiary of Holcim, the world’s second-largest producer of cement with annual revenues of $20.3 billion” (KPMG, 2015, p.1). 2013 Annual report 2012 Annual report 2013 Website Sustainability report 2012 Sustainability report 2013

4. Argos “A multinational company that produces and markets cement and ready-mix concrete through its

operations in Colombia, the US, Central America and the

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17 Caribbean” (KPMG 2018,

p.2).

5. Evonik One of the world’s leading speciality chemical companies, in more than 100 countries. Generated sales of 13.1 billion. Evonik goes beyond chemistry to create innovative, profitable and sustainable solutions for customers.

Strategic update May 2020

Website

6. Heerma Marine contractors

Are a world-leading marine contractor in international offshore oil and gas and renewables industry. HMC transports install and remove offshore facilities. 2017 Annual report 2016 Annual report 2017 Website Sustainability report 2017 Brocuher customer-driven performance 2017 7. Mitsubishi Elevator Europe

MEE is the authority in the Benelux in the area of high-quality, reliable elevators and escalators, elevator maintenance and elevator renovations. MEE is part of Mitsubishi Electric group.

2016 Annual report 2015 Annual report 2016 Website Brochure M-use 2020 8. NN investment partners

Handle capital management for clients with over €276 billion. They are creating active capital management and sustainable solutions for clients and society.

Annual report 2018 Website

9. NS “NS Group is the largest public transport operator in the Netherlands, employing over 20,000 people. 86% of its revenue come from passenger transport, the group’s subsidiary companies also provide maintenance for trains and are responsible for the management and commercial development of 400 Dutch railway stations”(KPMG, 2016, p.1). 2015 Annual report 2014 Annual report 2015 Website 10. Safaricom Limited

Are the largest mobile operator in Kenyan. It serves over 23 million customers. “Safaricom’s services include mobile and fixed

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and M-PESA, a mobile phone-based money transfer service. Safaricom’s goal is to transform lives by providing unmatched products and services that meet the needs of Kenyans” (KPMG, 2015, p.1).

11. Samsung South Korean producer of electronic devices.

Samsung has a wide variety of consumer and electronics.

2016 Annual report 2015 Annual report 2016 Sustainability report 2015 Sustainability report 2016 Website 12. Volvo “One of the world’s leading

manufacturers of trucks and busses and also provides services solution for financing and service. The group, with its headquarters in Gothenburg Sweden, employs about 100,000 people has production facilities in 19 countries and sells in more than 190 markets” (Volvo, 2015, p.2). 2015 Annual report 2014 Annual report 2015 Website 13. Yorkshire water

“Provide essential water and wastewater services to the people and businesses of the Yorkshire and Humberside region” (Yorkshire, 2018, p.4). 2016 Annual report 2015 Annual report 2016 Website Table 1: Companies

Differences and similarities of the True Value case studies will be examined. Deductive reasoning is applied since the conclusion will be based on theory and observations of the case studies. The philosophy of this study is positivistic since this study is using existing theory to adopt and develop a research question. Moreover, “only phenomena that you can observe will lead to the production of credible data” (Saunders, Lewis & Thornhill, 2007, p.113).

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19 All the companies which will be studied have been analyzed with the KPMG True Value approach. This methodology is using the same techniques as True cost accounting since it monetizes externalities of products or companies, both on the economic, social and environmental aspect. However, this model also includes possible investments to improve True Value. Furthermore, SDGs will be taking into consideration in this model. Hence this technique will be used as an implementation tool. Therefore the term True Value will be used instead of TCA. Qualitative data analysis tools can help researchers to address the crisis of representation, namely, the difﬁculty in capturing lived experiences via text. In order to understand better the phenomenon. The ability to “get more out of the data” (Leech & Onwuegbuzie, 2007, p.579). “As the old adage goes, what you can’t measure, you can’t manage” (KPMG, 2014, p.5). KPMG provides companies with a decision-making tool and internal risk assessment with the help of the True Value methodology. True Value methodology has been applied to several industries, such as cement, retail, transport, food production and retailing and private equity.

The methodology has a three-step process. The first step is to assess the company’s true earnings, which will identify all the positive and negative externalities and quantify them. As can be seen in the table below. “The concept is not perfect, and the data is not yet as reliable as that used for financial reporting. However, monetization does offer a useful means to draw comparisons of scale between a company’s various externalities and identify which of them are most material both to the business and to society” (KPMG, 2014, p.44).

