Measurement of sustainability performance in the public sector

by Carol A Adams, Stephen Muir and Zahirul Hoque published in the Sustainability Accounting, Management and Policy Journal

Abstract This article identifies current performance measurement practice within state, territory and federal government departments in Australia with a particular emphasis on the importance of sustainability performance measures. Whilst voluntary sustainability reporting by private sector organisations aligned, for the most part, with Global Reporting Initiative (GRI) guidelines is growing, there is little sustainability reporting by organisations in the public sector. This raises questions as to the extent to which public sector sustainability performance is managed. This research aims to assess the use of sustainability performance measures for supporting organisational performance improvement. A mail out survey approach has been adopted within government departments. The performance measures utilised by organisations to a great extent were in the areas of cost efficiency and quality measures and those utilised to least extent were for learning and growth measures and to satisfy legislative requirements and manage programs. Sustainability, environmental or social responsibility measures are the least used performance measures, and those utilised are mainly measures of employee diversity and non-financial economic aspects that are identified. The public sector is unlikely to adopt comprehensive sustainability performance measures while they remain voluntary and while there is no perceived need to be competitive in these areas. Either mandatory reporting is required or some form of competitive process based on performance measures implemented.The findings make a contribution to the academic literature on sustainability performance measures in public sector organisations and point to policy measures that may lead to improvements in practice.

This article is © Emerald Group Publishing and permission has been granted for this version to appear here ( Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Article citation: Carol A. Adams, Stephen Muir, Zahirul Hoque, (2014) “Measurement of sustainability performance in the public sector”, Sustainability Accounting, Management and Policy Journal, Vol. 5 Iss: 1, pp.46 – 67 DOI (Permanent URL): 10.1108/SAMPJ-04-2012-0018


In recent years there has been increasing global pressure on all levels of governments to improve performance. In Australia, this has been reflected in the increased number of government programs, particularly in the areas of health, employment, social welfare, education and defence (Codd, 1991; Parker and Guthrie, 1993; Clark and Corbett, 1999; O’Faircheallaigh et al., 1999; Hoque and Moll, 2001). For several decades, performance measurement has been used as an internal informational tool to evaluate departmental operations and make program and budgetary decisions (Ho and Ni, 2005). However, the large body of recent literature on new public management (NPM), benchmarking and balanced scorecards (BSCs) demonstrates the level of interest in the public sector for the use of performance measures not only for internal, but also for external reporting to a wide variety of stakeholders including media, community and external funding agencies (Ittner and Larcker, 1998; Bevir et al., 2003; Cavalluzzo and Ittner, 2004; Herawaty and Hoque, 2007). NPM is the most recent paradigm change in how the public sector is to be governed (Lane, 2000). In contrast to the long-standing importance of rule compliance, NPM emphasises managing for outcomes (Hood, 1995; Kaboolian, 1998; Lapsley, 1999). The increased attention on performance evaluation by public sector managers, consultants and academics reflects the increased pressure on public sector organisations (PSOs) to improve performance to remain viable in today’s competitive and global operating environment and to demonstrate this to external as well as internal stakeholders.

There is also a growing concern with sustainability, the impact of organisational activities on the environment and society as well as the more traditional aspect of economic viability. The implementation of information systems for performance management provides opportunity to incorporate measures aligned with sustainability outcomes and provide reportable indicators. There has been a considerable increase in sustainability reporting in the private sector but little in PSOs (Unerman et al., 2007, see also This is significant in that the commitment to report publicly, thus making performance visible, drives performance improvements. Local authorities and state owned water companies have done more than other PSOs with water companies having regularly submitted reports to the ACCA Australia and NZ sustainability reporting awards ( and some local authorities also producing “state of the environment” reports. In England Cooper and Pearce (2011) found that in 2008 97 percent of local area agreements included at least one climate change indicator as a priority.

It is argued that, not only is it important for the public sector to engage in sustainability reporting due to the size of their involvement in national economies (Ball and Grubnic, 2007), but that they also exist for a social and environmental purpose (Ball and Grubnic, 2007; Guthrie and Farneti, 2008). Furthermore, corporate reporting of sustainability performance measures does not allow assessment of the impact upon ecosystems whilst, in contrast, PSOs often have responsibility over geographic regions and therefore provide opportunities to report on the performance of ecosystems and regions (Ball and Bebbington, 2008). Thus, PSOs often have an opportunity and responsibility to achieve better sustainability performance than private sector organisations.

Where sustainability performance measures are reported by private sector organisations there is a propensity to align these with the Global Reporting Initiative (GRI) index (80 percent of G250 companies, KPMG International, 2011, p. 20) with a mixture of stand-alone sustainability reports and combined annual/financial reports with sustainability reporting. In 2006, 83 percent of Australian top 500 companies produced stand alone sustainability reports (KPMG, 2007, p. 9) but more recently a growing number of companies are reporting their sustainability performance with the financial to demonstrate, or at least give the impression, that sustainability is integrated in decision-making, a concept becoming known as integrated reporting (Economist Intelligence Unit, 2010, p. 16). For organisations whose purpose is viewed (at least by themselves) as being predominantly one of economic return might be more readily excused for separately reporting voluntary sustainability measures. But PSOs that have a social welfare focus and whose core tasks are closely linked with sustainability issues might be expected to address sustainability performance within the context of their standard reporting and other media. However, Guthrie and Farneti (2008) find that the level of reporting by PSOs that state they follow the GRI guidelines are fragmentary and particularly low in Human Rights and Society categories. They, and to a lesser extent, Bellringer et al. (2011) also found that a prominent reason for the poor reporting was that the organisational sustainability information was produced mainly for internal stakeholders.

