Integrating sustainability – an institutional perspective on change Open Access

The integration of social and environmental sustainability concerns into corporate strategy is an increasing feature of organisational life (Beusch et al., 2022). Growing institutional pressures from the external context suggest that organisations are beyond the phase of adopting voluntary social and environmental standards, policies and guidelines, motivated by legitimacy perspectives and reactive responses (Wijethilake and Ekanayake, 2018). Rather, internal systems of management accounting and control are necessary to support the production, use and interpretation of social and environmental sustainability data ^[1]. Even as sustainability becomes (more) integrated into corporate strategies (Rehman et al., 2021), the extent of this integration into systems of management accounting and control remains questioned, as organisations struggle to implement sustainability strategies into operational practices (see Battaglia et al., 2016; Ditillo and Lisi, 2016). As a result, knowing more about how sustainable integration is achieved in practice constitutes an important empirical gap.

Understanding how existing systems of management accounting and control change in response to institutional concerns about sustainability is important, not least for the connected decision-making and behavioural alignment functions of control (see Johnstone, 2024). It is also important because sustainability has often been viewed in control scholarship through an economic perspective (Henri and Journeault, 2010), which limits their transformative potential for other sustainability issues (Narayanan and Boyce, 2019). This is especially the case for social sustainability issues, which are generally lacking in accounting and control scholarship (see e.g. Egan et al., 2024; Ghio et al., 2024; Kalla and Seiter, 2025).

While sustainability integration studies that reflect “change” in various ways are increasing (e.g. Beusch et al., 2022; Ditillo and Lisi, 2016; Kerr et al., 2015), the integration concept nevertheless remains “fragile”, complex and contested (Battaglia et al., 2016; Beusch et al., 2022). This is partly because the focus of much sustainability control work has been on the organisational level of strategic integration, in terms of why organisations integrate controls to support corporate strategy in particular institutional contexts (e.g. Kerr et al., 2015; Wijethilake et al., 2017), rather than on how such controls are integrated with existing systems of management accounting and control in practice (Gond et al., 2012); studies of which are being increasingly called for (see Beusch et al., 2022; Kerr et al., 2015).

Meanwhile, empirical studies that draw on Gond et al.’s (2012) integration typology to explore how different types of controls can support sustainability strategies are both limited in number and suggest various barriers to integration. Some studies find that it is better for sustainability systems to remain decoupled from financial ones, and that there is a need for discrete sustainability departments and personnel to facilitate, coordinate and/or control sustainability work (Riccaboni and Leone, 2010). Other studies suggest that integration may not be a strategic issue, but more of a tactical one, especially for large organisations (Frostenson and Johnstone, 2023). In their conceptual paper, Gond et al. (2012) recognise the “excessive economic rationalization of the sustainability strategy, or an over-bureaucratization of sustainability management through growing control systems” is problematic. Together, these integration studies often focus on internal diagnostic and interactive control levers to understand the different integration configurations (e.g. Gond et al., 2012; Battaglia et al., 2016), rather than the wider belief and boundary systems concerned with behavioural alignment in response to a wider context (see Beusch et al., 2022). Not only does this limited number of empirical integration studies mean that we know relatively little about integration from practice, but the focus on discrete “operational” levers leads to a partial understanding of the integration process. This is because both external and internal institutions affect integration processes at different levels (see ter Bogt and Scapens, 2019).

Based on this background, it remains unclear whether full integration (i.e. the integration of organisational structures, systems and mindsets that support sustainable strategy alongside financial ones [cf. Gond et al., 2012]) is “optimal” ^[2] for sustainable strategic goals. The role of different institutions for this integration process is also unclear. This creates the need for more empirical studies to understand how social and environmental controls are designed and implemented in practice, that is, alongside – and integrated with – the more established financial ones. It here becomes a question of elaborating on the potential (resistance to) change in this integration process within organisations as they strive to integrate sustainability throughout the tiers. In contrast to full integration, resistance can be analytically captured as “partial” or “low” in that it implies some sort of strategic decoupling between sustainability and other systems of accounting and control. This is where this study sets to fill a gap.

The aim of this study is to understand the role of institutions (both from outside and within an organisation) for sustainability integration, which contributes to the growing discussion on whether sustainability integration along organisational, technical and cognitive dimensions is optimal. The following research questions are asked: How is sustainability integrated into existing systems of management accounting and control, and what is the role of internal and external institutions in this integration process?