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Figure 2: KPMG framework to identify True Value

“KPMG True Value focuses on linking societal value with corporate value, i.e. the financial value created for shareholders and the value of companies. It is not only a means to measure and manage the value a company creates for society, but also a tool to understand what that means for its future profit potential. In this way, KPMG True Value provides companies with a value-based decision-making tool” (KPMG, 2015, p.4). KPMG offers this service to clients in order to improve its strategy, financial performance and increase influence with stakeholders and investors. It also helps prevent reputation damage and stimulate innovation. This way, companies understand better what one’s impact on society and the environment is. “Once companies have a clearer view of their exposure to internalization, they will be in a stronger position to develop strategies that capture value” (KPMG, 2014, p.40). From here on the term, True Value will be used.

3.3 Data analysis

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Before True Value After True Value 1. Business values (Markiewicz, 2011).

2. Goals of the company (Terrafniti, 2020).

3. Are the goals long term oriented? (Terrafniti, 2020). 4. Is there organizational support?

(Management/stakeholders) (Székely & vom Brocke, 2017).

5. How is sustainable performance tracked? (Epstein & Buhovac, 2014).

6. Patterns of communication with stakeholders (Markiewicz, 2011).

7. Does the company contribute to solving both global/local sustainability issues (Terrafniti, 2020). 8. Does the company give attention to the issues

mentioned in the True Value report? Is there a continuation?

9. Are there further plans to improve sustainability? Table 2: strategy elements

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4. Results

This research argues that companies who integrated the advice of the True Value into one’s strategy will achieve greater sustainable development. It is not yet studied if companies will follow the advice the True Value tool gives and try to implement this into one’s strategy. Therefore this study focusd on why companies use the True Value methodology and what companies have done with the results.

4.1 Business values

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23 Already had a sustainable

strategy for several years.

Implemented a sustainable strategy a few years ago/recently. Have been investing in sustainability since the last 0-5 years. 1. Evonik 2. Mitsubishi 3. Safaricom 4. Volvo 1. AkzoNobel 2. Alliander 3. Abuja Cement 4. Argos

5. Heerema Marine contractors 6. NN investments

7. NS 8. Samsung, 9. Yorkshire

Table 3: a sustainable strategy

There were basically three different motivations to conduct True Value methodology: a better understanding of its externalities/opportunities. Secondly is to build a case. This is often done for a product/process, in order to prove to shareholders; this is a ‘profitable’ product/process. And lastly to contribute to a (changed) mission/vision.

Figure 3: What are the motivations for calculating True Value

In the table below quotes about why companies want to use the True Value methodology for one’s company or product can be seen.

Company Motivations

AkzoNobel “In order to better understand where we can have the biggest potential impact throughout our value chain, we will calculate this. We aim to making increasing use of economic, environmental and social impact assessment, as well as profit and loss accounting, as a driver for our decision making” (Akzonobel, 2017, p.3).

Opportunities/ externalities

Aliander “Alliander has invested in renovation projects of several buildings. They want to prove that circular renovation is on several aspects

Build a case

0 1 2 3 4 5 6

To contribute to (changed) mission/vision Build a case Better understanding of externalities/opportunities

What are the motivations for calculating TV

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24 profitable, through the use of the True Value methodology. With

this, they would like to inspire other parties to renovate buildings in a circular way” (KPMG, 2017, p.1).

Ambuja Cement Ltd.

“An ambition to secure long-term corporate value prompted the company to review its operations through the KPMG True Value approach” (KPMG, 2015, p.1).

Mission/ Vision

Cementos Argos

Firstly, the company wants to make better informed and more responsible business decisions by integrating a wide range of economic, environmental and social considerations. Secondly, Argos wants to understand how its social and environmental impacts – that have traditionally been considered “externalities”- might present a financial risk to the business in the future and to use this information to consolidate the strategy that mitigates these impacts. Thirdly, the company wants to promote accountability within their stakeholders about the net value it brings to society. Better quality information can contribute to informed dialogue with stakeholders (KPMG, 2018).

Opportunities/ Externalities

Evonik “To build the case for using innovative animal feed on a large scale, Evonik worked with finance and sustainability professionals at KPMG member firms to measure and value the economic, social and environmental impact of livestock production” (KPMG, 2020, p.3).