In this study, we attempt to shed some light on how government departments in Australia have responded to the growing need for sustainability performance measures and to what extent these influence decision making by investigating the use of performance measures and particularly social and environmental measures and the use of a BSC approach in measuring performance.

A mail out survey approach has been adopted within government departments. The study contributes to the public sector accounting and performance management literature by addressing the following major questions:

What elements of performance measurement are most frequently used?
How useful are social and environmental measures relative to other performance measures?

Public sector reform in Australia

The general context

The increased scale and intricacies of change in PSOs has produced the need for a strategy-oriented performance measurement and reporting system (Guthrie, 1999; Guthrie et al., 1999; Hoque and Moll, 2001). Additionally, the role of information produced by the performance measurement system in promoting organisational effectiveness (or performance) is an issue that has attracted particular attention not only in Australia, but also overseas (Hood, 1995; Guthrie et al., 1999).

In the last two decades the Australian public sector has experienced a relentless process of accountability reforms throughout all levels of government (Guthrie, 1999; Guthrie et al., 1999; Hoque and Moll, 2001). Areas of reform include: the increased use of competitive tendering and contracting out; organisational change (including reviews of boundaries and roles and functions) to enhance operational efficiency and accountability to local communities; greater emphasis on strategic and corporate planning; and workplace reform and enterprise bargaining.

The key objectives of such reforms are to promote a culture which emphasises performance and to make the public sector more responsive to the needs of the public, by increasing managerial accountability, promoting efficiency and effectiveness, introducing consultative decision making and adopting a customer-focused strategy (Broadbent and Guthrie, 1992; Hood, 1995; Hoque and Moll, 2001). The changes create a greater demand for reform of organisational strategic priorities and related issues such as organisational structure, accounting systems, strategic planning, and performance management and reporting in PSOs (Lapsley and Pettigrew, 1994). Increasing public (and in many countries, government) concern with climate change and sustainability issues make these higher public sector priorities (Monaghan, 2011, pp. 3 and 11).

Use of the BSC

The BSC approach addresses these needs by linking financial performance measures with a customer focus, the need for efficiency in internal processes and dimensions for innovation and learning (Kaplan and Norton, 1992). Originally aimed at private sector organisations the BSC’s multi-dimensional focus is seen as a means of addressing the management and accountability issues faced by public sector and non-profit organisations that did not have the same focus on financial performance. Kaplan and Norton (2001a, b) adapted the BSC framework to non-profit organisations replacing the financial objectives with the mission and customer objectives with high level perspectives on direct and social costs, value creation for a much broader set of stakeholders and legitimising support from its “donor” organisation (Kaplan and Norton, 2001a, b). Kaplan and Norton (1996) advocated a closer link between strategy and the balance scorecard using a public sector case study example – the city of Charlotte – arguing that the scorecard provides the discipline for describing important strategic themes by including the outcomes desired and the drivers required to achieve them. Hoque and Adams (2011) found support for both economic and “external” institutional rationales for the implementation and use of BSC measures.

Recent case studies on implementation of BSC in large PSOs has found that there are many factors that impinge on the success or otherwise of the implementation (Farneti, 2009; Umashev and Willett, 2008; Sharma and Gadenne, 2011), however key to success is effective communication, employee empowerment and incentive structures. Of special importance is the need for communication in large organisations where the specific project groups or business units may have different objectives to those defined in the organisational mission resulting in the cascading of strategies and performance indicators.

Management accounting plays a central role in mapping the future direction of organisations by giving managers information for setting strategies and ensuring that inputs, processes, and outputs are aligned to organisational goals and strategies. In a public sector context, there is one important additional potential use of this management accounting information – that is for external communication to users with a vested interest in the direction and success (outcome) of the entity. These users fall into three groups: resource providers (employees, lenders, creditors, suppliers), recipients of goods and services (ratepayers, taxpayers and members of professional associations), and parties performing a review of oversight function (parliaments, governments, regulatory agencies, analysts, labour unions, employer groups, media and special interest community groups).

The requirements to report on planning, efficiency and effectiveness directly relate to the use of resources and therefore the impact on the environment of the organisations operations. In addition to the requirements for reporting on planning, efficiency, effectiveness, performance and delivery of services to the community (where appropriate), the treasury (state/territory/federal) in 2003 set out the following requirements for reporting under the “managing (or working) for outcomes” framework with refinement through guidance notes: to report actual achievements against the approved output performance targets (quantity, quality, timeliness and unit cost) as specified in the budget paper, with explanations for significant variations in performance compared to targets; and to report performance against the original budget for the revised budget (DFA, 2003; DPMC, 2007; ANAO, 2007). In 2009 the new performance management framework was adopted, not to change, but to intensify efforts to improve performance information, management and monitoring (State Government of Queensland, 2009).

The framework is a contemporary financial management system which requires agencies/departments to provide Treasury with quarterly performance information on actual performance compared to targets. It is derived from an accrual output-based framework and provides agencies/departments with the tools necessary to effectively monitor, evaluate and improve their performance in the delivery of outputs to the community.

