Aligning an organisation's sustainability needs and its stakeholders' requests : the materiality balanced scorecard.

Abstract

This exploratory study aims to develop a critical understanding of how large hotel groups can define strategic sustainability objectives in order to create shared value. It is the first study to conduct a comparative analysis of the publicly available sustainability reports from the 50 largest hotel groups in the world, and to combine these with interview responses from a sample of their Corporate Social Responsibility (CSR) managers and industry sustainability experts. The richness of this data enables the investigation of complex and interdependent factors that influence strategic sustainability planning, measurement, management and reporting. This study first proposes a strategic management framework, the Materiality Balanced Scorecard (MBSC), to design, communicate and realise CSR strategies that create shared value. The MBSC combines the Balanced Scorecard, and its sustainability adaptations, with the principles of inclusiveness, materiality and responsiveness of the AA1000 Stakeholder Engagement Standard. The MBSC constitutes a theoretical contribution in the emerging literature addressing the relationship between sustainability performance management and reporting. This study then attempts to characterise and identify the internal determinants of the CSR management and reporting of large hotel groups, in order thence to appraise the feasibility of implementing the MBSC within the hotel industry. This study addresses the gap in the literature about hotel groups integrating CSR agendas into their organisational strategies, practices and processes. It extends earlier knowledge by including (1) cognitive determinants (in respect to the stakeholder culture, the stakeholder management capability, the stakeholder influence capacity, as well as the capacity building in respect to stakeholder engagement and materiality), (2) organisational determinants (CSR roles and responsibilities, internal accountability and cross-departmental coordination) and (3) technical determinants (integration of CSR within the overall business management, and the accuracy and comprehensiveness of the performance management systems). The research establishes the implications of the determinants for the mismanagement of sustainability and progress towards adopting the shared value approach. The study also critically assesses the adoption by large hotel groups of the inclusiveness, materiality and responsiveness principles that are central to the MBSC. It constitutes the first study to assess those three principles in tandem, and together with their effect on the organisations’ accountability. It is also the first empirical study on the disclosure of and barriers to materiality. The study identifies the symbolic adoption of reporting guidelines and characterises the process of managerial capture of the reporting process. The comparison between sustainability disclosure, environmental performance and sustainability integration reveals that the sustainability reports do not reflect the management of sustainability, adding to the body of knowledge that suggests sustainability reporting does not deliver accountability to stakeholders. Based on these findings, a refined conceptualisation of the principles of inclusiveness, materiality and responsiveness embedded in the MBSC is proposed to help organisations to develop shared value strategies, thereby making a practical contribution to address the limited guidance available on the implementation of shared value. Overall, the MBSC is rather idealistic when compared to the reality of the hotel industry, because the requirement to adopt shared value strategies seems mostly infeasible. Nonetheless, the MBSC may be applicable in proactive organisations as long as they are willing i) to commit to shared value and ii) to engage with the principles of inclusiveness, materiality and responsiveness openly, as a means to operationalise this commitment.