Through a longitudinal case study of a large European logistics company, ter Bogt and Scapens’ (2019) institutional framework is used to connect the two analytical levels of integration and institutions (i.e. the strategic-external level of “why” integration occurs and the operational-internal of “how” it occurs). This is important as the integration of sustainability with management controls is as much a part of socio-political processes as it is an organisational one (George et al., 2018). It is also important for moving beyond focusing on the managerial level of integration implied through the management control system (MCS) frameworks such as Simons’ (1995) levers of control (LOC) as a multilevel perspective of change (cf. Micelotta et al., 2017).

By illustrating different types of (resistance to) change through Gond et al.’s (2012) sustainability integration dimensions, we elaborate on the integration concept and contribute to institutional works in different ways. Particularly, we nuance discussion on the degree of integration as more or less optimal in a particular research setting (i.e. through the different levels and dimensions), as well as suggest different integration pathways (i.e. between social and environmental sustainability issues). We also accord with prior research that stability and change are not “mutually exclusive” (see also e.g. Skoog, 2003; Siti‐Nabiha and Scapens, 2005; Lukka, 2007) but extend that the change is in terms of how existing accounting systems are used in novel ways for extracting environmental sustainability data, rather than change in system design as previously emphasised (Siti‐Nabiha and Scapens, 2005).

The paper begins with a brief literature background to the integration concept before outlining the theoretical framework. The method, findings and analysis are then presented. The paper ends with the conclusions, contributions and future research suggestions stemming from this work.

The integration of sustainability into corporate strategy has been presented from two connected stances, which are now briefly described before connected to institutional theory in the sub-section that follows.

Various scholars (e.g. Burritt and Schaltegger, 2010; Maas et al., 2016; Mikes and Metzner, 2023; Traxler et al., 2020) emphasise the integration of sustainability at the strategic level through the relationship between the data for externally orientated reporting and internal management accounting and control systems. Such studies often centre on the sustainability balanced scorecard (SBSC) as the strategic integration tool (Figge et al., 2002; Kerr et al., 2015). However, this is considered limited for an integrated sustainability strategy (Beusch et al., 2022), not least because of the short-term performance gains associated with its focus on financial performance and technical systems.

Drawing on a sustainability MCS perspective, Gond et al. (2012) propose that there are, in fact, three dimensions of integration that support sustainable strategies within organisations as they move from decoupled control systems for sustainability (i.e. as low or partial integration) towards coupled ones (i.e. as fully integrated), namely, the organisational, technical and cognitive. As noted by Ghosh et al. (2019), this integration can be achieved either by adapting existing MCSs for sustainability or designing new sustainability control systems (SCSs). SCSs are considered important for integration because they are the “constellation of management accounting tools that connect organisational strategy […] by providing information and direction, as well as monitoring and motivating employees to continually develop sustainable practices for improved sustainability performance” (Johnstone, 2019, p. 34). The following paragraphs describe each of these integration dimensions in more detail.

Organisational integration concerns the extent to which actors and governance structures combine financial and management accounting functions with sustainability reporting and control, allowing actors to become specialists in both functions (Gond et al., 2012). This refers to “how actors and processes are organised around sustainability, and whether hybridisation [i.e. between MCS and SCS] and socialisation [i.e. social mixing] occur” (Battaglia et al., 2016, p. 214). Nevertheless, many suggest the need for having discrete sustainability personnel, departments or teams may be necessary to achieve sustainability performance outcomes (e.g. Riccaboni and Leone, 2010; Frostenson and Johnstone, 2023); thus, implying organisational decoupling and less integrated organisational systems may be optimal in certain circumstances.

Technical integration concerns the integration of tools and accounting systems, which Gond et al. describe as “a common calculability infrastructure”. This is particularly important for producing financial and other sustainability data for the decision-making function of control. Integrated technical systems are generally assumed to enhance decision-making. Nevertheless, some suggest that existing systems may be inadequate for capturing and monitoring sustainability data (Battaglia et al., 2016) and that environmental and financial performance systems are often decoupled (Wagner, 2015). This also implies that the low integration of technical systems may sometimes be optimal. However, in a more recent paper, Beusch et al. (2022) redefine technical integration as “any diagnostic or interactive control system that incorporates both financial and sustainability perspectives […] regardless of whether common calculability is present” (see Battaglia et al., 2016; George et al., 2018). In this sense, an integrated technical system is one that includes both financial and non-financial sustainability data, but the calculation method may vary. Bui et al. (2024) further argue that technical integration can be loose, through selective coupling that allows occasional interaction between systems; partial, whereby elements of systems are combined; or full, when carbon and other controls are unified.