Output measures capture the amount of products and services completed or delivered (Ho and Ni, 2005). Examples of such measures would be road safety services, community safety, crime prevention and victim support, road maintenance, number of emergency treatments in hospitals and providing educational programs or facilities. Outcome measures capture the results or the consequences of service delivery that are important to the public and customers (Ho and Ni, 2005). Examples of outcomes would be: maximizing employment and training opportunities for all; improving educational outcomes for all students in all key areas; ensuring safe employment, learning and public environments; ensuring efficient and effective systems to facilitate improvement in priority outcomes; enhanced community safety and protection; and safer, fairer and expeditious handling of persons involved in the judicial system. Many of these outcomes are indicators for social sustainability and other output measures, such as greenhouse gas emissions, provide indicators of environmental sustainability.

The role of sustainability measures in the public sector

Sustainability performance encompasses performance in connection with: natural resource conservation and emission levels; other environmental activities and initiatives; aspects of employment; occupational health and safety; community relations; stakeholder involvement; economic impacts of the organisation other than those financial measures used in the financial accounts. Whilst there is no one agreed worldwide standard or guideline, there are a number commonly used or referred to by organisations in selecting sustainability performance measures. Perhaps, the best known of these are the GRI G4 Sustainability Reporting Guidelines accessed 19 June 2013).

GRI is an independent institution working “towards a sustainable global economy by providing sustainability reporting guidance” ( accessed 19 June 2013). It was created by Ceres ( and the United Nations Environment Programme, in 1997, and became an independent body in 2002. The GRI is an international multi-stakeholder organisation.

The GRI guidelines aim to assist all organisations in reporting on the economic, social and environmental perspectives of their operations. Four sets of guidelines have been published to date. The first guidelines were released in 2000 and the 2002 guidelines were developed following the provision of extensive feedback by companies that had adopted the first guidelines. In 2006 the GRI released an enhanced version of the guidelines, “G3” with an updated version, G3.1 in March 2011. The G4 guidelines were released in May 2013 with an increased focus on materiality in determining what organisations report.

In March 2005, the GRI published Sector Supplement for Public Agencies: Pilot Version 1.0 (see accessed 19 June 2013). It noted that public sector sustainability information tended: to be scattered across a number of documents; to focus on policies rather than performance information; to be inconsistently presented across; and, to focus on measurement of external conditions (as in “state of the environment” reports) rather than public agency performance and impacts. The Sector Supplement for Public Agencies to the GRI 2002 guidelines aimed to identify performance indicators that are important to public agencies but which are not fully reflected in the guidelines.

An important Australian initiative is the Australian Guiding Principles on Extended Performance Management: A Guide to Better Managing, Measuring and Reporting Knowledge Intensive Organisational Resources released in November 2005 by the Society for Knowledge Economics ( accessed 19 June 2013). One of the stated aims of the Society for Knowledge Economics (2005, p. 5) is to: “develop and test a series of guiding principles to enhance the management of knowledge and innovation within public, private and third sector organisations”. The guiding principles argue that “new accounts of performance” such as social responsibility reports, triple bottom line (TBL) reports and intellectual capital reports (referred to in the guidelines as extended performance accounts) make visible knowledge intensive organisational resources giving a broader and more balanced perspective of organisational wealth and shed light on an organisation’s ability to create wealth in the future. The document outlines the importance of extended performance management and proposes a framework for developing an extended performance account.

Prior research indicates a lack of accountability for social and environmental performance in the Australian public sector relative to the private sector. Gibson and Guthrie (1995) analysed the contents of the 1994 annual reports of 20 public sector entities and 40 private sector entities finding that only 18 percent of public sector entities compared with 67 percent of listed companies had a separate section on environmental performance. None of the PSOs reported environmental performance against targets. Given the strong link between external reporting and data collected within an organisation, this indicates that environmental performance measurement in PSOs is inadequate. Burritt and Welch (1997b) examined the annual reports of 60 Australian Commonwealth PSOs over the ten-year period, 1984-1993. They found that budget entities funded from taxation revenues disclosed a much larger volume of environment related data than non-budget entities funded by the market and that differential increased markedly in the 1990s. Burritt and Welch (1997a) note that whilst private sector organisations are held to account by competitive market forces, corporate legislation and shareholder pressure, the Joint Committee on Public Accounts (JCPA) has raised concerns about the lack of mechanisms to scrutinise the accountability of commercially-oriented public sector entities (Commonwealth of Australia, 1995).

The JCPA called for the measurement and reporting of performance on social and environmental issues in the Commonwealth of Australia (1992) including a consistent use of indicators over time and the reporting of performance against targets.

Guthrie and Farneti (2008) and Farneti and Guthrie (2009) studied the pattern of sustainability reporting in a sample of seven Australian PSOs that were using a standardised set of indicators, those contained within the GRI G3 Sustainability Reporting Guidelines (2006) and the GRI Sector Supplement for Public Agencies (2005) , using content analysis to determine the extent and pattern of disclosures. The responses indicated that these organisations reported primarily for purposes of informing stakeholders and particularly internal ones, and that they had often started with a TBL or BSC approach but were only recently moving towards the GRI framework. They found that application of the GRI indicators was fragmentary, in total only 32.4 percent reported and that organisations only selected those indicators they wanted to disclose. A similar study by Bellringer et al. (2011) of five councils in New Zealand supported these conclusions about internal stakeholder reporting, but identified sustainability reporting was also undertaken for demonstrating leadership, public accountability and financial responsibility.

