Global warming and environmental impact are topics that have received increased attention in recent years. Research suggests that companies should take more responsibility for this impact. Scholars have expressed contradicting opinions on whether these sustainability initiatives result in new risks and thereby lead to worse financial performance or will benefit the organization. This qualitative multiple case study uses an abductive approach to examine how risks associated with environmental sustainability initiatives are perceived to impact financial performance as well as how these risks can be managed in practice. Based on existing literature on environmental sustainability, risk management, and financial performance combined with interviews conducted with six representatives from three different companies in the Swedish manufacturing industry, a framework is developed. The framework presents a link from sustainability initiatives to risks, which can result in negative impacts on financial performance. The study further shows a positive relation between sustainability and financial performance, indicating that financial benefits can be gained from working with sustainability. Additionally, it is found that sustainability-related risks should be managed differently than business-related risks in organizations. The presented framework therefore indicates a necessity of establishing sustainability risk management strategies. The four main strategies identified were i) creating a shared mindset which allows for understanding of risks in the organization, ii) increasing communication and collaboration across departments, iii) actively working with risk identification to understand its behavior, and iv) establishing constant revision of risk management strategies.

Financial sustainability is underrepresented in both the research on and practice of sustainability management and reporting. This article proposes a conceptual measure of financial sustainability and examines its association with capital market returns. The measure is positioned at the intersection of sustainability management, risk management and risk governance. Financial sustainability is regarded as a crucial control parameter complementing shareholder value and can be viewed by riskaverse investors as a secondary condition of investment decisions. It reduces refinancing and insolvency risks, leading to risk-adjusted excess returns in an imperfect capital market with financing restrictions and insolvency costs. We propose measuring a firm’s financial sustainability in terms of four conditions: (1) firm growth, (2) the company’s ability to survive, (3) an acceptable overall level of earnings risk exposure, and (4) an attractive earnings risk profile. We show that the application of a conditions-based investment strategy to European firms with high financial sustainability (i.e., firms fulfilling all four conditions) over the period from July 1990 to June 2019 results in monthly excess returns of 0.39%. This portfolio’s risk is lower than the risk of market investment. We find that the excess returns increase when incrementally adding each of the four conditions to the investment strategy.

Nachhaltigkeitsaspekte wie zum Beispiel Klimawandel, Umweltschutz und generationsübergreifender Ressourcenverbrauch gewinnen sowohl im globalen als auch unternehmensspezifischen Kontext signifikant an Bedeutung. Die damit verbundenen Unsicherheiten werden jedoch von den meisten Unternehmen unzureichend reflektiert, sodass die daraus resultierenden Nachhaltigkeitsrisiken im Rahmen des Risikomanagements größtenteils unberücksichtigt bleiben. Hinzukommend erschweren insbesondere fehlende Kenntnisse zur Auswahl geeigneter, qualitativer Methoden zunehmend die Identifikation, Bewertung, Steuerung und Überwachung von Nachhaltigkeitsrisiken. Um diesen Schwierigkeiten entgegenzuwirken ist der Einsatz eines Methoden- oder Kennzahlenverbundes, wie der Szenarioanalyse und Sustainability Balanced Scorecard, zielführend. Die dem Artikel zugrundeliegende Forschungsfrage untersucht, wie mithilfe der Szenarioanalyse und Sustainability Balanced Scorecard als Instrumente des Risikomanagements Nachhaltigkeitsrisiken präziser abgesichert werden können. Anhand eines umfassenden Literaturreviews wird aufgezeigt, dass sich der Risikomanagementprozess in den einzelnen Phasen beider Instrumente wiederspiegelt. Hierfür wurden die jeweiligen Phasen analysiert, um anschließend den Phasen des Risikomanagementprozesses zugeordnet zu werden. Somit wird offenbart in welchen Phasen Nachhaltigkeitsrisiken identifiziert, qualitativ-verbal bewertet, mit geeigneten Handlungsoptionen gesteuert und kontinuierlich überwacht werden. Unterstützend wird zur Beantwortung der Forschungsfrage zudem auf geeignete, qualitative Methoden, eine umfassende Beurteilung der Szenarioanalyse und Sustainability Balanced Scorecard sowie auf ausgewählte Praxisbeispiele eingegangen. / Sustainability aspects, such as climate change, environmental protection and cross-generational resource consumption, are becoming significantly more important, both in a global and company-specific context. However, the associated uncertainties are insufficiently reflected by most companies, so that the resulting sustainability risks are largely ignored in risk management. In addition, a lack of knowledge about the selection of suitable, qualitative methods in particular increasingly complicates the identification, evaluation, control and monitoring of sustainability risks. In order to counteract these difficulties, the use of a combination of methods or indicators, such as scenario analysis and Sustainability Balanced Scorecard, is appropriate. The research question investigates how sustainability risks can be hedged more precisely using scenario analysis and the Sustainability Balanced Scorecard as instruments of risk management. A comprehensive literature review shows that the risk management process is reflected in the individual phases of both instruments. For this purpose, the respective phases were analysed and then assigned to the phases of the risk management process. This reveals the phases in which sustainability risks are identified, qualitatively and verbally assessed, managed with suitable options for action and continuously monitored. In addition, suitable qualitative methods, a comprehensive assessment of the scenario analysis and the Sustainability Balanced Scorecard as well as selected practical examples will be discussed in order to answer the research question.