Finally, cognitive integration concerns the extent that ‘managers’ have shared understandings of sustainability. It is considered important for the behavioural alignment function of control. Gond et al. (2012, p. 210), referring to Heidmann et al. (2008), discuss that control systems can serve as ‘communication platforms’ to “facilitate interaction and create opportunities for discussion between people who bring with them different patterns of thinking, mindsets and practical viewpoints with regard to sustainability”. If mindsets do not align, sustainability may not be fully integrated into corporate strategy (Battaglia et al., 2016). However, as implied in sustainability control works (Johnstone, 2019), cognitive integration requires not only managers but also other actors throughout the organisation for sustainability to be fully integrated in a cognitive sense. Table 1 compares the different integration dimensions and levels within organisations.

As previously suggested, the processual strategic integration perspective of Gond et al. (2012) infers that complete integration along all three dimensions is optimal from a strategic perspective. However, from the limited empirical studies that address integration, it remains unclear whether this is the case. This is where institutional theorising comes into play because it helps us understand both why and how organisations integrate sustainability in practice.

Institutional theories have been used in the mainstream management accounting and control literature to study internal changes (e.g. Arroyo, 2012; Siti‐Nabiha and Scapens, 2005) considering external contexts (Moll et al., 2006). Changes primarily regard the extent to which new accounting and control systems are implemented (see Burns, 2000; Vamosi, 2000), in this case, as organisations respond to increasing sustainability demands and transition towards more integrated sustainability strategies.

To understand how sustainability is integrated into existing systems of management accounting and control, theoretical perspectives that recognise the role of both the external institutional mechanisms that influence sustainable strategy and those internal institutions operating within the organisation that influence employee action are important (see also Arroyo, 2012; Contrafatto, 2014; George et al., 2018). Here, actors within organisations are important for making sense of internal systems and procedures, as well as the external institutional demands placed upon them. They are also important for resisting or reforming such systems themselves (see Barros and Ferreira, 2023; Börner and Verstegen, 2013). Particularly, Beusch et al. (2022) find that incremental changes in rules and routines within organisations are key for supporting the integration process.

We argue that Burns and Scapens’ (2000) institutional framework of management accounting change provides a good basis to contribute to knowledge on sustainability integration. This framework suggests that over time, particular internal systems or procedures become institutionalised as accepted ways of working through the rules (i.e. formal ways of working) and routines (i.e. informal practices or actual behaviours) that constitute action. However, resistance to change is real. New systems and practices can remain “decoupled” (see Brignall and Modell, 2000), for example, as formal rules are strategically implemented but not (re)produced in the daily actions of organisational members (Ribeiro and Scapens, 2006). Other employees attempt to implement changes from below (Börner and Verstegen, 2013). This has implications for the behavioural alignment function of control through organisational, technical and cognitive dimensions. Additionally, systems can be loosely coupled, such as the maintenance of formal management accounting systems (i.e. rules) alongside the change of actual practices (i.e. routines), which allows for both stability and change to concurrently occur (e.g. Siti‐Nabiha and Scapens, 2005; Lukka, 2007).

When related to the purpose of this study, Burns and Scapens’ (2000) framework helps explain the extent of sustainability integration within organisations through (resistance to) change, rather than why organisations respond to strategic institutional pressures (e.g. Wijethilake et al., 2017). Yet, integration occurs on two levels as previously described. These are the external-strategic level and the internal-operational level. This means that the impact of external institutions on internal changes, or integration, is also important. This is where ter Bogt and Scapens’ (2019) extended institutional framework comes into play.

As suggested, the pathway towards sustainability integration regards balancing two institutional(ised) powers (i.e. institutions from the outside and institutions within the organisation) (see Arroyo, 2012). The sustainability integration concept also implies some form of “change” in management accounting and control practices within organisations. Ter Bogt and Scapens (2019) connect the interactions between field-level institutions, which they term “broader” institutions, and institutions within the organisation, which they term “local” institutions, presenting these connections as important for explaining management accounting change. Such work is inspired by both why organisations “adopt structures and procedures that are valued in their social and cultural environment” (Ribeiro and Scapens, 2006, p. 96) from a new institutional sociology stance (cf. Meyer and Rowan, 1977; DiMaggio and Powell, 1983), as well as how individual actors and groups of actors within organisations respond to different institutionalised pressures from an old institutional economics lens (cf. Veblen, 1898). This makes Ter Bogt and Scapens’ framework particularly relevant for this study as now described.