The literature demonstrates that there is both a requirement to adopt a performance measurement and reporting approach that includes social and environmental as well as financial indicators in PSOs in Australia and that there are standard systems in existence that could be adopted that meet these requirements and also the purpose of consistent indicators for comparability. However, the case study and content analysis studies conducted over a small number of such organisations have found only limited disclosure and poor implementation of any of these performance management approaches in the public sector. Hopwood (2009) argues that although corporate environmental reporting should improve visibility of corporate environmental activities this may not be the case. Organisations that are selectively reporting against only a few indicators may be increasing their legitimacy and thus reducing levels of enquiry or might be hiding their internal processes behind a few select favourable measures. Therefore, in the context of limited reporting of social and environmental indicators, the evaluation of public reports to determine sustainability performance is unlikely to be conclusive.

Research method

This research used a mail-out questionnaire survey approach. The questionnaire (see The Appendix to the article as published by Emerald here) was developed using previously published research, including the monographs published by the Government Accounting Standards Board of the USA in 2002[1]. Although it is a previously used instrument, a pilot test was conducted with a number of department managers who made no negative comments. The questionnaire included some demographic profile questions and five point Likert scale questions relating to the use of various measures relating to performance generally, social and environmental performance more specifically and BSC dimensions.

Government departments (federal, state and territory) were chosen for this study for two reasons. First, the use of performance measurement systems in government departments is generally common. Second, government departments have greater diversity and complexity in many areas such as funding models, new competitive environments, information technologies, and cost structure (in particular, the proportion and complexity of the overheads (Funnel and Cooper, 1998; Guthrie, 1999; Moll and Hoque, 2008). Questionnaires were sent to 109 departments at both state/territory and federal government levels in August 2005. Since each treasury, department of finance and government have different emphasis, this study considers the responses in total with tests for any association between responses and jurisdiction that might influence the findings. The size of the sample places limitations on the ability to compare or identify differences in practices caused by these different governments. As part of the University Research Ethics policy, survey respondents and their departments were assured anonymity. The questionnaire with a covering letter and a postage-paid, self-addressed return envelope was mailed to the selected manager of each department. These managers were considered to be the persons most likely to provide accurate and useful data concerning the department’s operating environment, management processes including budgets and performance management systems. The names of the participants were obtained by making telephone calls. 42 of the 109 questionnaires sent out in the first mailing were returned. A follow-up letter four weeks after the initial mail-out yielded a further nine returned questionnaires. Ten departments declined to complete the questionnaire, citing reasons such as contravening departmental policy and staffing constraints. Consequently, a total of 51 completed questionnaires constitute the sample, which represented a response rate of 46.8 percent. The raw data from the questionnaires were first recorded in a spreadsheet using Microsoft Excel and then were transferred into statistical package for social science (SPSS) for statistical analysis such as descriptive and regression analyses. Appropriate tests for data types such as χ 2 tests, Kruskal-Wallis tests and Mann-Whitney U tests were used to test for any significant association between profile characteristics and responses at a 5 percent level of significance to identify whether responses were influenced by respondent characteristics. Table 1 briefly summarises the overall survey response patterns, and Table II provides the profile of respondents who completed the survey.

This article is © Emerald Group Publishing and permission has been granted for this version to appear here ( Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.


To assess the extent of purposes for which government departments made use of different performance measures respondents were asked to indicate the appropriate number on a five point scale where 1 – to a little or no extent and 5 – to a very great extent. Tables presented below indicate responses on this five point Likert scale, however as many extreme responses are small at either end of the spectrum, summary figures presented in the discussion of results may aggregate numbers at either end of the scale.

The data in Table III arranges the responses to use for operational activities by decreasing mean rank to aid in interpreting the importance of use of the various performance measures. It indicates that the performance measures used in operational activities are predominantly those related to legislative requirements and for program management and performance, measures that cannot be transgressed or are financially orientated, there is comparatively little emphasis placed on social and environmental performance measures. Comparisons of these measures against profile characteristics, using χ 2 test for states and territories, Kruskal-Wallis tests between respondent length of service, age and education level categories and Mann-Whitney U test for gender, and the operational activity responses identify no significant association by state or territory or by respondent profile characteristics at a 5 percent level of significance other than goals in relation to satisfy community expectations and age (p-value=0.011) and state or territory and local community impacts (p-value=0.021).

Table III records that performance data was used to little or no extent or some extent to satisfy environmental goals by 71.4 percent, goals in relation to local community impacts by 54.5 percent, social responsibility goals by 50.0 percent and community expectations by 42.2 percent. The main uses of performance measures to a great or very great extent were to satisfy legislative requirements (58.7 percent) or for management of programs (52.2 percent) and their performance (53.3 percent).

The extent to which government departments made use of the social and environmental related measures aligned with the GRI performance indicator aspects for environment, labour practices, human rights and society are shown in Table IV. Respondents were asked to indicate the appropriate number on a five point scale where 1 – to a little or no extent and 5 – to a very great extent. Comparisons of the social and environment measures against profile characteristics, using χ 2 test for states and territories, Kruskal-Wallis tests between respondent length of service, age and education level categories and Mann-Whitney U test for gender, and the social and environmental measures responses identify no significant association by state or territory or by respondent profile at a 5 percent level of significance except length of service against employee satisfaction (p-value=0.032) and state or territory and community relations (p-value=0.008).

