Over the last decade, the environmental attributes of the business organization have been outlined as significant in affecting the outcome and general sustainability. The environmental concerns are propelled by the rise in legislation, pollution, and stakeholder pressure. This means that evaluation of environmental performance for a business is an integral part of the general financial, internal process, customer, and learning or growth perspectives of healthy performance (Kaplan & Norton, 1992). Several environmental management modules have been put forward to elevate the performance of companies such as the Environmental Balanced Scorecard (EBSC) to integrate different measured formed from a given strategy (Kim et al., 2014). Thus, this analytical paper performs a comprehensive EBSC modeling for the Everest Retail Company. The company manufactures and retails pharmaceutical products and health equipment. The paper will develop an EBSC for the Everest Retail Company to facilitate business sustainability management.
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Development of the Environmental Balanced Scorecard (EBSC)
Overview of EBSC
Created by Norton and Kaplan (1996), the concept of a balanced scorecard is an important tool for measuring and tracking the performance of an organization from financial and nonfinancial fronts. The performance is often interlinked in a web of cause-and-effect that ties the overall objectives to business strategies (Al-Zwyalif, 2017). In the case of the Everest Retail Company, the proposed balanced scorecard will track environmental issues within the financial, customer, internal process, and learning perspectives (Kaplan & Norton, 1993). The financial perspectives will cover measures and objectives that are representational of the ultimate aim of profit maximization in the dynamic and competitive retail business environment. The financial perspective will be used to track the current business strategy on sustainability to improve the shareholder value (Kaplan & Norton, 1996).
The customer perspective will be designed to capture the strategies that the Everest Retail Company intends to implement to differentiate its products from those of the competitors to attract and retain different customer segments (Norreklit, 2000). The internal process perspective will identify vital customer management, operating, regulatory, and innovative processes that must be addressed to ensure that the business is sustainable in terms of profitability, revenue, and customer growth (Zeng & Luo, 2013). Lastly, the learning and growth perspective will be designed to identify and improve the systems, people, and organizational functionality to guarantee long-term improvement (Jassem, Azmi & Zakaria, 2018).
The Proposed Environmental Balanced Scorecard
As captured in table 1, the proposed EBSC for the Everest Retail Company consists of internal processes, customer, financial, and learning and growth perspectives. Each perspective has strategic environmental objectives as discussed in the next section.
Table 1. Proposed EBSC for the Everest Retail Company. (Source: Self-generated).
|Internal operations perspective||Creation of an effective control system for business process sustainability, especially in the production and distribution networks.||Several random inspections in the warehouses. |
Reports on environmental control measures.
Frequency of detecting defects in the products and response to the alerts.
The number of activities initiated to develop an environmental performance sustainability module.
|3 inspections/month |
2 reports/6 months
1 detection per week with 2 responses each
4 activities each month
|Workforce quality||The average training cost per employee. |
The number of performance prizes from external organizations awarded to the company.
|$200 every 3 months |
4 prizes per financial year
|Learning and Growth Perspective||Improving the overall environmental performance strategies.||Number and frequency of environmental sustainability training courses within the organization. |
The number of participants drawn from the company enrolled in courses related to environmental sustainability.
Training costs related to environmental sustainability.
|2 pieces of training every three months |
40 trainees per session$1000 per session
|Achievement of specific and general objectives of the company that are related to environmental sustainability.||Level of commitment to the public policy and laws related to environmental sustainability. |
The proportion of competitiveness of the company in terms of environmental sustainability about other competitors in the same sector.
|At least one certification per financial year |
Top three ranking at the end of every financial year.
|Level of employee satisfaction.||Number and frequency of awards earned by the employees through contributions in the development of different environmental procedures, which are linked to Everest’s activities. |
The level of integration and quality of the work environment.
|4 awards every six months per department |
1 certification per year
|Financial Perspective||Reducing the overall environmental costs within and without the organization.||The proportion of environmental costs to the total cost of sales. |
The proportion of environmental costs to the total cost of production.
The proportion of environmental costs to the total cost of capital.
The proportion of costs related to environmental issues is a fraction of total costs.
|12% of the cost of sales |
3% of total production cost
1% of total capital
8% of the total cost
|Customer Perspective||To improve on the level of customer satisfaction. |
|Degree of organizational response to environmental issues through proactive control of the quality of the pharmaceutical and other products. |
Degree of the effectiveness of different environmental initiatives as established by the company to protect the environment.
|Monthly evaluation |
Evaluation after every three months
As captured in figure 1, the performance indicators for each perspective were linked to the vision of the Everest Retail Company to facilitate the evaluation of its environmental performance.
Summary and Conclusion
Proper integration of the above EBSC will determine its success and realization of the different objectives for each perspective. In application, the proposed scorecard should be linked with the current performance tracking systems of the company to ensure that the financial and non-financial processes are addressed (Alewine & Stone, 2013). In the case of the Everest Retail Company, the proposed balanced scorecard was created to enable the managers to continuously evaluate the current and predict future environmental performance (Kaplan & Norton, 1993). Moreover, the management of this company is empowered by the proposed EBSC to proactively control different organizational activities while tracking their costs and impacts within the financial, customer, internal and external company perspectives (Jassem, Azmi & Zakaria, 2018). In addition, the above scorecard has the potential of serving as a template for the organization to pursue and create future environmental awareness campaigns or training that directly address the mentioned indicators.
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