External regulations, laws, societal expectations and accounting practices (e.g. the coercive, normative and mimetic pressures) regarding sustainability affect the strategic design of internal structures, systems and procedures within the organisation. At the same time, local institutions (e.g. existing accounting and control systems) are affected by the prior history and experience of the organisation such as its approach to sustainability, as well as management accounting and control more generally. As Contrafatto (2014) suggests, these different types of institutions work together (at different levels) for the construction of common sustainability meanings, the “practicalisation” of rules and routines for sustainability outcomes and the implementation of structures and procedures within organisations.

Accordingly, actors – not only top managers but also others who are implied in the sustainability control work (Rodrigue and Picard, 2023) – must make sense of and rationalise both external and internal institutions. This is embodied through their ‘situated rationalities’, which can best be described as the taken-for-granted assumptions in terms of “how things are and how things should be done” (ter Bogt and Scapens, 2019, p. 1810). Thus, situated rationalities are affected by the overarching institutions, as well as the existing (formal) rules and (informal) routines within the organisation that constitute action. The question then becomes if and how actors and groups of actors within organisations come to integrate “new” sustainability systems into existing ways of working as system use, and through which strategically designed integration dimensions (i.e. organisational, technical and cognitive). Here, issues of decoupling (low integration), loose coupling (partial integration) and coupling (full integration) can be explained through institutional theorising in terms of (resistance to and even the formation of [Börner and Verstegen, 2013]) change along the pathway to sustainable integration. Based on our prior discussion, this is not to say that “full” coupling is the optimal state but rather that through institutional theorising, we can understand the role of different institutions for sustainability integration within organisations as our research aim.

In the wider organisational literature on institutionalisation, an integrated perspective of change requires consideration of changes in institutional environments, the role of organisational actors in driving and/or resisting change within institutions and the micro-practices of actors in their daily working tasks, which can be evolutionary or revolutionary (Micelotta et al., 2017). This multilevel perspective of integration is something we try to incorporate in this study through the role of external and internal institutions, as well as the extent of integration in practice through incorporating the situated realities in terms of system use that can (re)affect rules, routines and actions.

Figure 1 adapts ter Bogts and Scapens’ (2019) framework for the purpose of this study as an analytical model. This model is later drawn on theoretically to help explain the findings of this study in terms of institutional theorising. The figure illustrates the two overlapping levels of integration from prior sustainability control works; that is, the strategic level of integration that is influenced by “broader” or external institutions (e.g. Burritt and Schaltegger, 2010; Maas et al., 2016; Mikes and Metzner, 2023) and the more operational and tactical levels of integration which are influenced by “local” or internal institutions within the organisation and characterised around Gond et al.’s (2012) integration dimensions. Importantly, internal integration occurs through the situated realities of employees throughout the hierarchy who interpret and act upon the internal formal rules and informal routines as “accepted ways of working” and/or attempt to change these rules. These actions, in turn, have the potential to change existing institutionalised systems into “more sustainable” ones (see Johnstone et al., 2023; Ligonie, 2021) and, in doing so, imply increasing integration in the different dimensions.

This institutional perspective is important for understanding how sustainability is integrated into existing systems of management accounting and control and the role of internal and external institutions in this. The first part of the research question relates to describing Gond et al.’s (2012) integration dimensions but extends this to the extent of integration for each of those as low (decoupled), partial (loosely coupled) or full (coupled). Meanwhile, the second part goes beyond the prior research focus on external institutions and strategic managerial concerns for integrating sustainability control with corporate strategy (e.g. Kerr et al., 2015; Wijethilake et al., 2017). It extends knowledge on the actual use of controls to integrate sustainability from below – an emerging concern in sustainability control scholarship (e.g. Frostenson and Johnstone, 2023) – as necessary for understanding change in institutional theorisations (Micelotta et al., 2017).

A longitudinal case study of a large European logistics company (hereby named ‘EuroLogistics’) was adopted to understand the role of different institutions (external and internal) over time on internal change (see also George et al., 2018). Additionally, longitudinal studies have been especially important for following the integration process in sustainability control scholarship (e.g. Battaglia et al., 2016; Beusch et al., 2022).