The data in Table IV supports the findings in Table III, indicating that few social and environmental related measures are being used to a large or very great extent. The most commonly used measures were employee diversity and economic impacts other than financial measures used in the financial accounts. Employee diversity measures and economic impact measures were used by 43.1 and 41.5 percent of respondents, respectively, to a large or very great extent. With the exception of natural resource conservation and emission levels more respondents for all other categories (employee diversity; economic impacts; occupational, health and safety; stakeholder involvement in community; social and environmental issues; community relations; and, employee satisfaction) used performance measures to a large or very great extent than respondents using them to little or no extent. Natural resource conservation and emission levels measure was reported as being used to a little or no extent by 34.1 percent of respondents.

The responses in Table V which asked respondents to identify the type and extent to which performance measures are used in decision making reinforces the pattern observed in the preceding tables. 65.2 percent of respondents said they were using learning and growth measures (employee satisfaction, employee turnover, employee training and education, employee absenteeism) as BSC performance measures to little or no extent or some extent. Again, comparisons of the measures being used against profile characteristics, using χ 2 test for states and territories, Kruskal-Wallis tests between respondent length of service, age and education level categories and Mann-Whitney U test for gender, and the performance dimension responses identify no significant association by state or territory or by respondent profile at a 5 percent level of significance except age group with learning and growth measures (p-value=0.044) and with outcomes (p-value=0.033). Overall, there is little association between respondent profile characteristics and question response that the results do not appear to be influenced by the sample respondents’ length of service, age or education level or by the arm of government where they are employed.

The low use of social and environmental data is alarming given that some issues, such as occupational health and safety and equal opportunities, are covered by legislation. It would seem that the call by the JCPA for the measurement of performance on social and environmental issues has had little impact on practice despite the availability of voluntary guidelines such as those of the GRI. Where the private sector is subject to competition and the voluntary reporting of social and environmental performance may be used to differentiate one company’s consumer appeal from another company there is a market based mechanism to adopt voluntary performance measures. However, in a non-competitive environment voluntary reporting does not appear to carry much significance. It raises questions as to how the government can effectively encourage the public sector to be more accountable for its social and environmental impacts. Mandatory reporting in the public sector however seems unlikely any time soon. The Commonwealth’s Parliamentary Joint Committee on Corporations and Financial Services: Managing Risk and Creating Value (June 2006) recommended (Recommendation 20):

The committee recommends that, in order to show greater leadership and to encourage more agencies to disclose their sustainability performance, the Australian Government establish: voluntary sustainability reporting targets for government agencies; voluntary targets for government agency procurement in areas such as water, waste, energy, vehicles, equipment and consumables; and a requirement for each government agency to disclose such targets and to detail progress towards achieving these in its annual report.

Summary and conclusions

In recent years, the NPM doctrines world-wide advocate private sector styled accounting and performance measurement practices for PSOs. However, the application of such practices varies in different organisational contexts. This article documents the incidence of performance measurement and reporting practices of 51 state/territory and federal government departments in Australia.

The findings revealed that performance measurements utilised to a great extent in the departments and agencies who participated were in the areas of output (quantity) measures and cost efficiency and quality measures. Those used to the least extent were for learning and growth measures and used to satisfy legislative requirements and manage programs and their performance.

The most often used sustainability performance measures were employee diversity and economic activity, with ecological and social welfare issues being least considered. And whilst sustainability performance measures have been identified as mainly for internal stakeholders (Guthrie and Farneti, 2008) we found sustainability, environmental or social responsibility measures to be the least used performance measures.

The results reported here have drawn attention to the importance of multiple performance indicators in measuring the effectiveness of an operation. In particular, our study has led to a greater understanding of how BSC type performance measures could play an important role in improving the performance of a government department. These findings are consistent with the results reported in several private sector settings (Ittner et al., 1997, 2003; Hoque and James, 2000; Malmi, 2000). However, our findings indicate that the BSC is not linked to any strategy to improve performance on social and environmental issues (Adams and Frost, 2007). Further research could usefully explore the extent of this linkage, or lack of it, together with any reasons and perhaps develop measures that would better facilitate achievement of strategy.

The implications for policy are that the comprehensive implementation of sustainability reporting and use of environmental and social performance measures are unlikely to be adopted in the public sector while they remain voluntary and there is no competitive advantage in the adoption of such measures. Either the reporting needs to be made mandatory or the non-competitive nature of their operations needs to change, even if this is just by tying resources competitively to performance measurement across all sustainability indicators.

The above conclusions are, however, subject to the following limitations. As with all cross-sectional analysis, this study is likely to suffer from subjective perceived measurements based on this survey methodology. Multiple case studies of similar government departments based on face-to-face interviews may shed light on the use of sustainability measures. Future research may wish to undertake an assessment of whether or not sustainability performance is a function of the level of congruence between the government departments’ regulatory environment and use of currently voluntary BSC performance measures. The academic community largely supports claims that since BSC performance measures focus on a firm’s long-term critical success they may lead to improved organisational performance.


1. For further details, see (accessed 17 July 2012).


Adams, C.A. and Frost,G.R. (2007),“Managing social and environmental performance: do companies have adequate information?”, Australian Accounting Review, Vol. 17 No. 43, pp. 2-11.

