IMPLEMENTATION OF ESG-BASED BALANCED SCORECARD TO INTEGRATE FINANCIAL PERFORMANCE AND CORPORATE SUSTAINABILITY STRATEGY

Abstract

This study investigates the integration of Environmental, Social, and Governance (ESG) factors into the Balanced Scorecard (BSC) framework to align financial performance with corporate sustainability strategies. The research highlights the growing adoption of ESG metrics by businesses, with over 60% incorporating these factors into their strategic goals. It also identifies significant barriers to full integration, including the lack of standardized ESG measurement tools and organizational resistance, particularly from senior leadership. The findings suggest that while the integration of ESG factors into the BSC framework has the potential to improve long-term financial performance, such as market share and brand loyalty, companies face challenges in achieving strategic alignment between sustainability and financial objectives. This study contributes to the literature on strategic management by demonstrating how the BSC can be adapted to measure both financial and non-financial performance, offering a more holistic view of corporate success. The research also provides practical implications for organizations seeking to enhance sustainability efforts, emphasizing the need for leadership commitment and standardized performance metrics. Future research should focus on developing standardized ESG metrics, exploring the role of leadership in ESG adoption, and conducting empirical studies to further assess the long-term financial impacts of ESG integration across industries.