Build a case

Heerma Marine contractors

The quality of buildings is not limited anymore to traditional value drives: buildings also contain and contribute an economic, social and environmental value. Therefore True Value analysis was performed for the Vondellaan office (KPMG, 2016).

Mitsubishi Elevator Europe

“MEE would like to set up a leasing model, elevator suppliers would then be incentivized too minimize maintenance needs and build elevators for long-term durability. This more sustainable approach would likely deliver environmental and social pay-offs to society as well as financial benefits for the suppliers and customers. Therefore they would like to test this theory with the True Value methodology” (KPMG, 2016, p.1).

Build a case

NN investment partners

The mission of NN is “making a meaningful contribution to solving the world’s biggest challenges and achieve an attractive financial return. Societal & shareholder value creation can go hand in hand, therefore True Value will be calculated” (NN investment partners, 2019).

Mission/ Vision

NS “Its long-term vision is to increase the value it creates for society while reducing its negative impacts and delivering healthy financial returns. Hopes to accelerate change in the transport sector through its bold leadership” (KPMG, 2015, p.1).

Mission/ Vision

Safaricom The company wanted to understand how successful it has been in achieving this goal and how it can increase the value it creates for society (KPMG, 2015).

Samsung Strive to create social and environmental value as well as economic value through our sustainability management to contribute to the development of the global society. The mission statement of

Samsung is: We will devote our human resources and technology to

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25 create superior products and services, thereby contributing to a

better global society” (Samsung, 2016, p.3).

Volvo “Volvo Group decided to show leadership in sustainable development movement by quantifying the environmental and social value created by electric buses” (KPMG, 2015, p.1).

Build a case

Yorkshire water

“To ensure a highly efficient and resilient approach we are

collectively considering how to best optimize resources and manage inherent trade-offs to deliver the priorities our customer need and want” (Yorkshire, 2018, p.3).

Table 4: Motivations for TV

What can be seen in figure 4 is that companies who have had a sustainable strategy for many years mostly use True Value in order to build a case. These companies find sustainability important and want to convince stakeholders or increase awareness. “We are convinced that only companies that act responsibly can be successful in the long term. Sustainability has long been a growth driver in many of our businesses” (Evonik, 2019, p.13). Only Safaricom did not want to build a case. Hence wanted to be checked by a third party how they are performing. The companies who recently invested in a sustainable strategy use True Value mostly in order to contribute to their (new) mission/vision or to understand their externalities and opportunities better. In the table below: the relationship of different motivation of companies with sustainable for many years and companies who are relatively new to sustainability.

Figure 4: Difference in motivation calculating product or the whole company

0 1 2 3 4 5 6 7 8 9

Companies who already have a sustainable strategy for many years

Companies who recently changed to a more sustainable strategy

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26

4.2 Goals of the company

Figure 5: What is analysed with True Value

True Value can be calculated for product/process or the whole company. Besides different aspects which are calculated and the different motivations, there are also different ways True Value is used and implemented. Some companies use it in several ways, and others use it for one purpose only. True Value is mostly used for better decision making, besides a decision-making tool. The model is also used a lot as stakeholder engagement. Companies use it to improve the dialogue with stakeholders and increase understanding and collaborations among stakeholders. Companies who are building a case may use this to convince stakeholders to buy or invest in one’s product.

Furthermore, True Value is used to increase awareness. It helps to understand the real impact something has, which is a more persuasive message in order to create awareness. Finally, companies also use the tool to implement SDGs in the company’s strategy. Many companies do not know how to implement these goals and therefore use the True Value. KPMG assesses the contributions a company can make to the UN’s Global Goals for Sustainable Development. “With these insights, Mitsubishi aims to contribute to the global development goals” (KPMG, 2016, p.7). Some companies want to contribute to the SDGs, but do not know how to implement this into one’s companies strategy and therefore also use True Value as a tool to do this. “Safaricom will also use it as a tool to measure its contributions to achieving the UN’s Global Goals” (KPMG, 2015, p.5).

What is analysed with True value

Whole Company Process/product

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Figure 6: Wherefore do companies use True Value?

In the figure below, quotes can be found about wherefore True Value is used. Quotes Wherefore do companies use True Value?

