Putting Sustainability Talk into Managerial Action : A Study of Norwegian Firms’ Sustainability Integration into Management Control Systems and its Relation to Financial Performance
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- Master Thesis 
The pursuit of sustainable development has become one of the most important challenges and consequently a central concern for companies. Often, that concern is addressed via an outsideoriented approach, focusing on communication and sustainability disclosure. This thesis aims to shift the focus from an external perspective to the internalization of sustainability into decision-making. Specifically, we examine the integration of sustainability into management control systems (MCS). Through a comprehensive analysis of 166 Norwegian companies that participated in a ‘state of sustainability’ survey of S-HUB Norway, we assessed the extent of sustainability integration and developed patterns of formal and informal controls. The patterns reflect that controls are not isolated tools but interplay in a diverse manner. Our findings suggest that sustainability is only moderately integrated into the MCS, with a focus on a longterm strategic perspective and a lack of concrete measures and actions. Moreover, we examined the relationship between integration depth and financial performance, considering the tension between sustainability and profitability in academia and practice. By supplementing the sustainability data with archival financial data in a regression analysis, we found a short-term negative relationship – especially in the case of financially bad performing companies and for the integration into formal controls. This negative relationship could be attributed to a restriction effect, in which an excessive number of formal or irrelevant sustainability controls are counterproductive to the financial optimization of management decisions. Another explanation for the negative relationship might be the short-term nature of our study, representing its major limitation. The potential for positive long-term effects, coupled with the inevitably growing importance of sustainability, underscores the need for proactive measures and for the adaption of internal processes.