Integrating sustainability into manage-ment control systems – Effects on sustainability strategy
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School of Business |
Bachelor's thesis
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Authors
Date
2023
Department
Major/Subject
Mcode
Degree programme
Laskentatoimi
Language
en
Pages
37+11
Series
Abstract
This thesis delves into the integration of Management Control Systems (MCS) and Sustainability Control Systems (SCS) within Varma Mutual Pension Insurance Company, a financial sector entity in Finland. It investigates how this integration influences the firm's sustainability strategy by mirroring a case study done by Beusch et al. (2022). Utilizing Simon’s (1995) Levers of Control (LOC) framework and Gond et al.’s (2012) integration typology, the study provides insights into the use of MCS and SCS in managing sustainability-related risks and opportunities. This research aimed to answer the main research question: How does MCS-SCS integration support or hinder the development and implementation of an integrated sustainability strategy? The integration of MCS-SCS at Varma was a complex process, initiated in 2016 and still evolving due to the dynamic nature of sustainability metrics and stringent reporting standards. The investment operations department effectively merged sustainability and financial metrics, utilizing tools for risk management, KPI metrics, and scenario analysis. Educational and interactive events further supported the organizational integration, enhancing employee engagement and understanding of sustainability objectives. However, technical integration of MCS-SCS of other departments in the organization is still in process. The integration of MCS-SCS at Varma supported the company's sustainability strategy by aligning financial and sustainability goals, informing investment decisions, and facilitating strategic monitoring, thereby incorporating sustainability into strategic decisions and daily operations. This study also identified challenges in the integration process, notably in collecting, comparing, and measuring sustainability data and the insufficiency of existing resource allocations for these tasks. These challenges highlight potential obstacles in effective performance measurement and decision-making regarding sustainability strategies.Description
Thesis advisor
Vaivio, JuhaniKeywords
sustainability, management control systems, sustainability control systems, levers of control, strategic management