Sustainability Balanced Scorecard Architecture and Environmental Investment Decision-Making

Figure 1

Figure 2

Conditional direct and indirect effects of SBSC architecture on environmental investment decision-making (with and without risk) (Source: Authors’ own research)

Effect	Risk	Effect	SE	LLCI	ULCI
Direct	Without risk	−3.298	0.511	−4.313	−2.282
	With risk*	0.477	0.490	−0.497	1.452
Indirect	Without risk	−1.126	0.503	−2.276	−0.215
	With risk	−2.516	0.490	−3.570	−1.671

An example of the information that the participants could see at one time (SBSC-4)

Financial perspective	Goals	Investment A	Investment B
Return on investment	17%	12–14%	16–22%
Annual cash flow increase	$325,000	$100,000–$300,000	$300,000–$400,000
Sales growth	24%	22–27%	18–23%
Payback period	3 years	5 years	3 years
Energy cost savings	325,000	300,000–400,000	100,000–300,000

Index of moderated mediation (Source: Authors’ own research)

Mediator	Index	SE (Boot)	Boot LLCI	Boot ULCI
SBSC knowledge	−1.389	0.717	−2.992	−0.216

An example of the information that the participants could see at one time (SBSC-4 with risk)

Financial perspective	Goals	Investment A	Risk	Investment B	Risk
Return on investment	17%	12–14%	>15	16–22%	<15
Annual cash flow increase	$325,000	$100,000–$300,000		$300,000–$400,000
Sales growth	24%	22–27%		18–23%
Payback period	3 years	5 years		3 years
Energy cost savings	325,000	300,000–400,000		100,000–300,000

An example of the information that the participants could see at one time (SBSC-5)

Environmental perspective	Goals	Investment A	Investment B
Energy cost savings	325,000	300,000–400,000	100,000–300,000
Number of community complaints about company pollutant emissions	3	1–3	7–9
Annual tons of nitrogen dioxide emissions	30	20–30	40–55
Number of hours of training per factory employee for environmental emergency responses	275	180–250	240–300

Pairwise Comparison between SBSC-4 and SBSC-5 (with risk and without risk)(Source: Authors’ own research)

Risk level	SBSC architecture		Mean difference (MD)	SE	p-value	95% CI for difference		η2
						LB	UB
Without risk	SBSC-4	SBSC-5	4.424*	0.638	<0.001	3.157	5.692	0.384
With risk	SBSC-4	SBSC-5	2.038*	0.625	0.002	0.797	3.279	0.106

Results of ANOVA for environmental investment decision-making (between subject effect)(Source: Authors’ own research)

Source	df	MS	F-Value	p-Value	η2
SBSC architecture	1	244.807	52.39	<0.001	0.368
Risk	1	390.369	83.541	<0.001	0.481
SBSC architecture risk	1	33.37	7.141	0.009	0.074

Results of the mediation test of SBSC Knowledge between SBSC Architecture and Environmental Investment Decision-Making (with risk) (Source: Authors’ own research)

Path	B	SE	T/Z	p-value	LLCI	ULCI
IV to Mediators (path a) SBSC architecture–SBSC knowledge	−1.557	0.252	−6.180	<0.001	−2.064	−1.049
Mediator to DV (path b) SBSC knowledge–env. investment decision-making	1.633	0.218	7.493	<0.001	1.194	2.071
Direct effect (path c) SBSC architecture–env. investment decision-making	−0.503	0.504	−0.999	0.323	−0.511	1.518
Indirect effect (path ab) SBSC architecture–env. investment decision-making	−2.542	0.536	−4.743	<0.001	−3.640	−1.695

Path coefficient for the mediation effect of SBSC knowledge between SBSC architecture and environmental investment decision-making (Source: Authors’ own research)

Path	B	SE	T/Z	p-value	LLCI	ULCI
IV to Mediators (path a) SBSC architecture–SBSC knowledge	−0.697	0.334	−2.085	<0.05	1.371	−0.023
Mediator to DV (path b) SBSC knowledge–env. investment decision-making	1.606	0.210	7.641	<0.001	1.182	2.030
Direct effect (path c) SBSC architecture–env. investment decision-making	−3.305	0.488	−6.766	<0.001	−4.290	−2.320
Indirect effect (path ab) SBSC architecture–env. investment decision-making	−1.119	0.561	−1.996	<0.05	−2.046	−0.165

An example of the information that the participants could see at one time (SBSC-5 with risk)

Environmental perspective	Goals	Investment A	Risk	Investment B	Risk
Energy cost savings	325,000	300,000–400,000	<15	100,000–300,000	>15
Number of community complaints about company pollutant emissions	3	1–3		7–9
Annual tons of nitrogen dioxide emissions	30	20–30		40–55
Number of hours of training per factory employee for environmental emergency responses	275	180–250		240–300

Evolution of BSC to SBSC-4 and SBSC-5(Source: Authors’ own research)

Phase	Summary of Phase	Source
1	BSC: Was introduced as a performance measurement system through a longitudinal research on 12 companies, at the leading edge of performance measurement. The study designed a dashboard (i.e., the BSC) that gives top management a fast and comprehensive view of their business. The BSC includes financial measures that tell the results of actions already taken by complementing financial measures with operational measures on customer satisfaction, internal processes and people within the organization.	Kaplan and Norton (2001)
2	SBSC-4: Four components (i.e., environment, safety and health performance, employment practices, and community investment) were embedded into the four BSC perspectives. This scorecard was designed for companies to comply with national and local regulations on the environment, employee health and safety, hiring and employment practices to avoid shutdowns or litigations, and so on.	Kaplan and Norton (2001)
3	SBSC-5: Stephan Schaltegger along with two of his Ph. D students published a seminal paper that introduces the SBSC framework where the sustainability parameters are proposed as a separate 5th perspective. Their initial intent was to introduce non-market perspectives such as “child labor.” In several follow-up papers, Schaltegger and his team introduced other components of sustainability related to the physical environment from environmental management accounting.The introduction of the 5th perspective, thus gave birth to two separate schools of thought on SBSC; one where sustainability parameters are embedded into BSC perspectives (SBSC-4) and the 5th perspective type configuration with sustainability as a separate perspective (SBSC-5), see Fig. 1.	Figge, et al. (2002)

Descriptive statistics of environmental investment decision-making(Source: Authors’ own research)

SBSC Architecture	Risk	Investment A		Investment B
		Mean	SD	Mean	SD
SBSC-4	Without risk	8.409 (42%)	2.922	11.591 (58%)	2.922
	With risk	5.521 (27.6%)	1.647	14.478 (72.4%)	1.647
SBSC-5	Without risk	12.833 (64.2%)	1.786	7.167 (35.8%)	1.786
	With risk	7.56 (37.8%)	2.123	12.44 (62.2%)	2.123

Pairwise comparison between both risk levels (with risk and without risk) (Source: Authors’ own research)

SBSC architecture	Risk		Mean Difference (MD)	SE	p-value	95% CI for difference		η2
						LB	UB
SBSC-4	Without risk	With risk	−2.887*	0.645	<0.001	−4.168	−1.607	0.182
SBSC-5	Without risk	With risk	−5.273*	0.618	<0.001	−6.501	−4.046	0.447

Four groups and manipulated conditions (Source: Authors’ own research)

Conditions	Configuration	Including risk	Number of SBSC perspectives	Experimental group No.
1	SBSC-4 without risk	No	4	Group 1
2	SBSC-4 with risk	Yes	4	Group 2
3	SBSC-5 without risk	No	5	Group 3
4	SBSC-5 with risk	Yes	5	Group 4