Factors influencing the integration of sustainability indicators into a company's performance management system

Abstract

This paper investigates how different factors influence whether companies integrate economic, social and environmental sustainability indicators into their performance management system. A survey was conducted among sustainability managers at 239 Australian and New Zealand companies across a wide range of industrial sectors. Using hierarchical multiple regression analysis, this study found that industry, company size, and managers' perception of the importance of a sustainability indicator all influenced their integration into a company's performance management system. In particular, larger companies and companies in environmentally low-impact industries generally integrated more sustainability indicators into their performance management systems, especially if sustainability managers considered them important to performance. Large companies and companies from environmentally high-impact industries integrated social but generally not environmental indicators into their performance management systems. Conspicuously, whether or not an indicator was included in corporate sustainability reports did not influence its integration into a company's performance management system. The results thus highlight the lack of synergy between external corporate sustainability reports and internal sustainability performance management which organisations need to address in order to become more sustainable.