The Role of Sustainability Indicators and their Impact on Decision-making and Control: A Case Study of Mestergruppen

Abstract

The climate crisis is happening much faster than anticipated and the construction industry has a big responsibility to become more sustainable since it stands for more than 15% of Norway’s total emissions. While the direct emissions from the industry are relatively small, the indirect emissions are significant. Based on this, organizations in this industry need to act. Sustainability indicators can be used to monitor goals and measure sustainability performance. The research on sustainability indicators is growing but there are still shortcomings, especially regarding comparison of sustainability indicators, which indicators that are most useful and what the contribution of sustainability indicators is. The research question we aim to answer in our study is therefore: What is the role of sustainability indicators and how do they impact decision-making and control in an organization? To answer this question, we have conducted a single case study of Mestergruppen to gain in depth data. The data were gathered through four semi-structured interviews, Mestergruppen’s website and relevant documents. To analyze the data, we developed a conceptual framework based on literature and theories regarding sustainability, stakeholders, and Management Control System in an attempt to contribute with new insights. Based on the findings we have identified six challenges and explore in this study how a development of sustainability indicators can help Mestergruppen to solve these to become more sustainable. The challenges are as follows: Mestergruppen does not have sustainability indicators today, the values lack a presence in the organization, sustainability decisions are taken by a smaller group of managers, the ethical guidelines do not focus on the environmental dimension, the supply chain is difficult to control since Mestergruppen does not own all its suppliers and the SDGs are used to a small degree in the development of plans and sustainability goals. Based on the theory and findings, we find it necessary for Mestergruppen to develop sustainability indicators if it wants to become more sustainable. The findings show that sustainability indicators can have several roles depending on which sustainability challenge to solve. They can for instance have a supportive, informative, monitoring, and guiding role. Based on this, we find that sustainability indicators can have a positive impact on both decision-making and control.