The case company selected was of particular interest because it is subject to European sustainability mandates from external institutions, and it operates in the male-dominated transport industry, making it subject to both social and environmental sustainability concerns, such as those regarding diversity and inclusion in addition to climate concerns. EuroLogistics operates in four countries and employs over 30,000 people. Its main services are postal deliveries, logistics solutions and warehousing facilities. While owned by the nation states of two countries, EuroLogistics is independently financed, meaning that it must meet regulatory requirements while borrowing from capital markets. In many ways, EuroLogistics functions as a decentralised organisation, with the strategic level of the group making broad-scope sustainability objectives and the four respective country organisations charged with the responsibility for designing, implementing and monitoring discrete KPIs, as well as reporting them back to the group.

The case study spans a six-year period, over two discrete phases. Initial access was obtained in 2017 and mediated through the (then) group-level Head of Strategy, with interviews continuing into 2018 when the initial contact was laid off during a restructuring process. Meanwhile, during 2022/2023, access was mediated through the sustainability strategist of the primary country as a new contact to the case company that allowed for further access. This time was also deemed important because of the various changes in the external institutional context between the two phases, such as incoming sustainability legislation (e.g. the EU Taxonomy and CSRD). This, thereby, allowed us to better view any changes in integration between two periods.

While 23 semi-structured interviews with 19 employees in accounting, control, sustainability and operational roles regard the main bulk of the data (see Table 2), notes from two half-day site visits in 2018 and informal conversations with the two main contacts during both phases informed backgrounding information. Additionally, presentations by EuroLogistics and secondary data from the five Annual and Sustainability Reports from 2017 to 2021 were also used to supplement empirical information and interview contextualisation.

The first round of interviews in 2017/2018 focused more generally on questions related to the structure, systems, roles and tools for sustainability, as well as the perspectives of those using them. Meanwhile, the second round of interviews in 2022/2023 followed a stricter interview protocol based on Gond et al.’s (2012) dimensions of integration as the idea for this paper became more theory informed (see Hall and Messner, 2017) ^[3]. All interviews were recorded and transcribed. Through what can be regarded as an abductive approach, we went back and forth between our initial findings and analysis before adapting ter Bogt and Scapens’ (2019) institutional framework to both frame and explain the integration process along all three dimensions as now described.

To understand how sustainability was strategically integrated into existing systems of management accounting and control at EuroLogistics and the role of institutions in this data were presented in the findings section around external (i.e. contextual factors) and internal (i.e. internal systems of management accounting and control) institutions before being related to institutional theorising in the analysis section. This was the result of the following procedure.

First, fragments from interview transcripts, notes and corporate reports were highlighted that helped answer why EuroLogistics had strategic sustainability ambitions considering its context and what these were. Such fragments were framed around the impact of external institutions on EuroLogistics’ strategy for both time periods, which were then compared in narrative form in the presentation of the findings.

Second, fragments were highlighted in terms of how internal systems of management accounting and control included these strategic ambitions for both time periods (i.e. in what ways) and what changes to existing systems (internal institutions) had been made and even why. The fragments from this second stage were primarily obtained from the interview transcripts and categorised under Gond et al.’s (2012) organisational, technical and cognitive dimensions for both time periods. This was necessary to help understand if and how sustainability had become (more) integrated over time in terms of the situated realities of the employees.

Third, following from the narrative presentation of both the external and internal institutions and inspired by a recent sustainability control study (Johnstone, 2024), the connections between the key findings were summarised visually in terms of how they differed for each period regarding the behavioural alignment and decision-making functions of control. This allowed for a preliminary assessment of the differences in terms of the extent of integration through controls that were then elaborated in relation to the theoretical model.

The final step was to discuss the findings more theoretically using the institutional framework in terms of what they meant for internal change, and thus sustainability integration (or not). This gave rise to the following themes: resistance to integration, and stability and change in system use. These themes structured the analytical discussion section and were discussed considering prior integration and institutional literatures, respectively.

Since 2017, sustainability has become higher on the strategic agenda of EuroLogistics and increasingly “tangible” (A15), the primary reason for this coming down to context (e.g. the EU Taxonomy and CSRD) as well as customer pressures and the personal interests of the owner. This meant a strategic move away from working with (primarily environmental) sustainability issues, inherent to the logistics industry, towards “integrating sustainability in everything [EuroLogistics] do[es]” (A7).