ANAO (2007), Application of the Outcome and Outputs Framework, Audit Report No. 23, Australian National Audit Office, available at:,/media/Uploads/Documents/2006%2007_audit_report_23.pdf

Ball, A. and Bebbington, J. (2008), “Editorial: accounting and reporting for sustainable development in public sector organizations”, Public Money & Management, Vol. 28 No. 6, pp. 323-326.

Ball, A. and Grubnic, S. (2007), “Sustainability accounting and accountability in the public sector”, in Unerman, J., Bebbington, J. and O’Dwyer, B. (Eds), Sustainability Accounting and Accountability, Routledge, London, pp. 243-265.

Bellringer, A., Ball, A. and Craig, R. (2011), “Reasons for sustainability reporting by New Zealand local governments”, Sustainability Accounting, Management and Policy Journal, Vol. 2 No. 1, pp. 126-138.

Bevir, M., Rhodes, R.A.W. and Weller, P. (2003), “Traditions of governance: interpreting the changing role of the public sector”, Public Administration, Vol. 81 No. 1, pp. 1-17.

Broadbent, J. and Guthrie, J. (1992), “Changes in public sector: a review of recent ‘alternative’ accounting research”, Accounting Auditing and Accountability Journal, Vol. 5 No. 2, pp. 3-31.

Burritt, R.L. and Welch, S. (1997a), “Accountability for environmental performance of the Australian Commonwealth public sector”, Accounting Auditing and Accountability Journal, Vol. 10 No. 4, pp. 532-561.

Burritt, R.L. and Welch, S. (1997b), “Annual reports of Australian Commonwealth authorities: an analysis of their environmental disclosures”, Abacus, Vol. 33 No. 1, pp. 69-87.

Cavalluzzo, K.S. and Ittner, C.D. (2004), “Implementing performance measurement innovations: evidence from government”, Accounting, Organizations and Society, Vol. 29, pp. 243-267.

Clark, C. and Corbett, D. (1999), Reforming the Public Sector Problems and Solutions, Allen & Unwin, Sydney.

Commonwealth of Australia (1992), Social Responsibilities of Commonwealth Statutory Authorities and Government Business Enterprises, Report 315 of the Joint Committee on Public Accounts, Parliament of the Commonwealth of Australia, AGPS, Canberra.

Commonwealth of Australia (1995), Public Business in the Public Interest: An Inquiry into Commercialisation in the Commonwealth Public Sector, Joint Committee on Public Accounts, Australian Government Publishing Service, Canberra.

Cooper, S. and Pearce, G. (2011), “Climate change performance measurement, control and accountability in English local authority areas”, Accounting Auditing and Accountability Journal, Vol. 24 No. 8, pp. 1097-1118.

DFA (2003), Performance Reporting Under Outcomes & Outputs, Department of Finance and Administration, available at:

DPMC (2007), Requirements for Annual Report for Departments, Executive Agencies and FMA Act Bodies, Department of the Prime Minister and Cabinet, available at:

Economist Intelligence Unit (2010), Global Trends in Sustainability Performance Management, EIU Limited, London.

Farneti, F. (2009), “Balanced scorecard implementation in an Italian local government organisation”, Public Money & Management, Vol. 29 No. 3, pp. 313-320.

Farneti, F. and Guthrie, J. (2009), “Sustainability reporting by Australian public sector organisations: why they report”, Accounting Forum, Vol. 33 No. 2, pp. 89-98.

Funnel, W. and Cooper, K. (1998), Public Sector Accounting and Accountability in Australia, UNSW Press, Sydney.

Gibson, R. and Guthrie, J. (1995), “Recent environmental disclosures in annual reports of Australian public and private sector organizations”, Accounting Forum, Vol. 19 Nos 2/3, pp. 111-127.

GRI (2005), Sector Supplement for Public Agencies: Pilot Version 1.0, available  at: (accessed 14 July 2009).

GRI (2006), G3 Sustainability Reporting Guidelines, available at: (accessed 14 July 2009).

Guthrie, J. (1999), “A critique of the application of accrual accounting to the public sector”, in Clark, C. and Corbett, D. (Eds), Reforming the Public Sector: Problems and Solutions, Allen & Unwin, Sydney.

Guthrie, J. and Farneti, F. (2008), “GRI sustainability reporting by Australian public sector organizations”, Public Money & Management, Vol. 28 No. 6, pp. 361-366.

Guthrie, J., Olson, O. and Humphrey, C. (1999), “Debating developments in new public management: the limits of global theorising and some new ways forward”, Financial Accountability & Management, Vol. 15 No. 3, pp. 209-228.

Herawaty, M. and Hoque, Z. (2007), “Disclosure in the annual reports of Australian government departments: a research note”, Journal of Accounting & Organizational Change, Vol. 3 No. 2, pp. 147-168.

Ho, A.T.-K. and Ni, A.Y. (2005), “Have cities shifted to outcome-oriented performance reporting? A content analysis of city budgets”, Public Budgeting and Finance, Summer, pp. 61-83.

Hood, C. (1995), “The ‘new public management’ in the 1980s: variations on a theme”, Accounting, Organizations and Society, Vol. 20 Nos 2/3, pp. 93-109.

Hopwood, A. (2009), “Accounting and the environment”, Accounting, Organizations and Society, Vol. 34 Nos 3/4, pp. 433-439.