AkzoNobel “We will continue to work on improving the approach and map additional impacts that are both positive and negative. We can gain valuable insights into how we can drive longer-term business value and help with our strategic decision-making. By expanding and developing the methodology, our results will change over time, through improvements to our own

performance as well as through the addition of more elements. Helps us to enhance our existing business, create new business opportunities and minimize risks” (Akzonobel, 2017, p.7).

Decision-making

Alliander “Buiten het ontwikkelen/realiseren van gebouwen of

rennovaties kan maatschappelijke impact analyse voorafgaand aan projecten worden gebruikt als tool voor het maken van investeringsbeslissingen. Door inzicht te bieden in hoe de financiele investering opweegt ten opzichte van de

maatschappelijke gecreëerde waarde” (KPMG, 2017, p.5).

Decision-making

Ambuja “Bringing together the numbers and presenting them in such as visual manner provided valuable insights, which helped to get company staff engaged. The process has helped Ambuja in its decisions-making. It has helped the company to identify a portfolio of cost-effective projects, reduce costs, increase earnings and most importantly, increase its True Value” (Ambuja, 2013).

Stakeholder engagement/ Decision making

Argos “Valuable tool for engaging with Argos’ stakeholders in a fact-based discussion about the positive and negative impacts of

Stakeholder engagement

Decision-making Stakeholder engagement Increase awareness Implementation SDG's

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28 Argos to society and its specific communities.” (Argos, 2018

,p.6)

Evonik “To generate engagement and debate around how the livestock industry can work together to address its social and

environmental challenges. They could trigger meaningful dialogue across the value chain and help to shift farming towards more sustainable practices. It can help farmers to engage in fact-based discussions about the societal value they create – potentially helping strengthen their social license to operate. Evonik sees this analysis as a tool to guide its decision-making in innovation and product portfolio management to develop new products that have an even greater positive effect on society” (KPMG, 2020, p.8). Increase awareness/ Stakeholder engagement/ Decision making Heerma Marine contractors

“Further analysis and data point over a longer period are needed to better understand and valuate how results found in literature relate to day to day performance. Additionally, training employees to make the best use of their new surrounding may have significant influence on perceived productivity and is worth a consideration for further research as well” (KPMG, 2016, p.2). Decision making/ Stakeholder engagement Mitsubishi Elevator Europe

“True Value methodology helps to build the business case for long term leasing. There are not only financial benefits for the customer but also benefit for society. With these insights, both organizations aim to contribute to the global development goals” (KPMG, 2016, p.7).

Will use the results to provide valuable insights to its stakeholders on the impact of long-term leasing concepts, in order to stimulate demand for leased elevators and to deliver the financial and socio-economic benefits that leasing brings.

Increase awareness/ Implementation of SDGs/ Stakeholder engagement NN investment

“Creating a better fit between ESG and SDGs. From risk to opportunities. The strong foundation of our purpose, brand, values and ambition, combined with our focus on our strategic priorities enables us to create long-term value for our company and our stakeholders” (NN investment, 2019, p.11).

Implementing SDGs/ Decision-making

NS “The insights are improving internal decisions-making and strengthening reporting and dialogue with external

stakeholders” (KPMG, 2015, p.6). Decision making/ Stakeholder engagement Safaricom Limited

“Safaricom will use the KPMG True Value as a platform to develop further initiatives to create shared value in Kenya, better informed decision-making, and to promote stakeholder dialogue. Safaricom will also use it as a tool to measure its contributions to achieving the UN’s Global Goals. True

Earnings has been used by Safaricom as a way of understanding and expressing the value that the company creates for society” (KPMG, 2015, p.5). Decision making/ stakeholder engagement/ Implementation SDGs

Samsung “Although we cannot conclude that these indicators reflect the entirety of Samsung’s activities, we will continuously systemize and complement them to manage social and environmental goals and to establish future approaches. We are securing business continuity by ensuring materiality assessment results

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29 are reflected in management’s decision-making process and

related divisions’ business plans” (Samsung, 2016, p. 31). Volvo “The analysis helps to increase awareness of the environmental

and socio-economic impact of city transport. It also helps city municipalities and transport authorities worldwide to make decisions on city planning and the future development of their transport systems” (KPMG, 2015, p.6). Increase awareness/ Stakeholder engagement Yorkshire water

“We will use this data-driven system to consider the best mix of investment and operational choices based on their impact and value across a broad range of measures, thereby helping maximise societal benefit and more sustainable approaches” (Yorkshire, 2018, p.17).

