Amanco: Sustainable Balanced

Scorecard Harvard Case

Evolution of an internal strategic management tool

Professor Doug Cerf

Donald Bren Graduate School of Environmental
Science and Management
Environmental Accounting &Financial
Management (ESM 284)
Spring 2007
 Evolution of an internal strategic
management tool

• Stage #1 Metrics tied to strategy

– Metrics financial
– Investments in long-term capabilities and customer relationships
were not critical for success
• Stage #2 Balanced Scorecard (the early 90’s)
– Financial, customer, internal processing, learning and growth
perspectives
– Investments in sustainability were not critical to create shareholder
value
• Stage #3 Sustainable balanced scorecard (mid 2000)
– Evolves over time within a firm as we observe in the Amanco case

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 Sustainable Balanced Scorecard

• Possible methods to integrate sustainability

into Balanced scorecard
– Sustainability aspects integrated in the existing
four standard perspectives.
– An additional perspective added to take
environmental and social aspects into account
– A separate scorecard should only be used to
augment the previous two options
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 Sustainability Scorecard System

• “Our strategy is the best for sustainable

creation of value”
» Amanco’s founder

• Simultaneously maintain a sustainable

strategy and an increase in profitability
– Earnings increased from $520 to $700 million
from 2001 to 2006

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• Amanco executive started the World
Business Council for Sustainable
Development
– Coined the term eco-efficiency
• Adding greater value to goods and services while
using fewer resources and generating less waste and
pollution
– Developed GHG accounting and reporting
standard with the World Resource Institute
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• Evolution of Amanco’s sustainable
scorecard follows….

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 Amanco’s first Sustainability
scorecard (2001)
• Class discussion of Exhibit 7
• Identify perspectives
• Explain the level of integration of sustainability
• Objectives in each block
– Translated into action plans
– Details responsibility
– Determine necessary resources need for each objective
• Action plans revised quarterly
• Action plans thoroughly discussed with middle
management

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better, not printed at all
 Amanco’s Triple Bottom Line
Sustainability Strategy Map (2002)
• Previous version did not present the triple bottom
line concept as an element for competitive
advantage, development and value creation
• Class discussion of Exhibit 8
• Strategy management committee met quarterly to
learn from the scorecard
• Link of sustainability scorecard to compensation
to improve accountability
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better, not printed at all
Revised Sustainability Strategy Map
(2005)
• Class discussion of Exhibit 9
• Connect sustainability scorecard to value creation
• Economic value added – profits after subtracting
the expected return to shareholders
• Goal to increase EVA $4.6 million per year
beginning in 2005
• Local sustainability scorecards developed in
countries and divisions
– Local scorecards aligned with corporate scorecard

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 Linking Sustainability to
Compensation
• Managers must be motivated to act upon new
information
• Financial, environmental and social metrics have
significant influence on employee awards
• Employees that do not reach the target do not
receive the reward for that dimension
• Compensation link sporadically implemented
because labor laws varied by country
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better, not printed at all
 Selected Indicators (Exhibit 10)
• For each indicator the unit, source, responsible
party, methodology, frequency and classification
are determined
• Indicators
– Economic
• Change in economic value added
– Social
• External ranking of the 150 best places to work
– Environmental
• Savings as a result of environmental efficiency

Printed on recycled paper-actually

better, not printed at all