Integration of sustainability into management control systems – Perceptions from sustainability reporting
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Journal Title
Journal ISSN
Volume Title
School of Business |
Master's thesis
Author
Date
2022
Department
Major/Subject
Mcode
Degree programme
Accounting
Language
en
Pages
122
Series
Abstract
Researchers from the accounting profession have studied management control systems (MCS) to understand the processes and tools by which management attempts to align the actions of employees with firms’ strategic objectives. More recently, the line of research has been applied to corporate sustainability, whereby the management of sustainability topics is studied through exploring the use of MCS to manage sustainability. Sustainability reporting is a form of MCS, and as the central proposal of this thesis holds, also a place where stakeholders can find information on the management control systems a firm uses to manage sustainability. The thesis approaches the topic of sustainability reporting and MCS with research questions that seek answers to whether firms disclose on the integration of sustainability into MCS in sustainability reporting, whether the reported integration of sustainability into MCS has increased from 2015 to 2020, and whether the reported internal consistency of sustainability related MCS packages has increased from 2015 to 2020. The study was conducted as a case study whereby content analysis and abductive reasoning were used to explain the findings. Data was collected from external sustainability reporting of large Finnish firms operating in an environmentally sensitive context. The findings show that by creating a mapping between MCS categorizations based on characteristics established by previous researchers and common disclosures in corporate sustainability reporting, an external observer can gain information on the use of MCS to manage sustainability for each of the categories from sustainability reporting. The results also show that the amount of disclosures on MCS used to manage sustainability have increased from 2015 to 2020, as did the internal consistency of MCS packages. Corporate sustainability and sustainability reporting have been criticized as a mere greenwashing activity. By reporting on the use of tools legitimized by the accounting profession, external sustainability disclosures are providing relevant and meaningful information to external stakeholders. From the legitimatization perspective, the quality of these external disclosures is concluded to have increased from 2015 to 2020.Description
Thesis advisor
Myllymäki, Emma-RiikkaKeywords
corporate social responsibility, sustainability, management control systems, sustainability reporting