Decision-making

Table 5: Quotes: where do companies use True Value for

4.3 Stakeholders

Companies often include stakeholder importance into their strategy. All companies acknowledge that stakeholders are an essential aspect of the company. “We want to be a company that matters in the lives of our stakeholders: our customers, employees, shareholders, business partners and society at large. We take our decisions with care and with the interests of our stakeholders in mind. The strong foundation of our purpose, brand, values and ambition, combined with our focus on our strategic priorities enables us to create long-term value for our company and our stakeholders” (NN

investments, 2018, p.1). Also, Yorkshire and Safaricom find it important to include stakeholders in one’s strategy. “Maintaining the trust of our stakeholders and remaining accountable to them as vital to achieving our vision. As a result, we are committed to retaining that trust by managing our

operations responsibly by keeping our people safe, managing our environmental footprint, protecting the privacy of our customers and conducting our business in an ethical and transparent way”

(Safaricom, 2016, p.90). “The essence of our vision is doing what is right for customers, colleagues, partners, the environment and investors, both in the short and long term. This holistic and integrated approach is critical to the sustainability of our water and wastewater services and our business. Putting our customer priorities at the heart of our strategy. We undertake extensive customer and stakeholder engagement to ensure we understand our customers’ priorities. We also undertake extensive analysis and research to ensure we can act on the best available evidence in our decision making” (Yorkshire, 2016, p.8).

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30 In some cases, stakeholders convince the company to address certain sustainability issues. “Our stakeholders expect us to make a substantial contribution towards the new energy landscape. To this end, we have defined a clear four-pillar strategy” (Aliander, 2017). Stakeholder concerns may be the cause why companies start to invest in sustainability and therefore, also use the True Value

methodology.

However, in other cases, the company is convincing the stakeholder to contribute to sustainability. “Annually, we invite our stakeholders to participate in our Sustainability Dialogues, a space to promote a sustainable culture. In the last three years, we have increased the participation of our stakeholders in both sustainability week and sustainability dialogues” (Argos, 2015, p.43). Therefore companies use True Value in order to engage stakeholders. “We strive to empower all employees to contribute and be accountable for our sustainability performance, using training and other engagement processes, including business and site-level activity, as well as web-based resources” (Akzonobel, 2015, p.200). The stakeholder relationships are all different. Nevertheless, all companies have dialogues with one’s stakeholders. “Our stakeholder engagement activities are linked to our

sustainability and business strategy because becoming radically resource efficient is a huge challenge which we can’t accomplish alone” (Akzonobel, 2015). It is recognized that stakeholder engagement is an important aspect to implement sustainability. “We recognise the need to engage and collaborate much more with our supply chain, customers and tenant to collectively grow positive outcomes” (Yorkshire water, 2018, p.17). “

4.4 Tracking of sustainability performance

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31 companies focus on SDGs, and others create a roadmap. Three companies implemented only the True Value model. “The process (TRUE VALUE) is now being applied more widely across the company and is helping to generate business value” (Akzonobel, 2015). Several companies want to extend the analysis and improve the data of the True Value. “The impact analysis is a growth process, and each year NS aims where possible to extend the scope of the analysis while tightening up the methodology and data quality adopted (NS, 2016, p.5). Below the differences can be seen in table 6.



Figure 7: Implementation of a model

The different models of companies can be found in the appendix. Some models are similar to the True Value methodology, however specific in/outputs of the company are included. Or materiality themes are included, some include achievement and ambitions. Other models are a step-by-step approach or explain a new process. Quotes of the implemented models can be found below.

Quotes Implemented models

AkzoNobel “The process (TRUE VALUE) is now being applied more widely across the company and is helping to generate business value” (Akzonobel, 2015).

True Value

Alliander A new model is created. “Thanks to this collaborative approach, the model can be developed faster and with more robust coefficients. We also want to use our impact model more to make better-informed choices as to new developments and investments” (Alliander, 2017, p.33).