Hoque, Z. and Adams, C.A. (2011), “The rise and use of balanced scorecard measures in Australian government departments”, Financial Accountability & Management, Vol. 27 No. 3, pp. 308-334.

Hoque, Z. and James, W. (2000), “Linking balanced scorecard measures to size and market factors: impact on organizational performance”, Journal of Management Accounting Research, Vol. 12, pp. 1-17.

Hoque, Z. and Moll, J. (2001), “Public sector reform: implications for accounting, accountability and performance of state-owned entities – an Australian perspective”, International Journal of Public Sector Management, Vol. 14 No. 4, pp. 304-326.

Ittner, C.D. and Larcker, D.F. (1998), “Innovations in performance measurement: trends and research implications”, Journal of Management Accounting Research, Vol. 10, pp. 205-238.

Ittner, C.D., Larcker, D.F. and Meyer, W.M. (2003), “Subjectivity and the weighting of performance measures: evidence from a balanced scorecard”, The Accounting Review, Vol. 78 No. 3, pp. 725-758.

Ittner, C.D., Larcker, D.F. and Rajan, M.V. (1997), “The choice of performance measures in annual bonus contracts”, The Accounting Review, Vol. 72 No. 2, pp. 231-255.

Kaboolian, L. (1998), “The new public management”, Public Administration Review, Vol. 58 No. 3, pp. 189-193.

Kaplan, R.S. and Norton, D.P. (1992), “The balanced scorecard: measures that drive performance”, Harvard Business Review, January-February, pp. 71-79.

Kaplan, R.S. and Norton, D.P. (1996), The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press, Boston, MA.

Kaplan, R.S. and Norton, D.P. (2001a), The Strategy Focussed Organization, Harvard Business School Publishing Corporation, Boston, MA.

Kaplan, R.S. and Norton, D.P. (2001b), “Transforming the balanced scorecard from performance measurement to strategic management: part I”, Accounting Horizons, Vol. 15 No. 1, pp. 87-104.

KPMG (2007), Sustainability Reporting in Australia, KPMG International, Canberra.

KPMG International (2011), Survey of Corporate Responsibility Reporting, available at:

Lane, J.-E. (2000), New Public Management, Routledge, London.

Lapsley, I. (1999), “Accounting and the new public management: instruments of substantive efficiency or a rationalising modernity?”, Financial Accountability & Management, Vol. 15 No. 3, pp. 201-207.

Lapsley, I. and Pettigrew, A. (1994), “Meeting the challenge: accounting for change”, Financial Accountability & Management, Vol. 10 No. 2, pp. 79-92.

Malmi, T. (2000), “Balanced scorecard in Finnish companies: a research note”, Management Accounting Research, Vol. 12 No. 2, pp. 1-14.

Moll, Z. and Hoque, Z. (2008), “New organizational forms and accounting innovations: the specifier/provider model in the Australian public sector”, Journal of Accounting & Organizational Change, Vol. 4 No. 3, pp. 243-269.

Monaghan, P. (2011), Sustainability in Austerity, Greenleaf, Sheffield.

O’Faircheallaigh, C., Wanna, J. and Weller, P. (1999), Public Sector Management in Australia: New Challenges, New Directions, 2nd ed., Macmillan Education Australia, Sydney.

Parker, L. and Guthrie, J. (1993), “The Australian public sector in the 1990s: new accountability regimes in motion”, Journal of International Accounting Auditing and Taxation, Vol. 2 No. 1, pp. 59-81.

Sharma, B. and Gadenne, D. (2011), “Balanced scorecard implementation in a local government authority: issues and challenges”, The Australian Journal of Public Administration, Vol. 70 No. 2, pp. 167-184.

Society for Knowledge Economics (2005), Australian Guiding Principles on Extending Performance Management, available at: (accessed 30 July 2012).

The State Government of Queensland (2009), A Guide to the Queensland Government Performance Management Framework, The State Government of Queensland, Brisbane, May.

Umashev, C. and Willett, R. (2008), “Challenges to implementing strategic performance measurement systems in multi-objective organizations: the case of a large local government authority”, Abacus, Vol. 44 No. 4, pp. 377-398.

Unerman, J., Bebbington, J. and O’Dwyer, B. (2007), Sustainability Accounting and Accountability, Routledge, London.

Further reading

Chapman, C.S. (1997), “Reflections on a contingent view of accounting”, Accounting, Organizations and Society, Vol. 22 No. 2, pp. 189-205.

Common, R.K. (1998), “Convergence and transfer: a review of the globalization of new public management”, International Journal of Public Sector Management, Vol. 11 No. 6, pp. 440-450.

CPA Australia (2000), Accounting and Auditing Handbook, Prentice-Hall, Sydney, Version 2.

Crawford, P. (1996), The Serious Business of Governing, Royal Institute of Public Administration, Sydney.

DiMaggio, P.J. and Powell, W.W. (1983), “The iron cage revisited: institutional isomorphism and collective rationality in organizational fields”, American Sociological Review, Vol. 48, April, pp. 47-160.

DiMaggio, P.J. and Powell, W.W. (1991), “Introduction”, in Powell, W.W. and DiMaggio, P.J. (Eds), The New Institutionalism in Organizational Analysis, The University of Chicago Press, Chicago, IL, pp. 1-40.

