How will an integrated sustainability tool contribute to strategy making? : a multiple case study of the Integrated Profit and Loss assessment

Abstract: The demand on companies from various stakeholders, such as customers and suppliers, to report impacts and sustainability efforts creates a need for sustainability reports to integrate the financial, environmental and social perspectives of a company. International research has during recent years focused on developing sustainability tools for measuring economic, social and environmental dimensions. To approach the challenges of sustainability, challenges such as climate change and emissions of greenhouse gases, an integrated assessment for companies is required, in order to provide guidance for decision-making. Including natural capital, as well as human and social capital within the value of a company, is often described as an integrated sustainability assessment (ISA). An integrated sustainability assessment is argued to be needed in order to simplify the complexity of the surrounding sustainability issues. However, integrated sustainability assessment tools deal with challenges. Sustainability efforts are constantly being criticizes for being time consuming and for having unclear purposes. In addition, the implementation of sustainability efforts into the company’s strategy is often difficult, because the sustainability work does not get integrated within the decision making. Given the above reasoning, there are uncertainties about how an ISA tool can be managed in order to contribute to strategy making. A company must have a strategy and management approach that can deal with both trustworthy sustainability reporting and strive towards a long-term perspective of reducing their impacts. This study has chosen to investigate one specific ISA tool, the Integrated Profit & Loss (IP&L). Since the IP&L tool is a recently established tool, there is a lack of research about how it can contribute to strategy making. This thesis wishes to address the research gap. The aim of this study is to investigate how the integrated sustainability assessment tool IP&L contributes to corporate strategy making. The research focus lies on the managers’ experiences and perspectives. This study follows a qualitative and flexible research design. Further, an inductive approach is used regarding literature collection and empirical material. A multiple case study on managers and one strategist working with the IP&L tool is preformed, which are in total four employees at two companies that have implemented IP&L. Semi-structured interviews are the main primary source of data carried out on four respondents/cases. Secondary sources of data are collected from different websites. The conceptual framework used to analyze the empirical material is based on corporate sustainability, integrated assessment, integrated sustainability assessment (ISA) and the process of ISA. The theoretical view of ISA identifies three areas of the ISA process, themes/motives, management and strategy making. The thesis identifies that the IP&L tool can contribute to corporate strategy making by generating information in an understandable way. IP&L can therefore be seen as a communication tool that converts “invisible” values of capital into monetary financial values. “Hot spots”, which is referred to areas the company operates in that need immediate attention, has also been highlighted through the IP&L assessment. This generates strong arguments for changing strategies and is seen as the biggest utility of the tool, viewed from managers’ perspective.