Own model

Ambuja “It gives me great pride to introduce Value Creation. In the quest to create value beyond business, our people are focused on creating enduring results in all three aspects of our future - Social,

True Value 3 7 2 1

Implementation of model

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32 Environmental and Economic. To ensure that the efforts are

sustainable, we have defined clear quantitative metrics to measure our performance, which will be continuously tracked and shared. The process has helped Ambuja in its decisions-making, and the company plans to fully integrate the KPMG True Value approach in its business processes” (Ambuja, 2013).

Argos “Using KPMG’s True Value methodology, we developed the Value Added Statement (VAS), a tool that provides important insights on the ways through which we retain, add, or reduce value for the society as a whole.” (Argos, 2016 p.28) This model is updated every year.

Own model

Evonik By further developing the sustainability analysis of its businesses, Evonik is laying the foundations for embedding sustainability in decision-making processes (Evonik, 2020).

True Value Heerema

Marine contractors

“As of 2017, a Roadmap including Themes are used to improve sustainability in HMC” (Heerema marine contractors, 2017).

Own model Mitsubishi

Elevator Group

“The cradle-to-cradle model has been developed now and is called. M-use” (Mitsubishi Elevator Europe, 2020).

Own model

NN investment

“In 2019, we took steps to further link the SDGs to the areas of our strategic agenda: healthy and safe living, a sustainable planet and an inclusive economy.” SDGs are linked to every subject of the annual report.” (NN investment, 2019, p. 43).

Own model

NS “The impact analysis is a growth process, and each year NS aims where possible to extend the scope of the analysis while tightening up the methodology and data quality adopted” (NS, 2016, p.5).

Own model Safaricom 1. “The True Value report expands the way in which we assess and

communicate our “Transforming Lives” mission. We consider it important for us to understand how our business operations, our environmental footprint and our social investments impact our ecosystem and the Kenyan economy as a whole. We continually track whether we are successfully improving quality of life and contributing towards a sustainable livelihood for people throughout Kenya” (Safaricom Limited, 2016, p.29)

2. Own model created to implement SDGs. “Guided by a structured impact modelling tool, we are able to conduct holistic

assessments and build a foundation from which to explore inclusive solutions to further increase the value we create for society” (Safaricom, 2016, p.29).

Both

Samsung 1. True Value model has been implemented.

2. SDGs are implemented per subject (Samsung, 2016).

Both Volvo No new model is introduced. However, they did publish a standalone

Sustainability Report anymore.

Neither Yorkshire ‘We are building capitals assessments into our new Decision Making

Framework (DMF). We will use this data-driven system to consider the best mix of investment and operational choices based on their impact and value across a broad range of measures, thereby helping maximise societal benefit and more sustainable approaches.’

“To ensure the long-term sustainability of our business and services, we manage a programme of activity that drives us towards our vision

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33 and six Strategic Business Objectives (SBOs). Our SBOs shape

everything we do and encompass all our material issues as a business; environmental, financial and social” (Yorkshire, 2018, p.17).

Table 6: Quotes implemented models

4.5 Focus on True Value issues

All companies focus on the True Value issues, and many have introduced new goals or initiatives in the annual report after the True Value has been calculated. Some companies implemented long-term goals. Other companies already had long-term goals and introduced new projects or requirement. Many of these projects tackle the issues mentioned in the True Value report. Also implementing SDGs fully into the company is a recurrent goal. Seven companies announced new goals which are related to the True Value results of the company. Two companies announced new goals which were not related to the True Value. The other four companies announced new goals which were related to the

implementation or achievement of SDGs. Some companies implemented True Value or SDGs in every aspect of the annual report. Other companies focused more on general sustainability goals.

Figure 8: Focus of the new goals

Explanations of new goals of companies can be found below: Quotes New goals

0 1 2 3 4 5 6 7

Goal related to SDG's Goal not related to True value results

Goal related to True value results

Focus of goals

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34 AkzoNobel “Working with suppliers to identify and deliver cost-effective

carbon footprint improvements, equipping a broader range of managers/employees across functions to drive sustainability improvements.

We have established a Sustainability Council, which advises the Executive Committee on strategy developments, monitors the integration of sustainability into management processes and oversees the company’s sustainability targets and overall performance” (Akzonobel, 2015, p. 118).