Dixon, J. and Kouzmin, A. (1994), “The commercialization of the Australian public sector: competence, elitism or default in management education?”, International Journal of Public Sector Management, Vol. 7 No. 6, pp. 52-73.

Dunford, R., Bramble, T. and Littler, C. (1998), “Gain and pain: the effects of Australian public sector restructuring”, Public Productivity & Management Review, Vol. 21 No. 2, pp. 386-402.

English, L. (2002), “Emasculating public accountability in the name of competition: transformations of state audit in Victoria”, Critical Perspectives on Accounting, Vol. 14, pp. 1-2.

Ferlie, E., Ashburner, L., Fitzgerald, L. and Pettigrew, A. (1996), The New Public Management in Action, Oxford University Press, Oxford.

Hood, C. (1991), “A public management for all seasons”, Public Administration, Vol. 69 No. 1, pp. 3-19.

Hood, C. and Peters, G. (2004), “The middle ageing of new public management: into an age of paradox?”, Journal of Public Administration Research and Theory, Vol. 14, pp. 267-282.

Hoque, Z. (2005), “Securing institutional legitimacy or organizational effectiveness? A case examining the impact of public sector reform initiatives in an Australian local authority”, International Journal of Public Sector Management, Vol. 18 No. 4, pp. 367-382.

Hoque, Z., Arends, S. and Alexander, R. (2004), “Policing the police service: a case study of the rise of ‘new public management’ within an Australian police service”, Accounting, Auditing & Accountability Journal, Vol. 17 No. 1, pp. 59-84.

Langfield-Smith, K. (1997), “Management control systems and strategy: a critical review”, Accounting, Organizations and Society, Vol. 22 No. 2, pp. 207-232.

Lapsley, I. (1994), “Responsibility accounting revived? Market reforms and budgetary control in health care”, Management Accounting Research, Vol. 5, pp. 337-352.

Lapsley, I. (1996), “Reflections on performance measurement in the public sector”, in Lapsley, I. and Mitchell, F. (Eds), Accounting and Performance Measurement: Issues in the Private and Public Sector, Paul Chapman Publishing, London.

Lapsley, I. and Mitchell, F. (Eds) (1996), Accounting and Performance Measurement: Issues in the Private and Public Sector, Paul Chapman Publishing, London.

Lapsley, I. and Wright, E. (2004), “The diffusion of management accounting innovations in the public sector: a research agenda”, Management Accounting Research, Vol. 15, pp. 355-374.

Lynch, R.L. and Cross, K.F. (1991), Measure Up!, Blackwell, Cambridge, MA.

Miles, R.E. and Snow, C.C. (1978), Organizational Strategy, Structure and Process, McGraw-Hill, New York, NY.

Modell, S. (2001), “Performance measurement and institutional processes: a study of managerial responses to public sector reform”, Management Accounting Research, Vol. 12, pp. 437-464.

Modell, S. (2005), “Performance management in the public sector: past experiences,current practices and future challenges”, Australian Accounting Review, Vol. 15 No. 3, pp. 56-66.

Olson, O.J., Guthrie, J. and Humphrey, C. (1998), Global Warning! Debating International Developments in New Public Financial Management, Cappelen Akademisk Forlag, Oslo.

Otley, D.T. (1980), “The contingency theory of management accounting: achievement and prognosis”, Accounting, Organizations and Society, Vol. 5 No. 4, pp. 413-428.

Parker, L. and Gould, G. (1999), “Changing public sector accountability: critiquing new directions”, Accounting Forum, Vol. 23 No. 2, pp. 109-136.

Pendlebury, M. and Karbhari, Y. (1997), “Management and accounting development in executive agencies”, Financial Accountability & Management, Vol. 13 No. 2, pp. 117-138.

Pollit, C. (1993), Managerialism and the Public Services: The Anglo-American Experience, 2nd ed., Blackwell, Oxford.

Rose, A. and Lawton, A. (Eds) (1999), Public Services Management, Pearson Education, Edinburgh.

Ryan, C. and Walsh, P. (2004), “Collaboration of public sector agencies: reporting and accountability challenges”, International Journal of Public Sector Management, Vol. 17 No. 7, pp. 621-631.

Sharma, B. and Wanna, J. (2005), “Performance measures, measurement and reporting in government organizations”, International Journal of Business Performance Management, Vol. 7 No. 3, pp. 320-333.

Simons, R. (1987), “Accounting control systems and business strategy: an empirical study”, Accounting, Organizations and Society, Vol. 12, pp. 357-374.

Simons, R. (1990), “The role of management control systems in creating competitive advantage: new perspectives”, Accounting, Organizations and Society, Vol. 15 Nos 1/2, pp. 127-143.

Simons, R. (1995), Levers of Control, Harvard Business School Press, Boston, MA.

Simons, R. (2000), Performance Measurement and Control Systems for Implementing Strategy, Prentice-Hall, Upper Saddle River, NJ.

Vickers, M. and Kouzmin, A. (2001), “New managerialism and Australian police organizations”, The International Journal of Public Sector Management, Vol. 14 No. 1, pp. 7-26.

Wilson, J. (1998), Financial Management for the Public Services, Open University Press, Buckingham.

The authors gratefully acknowledge the financial support provided for this study by CPA Australia.

This article is © Emerald Group Publishing and permission has been granted for this version to appear here ( Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Useful resource: Learning and Teaching Sustainability

Share this article

Enter your email address to receive the latest posts