Goal related to True Value results

Aliander “It is our ambition to give the SDGs a prominent place in our accountability information in the coming years. We want to be transparent about how and what we contribute to the attainment of these goals. One key challenge in this context is to link the SDGs to Alliander's long-term objectives. We want to set priorities and raise internal awareness of these goals. After establishing what we can contribute and the potential impact, we define and implement our long-term objectives as an integral part of our operations. In doing so, our challenge is to consistently integrate the SDGs into our efforts to realise Alliander's long-term objectives” (Alliander, 2017, p.35).

Goal related to SDGs

Ambuja Cement Ltd.

The 2030 Plan envisions a construction sector which will be innovative, climate-neutral and circular in its use of resources. It will be respectful of water and nature, and inclusive – thus enhancing the quality of life. Essential goals to fully integrate the True Value concept in business processes, and revalidate our 2020 Sustainability ambitions.

We launched multiple initiatives to address the key issues that were identified during the diagnostic phase. All these initiatives have been rolled out, which has led to significant improvement in employee morale, greater interactions with stakeholders and clarity in roles and responsibilities. An example is Zero Harm project (Ambuja cement, 2013).

Argos 2025 sustainability plan is created. Furthermore, in this report, every aspect mentions goals for 2017. Whereas in the previous report, no goals where mentioned. Also, SDGs are now mentioned in every subject. “In 2017, we will continue to align the SDGs with our strategy and focus on specific goals for each of the four SDGs to which we are committing. Furthermore, we will set a specific target for each goal and determine the KPIs that will allow us to measure our progress” (Argos, 2016, P.40).

Evonik Evonik plans to expand the scope of its research to measure the impacts of its feed-in other major poultry and swine producing regions, as well as in the dairy and aquaculture sectors (Evonik, 2020). Goal related to True Value results Heerma Marine contractors

Heerema will become carbon neutral and prepared for the future. Start the discussion on stress and burnout, Reduce footprint and emissions, Sustainable supply chain management, Offshore excellence (Heerema marine contractors, 2017).

Goal not related to True Value Mitsubishi Elevator Europe

Recycle 100% of M-use elevator lifts, creation of products which

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35 lifecycles of the product, decrease CO2 emissions of product use

(Mitsubishi Elevator Europe, 2020). NN investment

partners

“In 2019, we took steps to further link the SDGs to the areas of our strategic agenda: healthy and safe living, a sustainable planet and an inclusive economy. We want to better define our impact, by measuring not just our positive but also our negative impact on the SDGs we have identified” (NN investment, 2019, p. 42).

NS “Sustainable mobility is one aspect of Annual report 2015, the strategy of NS. This strategy is translated into plans and KPIs by business units. The plans relate to the three strategic themes of Energy, Waste and Encounters & Connections” (NS, 2015, p.45).

Goal related to True Value results Safaricom

Limited

“We started requiring all new business partners to sign up to the Code of Ethics for Businesses in Kenya during the onboarding process. We hosted an Anti-Corruption Conference in partnership with the UN Global Compact Network Kenya in December 2015” (Safaricom Limited, 2016, p.93).

Samsung “We will work to align our business activities with the SDG framework. Setting strategies based on the results so that our social considerations are simply embedded in all our business processes. We will also prudently recognize where we are as a company before deciding on our future approach, thereby establishing an effective sustainability management strategy. New Sustainability management approach:

1. Recognition of risks and opportunities of sustainability management

2. Participation in Global sustainability initiatives 3. Connection social responsibly issues and business”

(Samsung, 2016, p.5).

Volvo In 2015, they took the decision not to publish a standalone Sustainability Report. Key sustainability information, determined through the materiality process, is included in the Volvo Group (Volvo, 2015). Goal not related to True Value Yorkshire water

“Plan to develop a circular economy in Yorkshire by establishing the demonstration phase of our IWWRR project at Esholt

Treatment Works” (Yorkshire, 2016, p.33).

Table 7: Quotes of new goals

4.6 Sustainability aspirations

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36 to help drive positive, sustainable change in the global livestock industry. Our goal is to generate engagement and debate around how the livestock industry can work together to address its social and environmental challenges” (Evonik, 2020).

Furthermore, “Volvo group is sharing the results widely to show how the transportation sector can play a key role in developing the sustainable cities of the future” (KPMG, 2015, p.6). Companies believe True Value can be very effective in changing how the world currently operates. According to Ambuja Cement (2013), “the True Value approach can bring about a paradigm shift in the way Indian and global companies, especially in the cement sector, operate their businesses” (Abumbuja Cement, 2013). Moreover, Yorkshire explains that “throughout our monitoring, reporting and decision making processes to achieve a truly integrated approach which enables the management of non-financial priorities to the same standard as highly respected traditional financial approaches” (Yorkshire, 2018, p17).

5. Discussion

In what way do companies implement the advice of the True Value into sustainable strategy? There has been little focus on how sustainable goals have to be implemented into the company strategy and practice (Engert & Baumgartner, 2015). It is not yet studied what companies do with the results, and if companies will follow the True Value advice. So far, insufficient attention has been paid to the actual implementation of sustainability into the company’s strategy and practice (Engert & Baumgartner, 2016).

Companies are motivated to use True Value in order to create a better understanding of its

externalities/opportunities, build a case or to contribute to a (new) sustainable mission/vision, which can be seen in figure 3. As can be seen in figure 6, the goal of the companies is to improve decision-making, stakeholder engagement, increase awareness or to implement SDGs with the help of True Value. Stakeholders play a significant role in the process of True Value. Companies use it to convince stakeholders they have the best product, to make sure stakeholders are better engaged with improving sustainability and used to improve the communication with stakeholders. The companies are

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37 their strategy as such with new models, goals and stronger stakeholder engagement and

communication, and transparency.

5.1 Business values

Many companies who used the True Value methodology, have recently changed the strategy/goals of the company. These changed strategies include a more sustainable approach. It seems that companies believe True Value can help to improve the integration of sustainability. AkzoNobel announced a new strategy. This company wanted to use the True Value methodology: “In order to better understand where we can have the biggest potential impact throughout our value chain, we will calculate this” (Akzonobel, 2017, p.7). Yorkshire changed their strategic forces and was motivated to use the True Value methodology: “To ensure a highly efficient and resilient approach we are collectively

considering how to best optimize resources and manage inherent trade-offs to deliver the priorities our customer need and want” (Yorkshire, 2018, p.3). Also, Ambuja changed their vision statement and was motivated to use True Value methodology because it was: “An ambition to secure long-term corporate value prompted the company to review its operations through the KPMG True Value approach” (KPMG, 2015, p.1). These companies have confidence in True Value to help with improving the strategy and help to implement sustainability into their business process and decision-making.

Further research was needed on the patterns of the adoption of sustainable practices (Babiak & Trendafilova, 2011).Krivačic & Janković (2017) found that there was more study needed on the managerial attitudes towards environmental accounting and the underlying factors which influence this practice. In the results, as can be seen in figure 3, companies are motivated to use the True Value methodology in order to understand one’s opportunities/externalities better, build a case or to

contribute to the mission/vision of the company. The companies who use True Value to build a case, are companies who try to convince others of sustainability with the help of True Value. “It can help farmers to engage in fact-based discussions about the societal value they create” (Evonik, 2020). These companies have had a sustainable strategy for many years. “Volvo Group decided to show leadership in sustainable development movement by quantifying the environmental and social value created by electric buses” (KPMG 2015, p.1). Companies who do not use True Value to build a case are not as expierenced in sustainability. These companies use True Value in order to understand one’s opportunities and externalities better or to contribute to one’s (changed) mission/vision. Most

companies recently changed one’s strategy/goals, which includes a more sustainabile approach. These companies believe that sustainability can create opportunities for them.

Sustainability In what way do companies implement the advice of the TCA into sustainable strategy?

Sustainability

In what way do companies implement the advice of the TCA into

sustainable strategy?

Dorien van der Lee

d.van.der.lee.1@student.rug.nl

S3756637

22-06-2020

Table of Contents

List of Figures

List of Tables

Abstract

1. Introduction

2. Theory

2.1 Sustainable accounting

2.2 Managerial attitudes towards change

2.3 True cost accounting (TCA)

2.4 Sustainable strategy

2.5 Organizational change

2.6 Difficulties after calculating TCA

3 Research Design

3.1 Data collection

3.3 Data analysis

4. Results

4.1 Business values

What are the motivations for calculating TV

4.2 Goals of the company

What is analysed with True value

4.3 Stakeholders

4.4 Tracking of sustainability performance

Implementation of model

4.5 Focus on True Value issues

Focus of goals

4.6 Sustainability aspirations

5.

Discussion

5.1 Business values