In 2017/2018, the financial logic dominated, and the vision to “integrate sustainability in everything” was considered “vague” (A5). The company was in a bad financial position because of a downturn in its core postal services and the negative media attention it received (customers complained about lengthy deliveries and unreasonable fees). Accordingly, EuroLogistics underwent an intensive restructuring process, including hundreds of layoffs. This, however, meant that social and environmental sustainability were sidelined, because “at the end of the day, they [group management] look at the cost” (A4).

In 2022/2023, EuroLogistics was in its post-pandemic phase, and its operating income was stronger than ever. Sustainability became a key part of its strategy, seen as “a smorgasbord of possibilities where we have to decide that we need to transition from reporting (i.e. looking in the rearview mirror) to value creation – both direct and indirect business values” (A15). The introduction of more internal controls to provide the accounting information mandated by the EU and resultant national legislations meant that the strategic sustainability work was becoming more concrete and less reputational and communication-based (A15). EuroLogistics had specific strategic goals not only regarding climate (e.g. “fossil free by 2030”) but also social sustainability concerns (e.g. “zero tolerance for accidents”, “fair working conditions” and an “all-inclusive workplace”). These were broken down into intermediary targets and pushed down the hierarchy. As an example, the strategic goal of fossil-free by 2030 was broken down into a 40% reduction in carbon from 2020 levels by 2024 and zero emissions in the last mile (i.e. from the transport hub to destination by 2027).

The following sub-section investigates how these strategic aims were integrated into existing systems of management accounting and control as local institutions.

Back in 2017, EuroLogistics had over 33,000 employees, but the number working with sustainability issues was comparatively low. There was a small sustainability department of six people at the group level (three working with environmental issues and three with quality) under the communications function. Their task was to “coordinate sustainability issues that involve everybody such as the Code of Conduct and reporting” (A2). While most believed that having dedicated sustainability personnel at the group level was necessary “for controlling the sustainability work and then putting it out to other departments [because sustainability] is not mature enough” (A7), others questioned this structure:

Nevertheless, other group-level functions worked with sustainability issues such as the “group sourcing for sustainable supply chains, legal department for business ethics […] and finance department regarding tax as a new sustainability issue” (A2).

Regarding sustainability roles, there were two sustainability supply chain specialists at the group level who had the task of reducing supply chain risk by ensuring safe and fair working conditions, as well as supporting the climate-driven aims of EuroLogistics throughout the supply chain. This was manifested by forcing suppliers to sign the supply chain code of conduct. Moreover, there was a dedicated director at the group level responsible for environmental sustainability who belonged to the communications department, and in 2018, the new position of social sustainability director was established.

Beyond the group level, sustainability positions were mainly incorporated into the human resource departments of each respective country (which continued into 2023). The role of individuals in such positions was to convey progress in terms of KPIs through monthly follow-up meetings with group-level managers (i.e. a monitoring and coordination role), rather than driving any internal change in terms of management accounting and control systems from below. However, there was a large degree of flexibility in terms of how each country worked with the targets:

There was also an Environmental Council that involved “key environmental people in the country organisations [meeting] every three months to discuss environmental issues” (A2). There was not the same degree of formalised intra-organisational networks for social sustainability issues, which were then considered “new”.

Moving into 2022/2023, a new organisational structure had been created around sustainability that moved roles further down the hierarchy into the country organisations. While much of the work was “still in climate” because of the nature of the logistics industry, “health and safety and work environment [were] becoming more important” (B1). Around 40 people had official sustainability roles, with many more working with environmental and social sustainability issues in different ways. This was significant, as the overall employee number had reduced by 3,000 over the same period. Additionally, a handful of personnel in each country were given sustainability controller roles. This new structure organised sustainability better and was considered important for finding information for external reporting purposes as a function of control. This stood in contrast to the earlier period where “sustainability was not organised in an intuitive way at all [with] hidden departments, people [and] information” (B1).

Interestingly, none of the strategic-level group employees interviewed in 2017/2018 remained at EuroLogistics in 2022. Many group-level positions had been cut, and the newly formed sustainability departments within the countries included many “young university-educated personnel” or “recent graduates” (A1). There seemed to be a cultural shift in terms of bringing in new sustainability competences to drive change from below. As one recent graduate employed as a sustainability specialist explained: “They were looking for people with fresh ideas and academic training in sustainability” (B1). It was also considered cheaper to employ recent graduates (A1).

In Country A, there was a sustainability department with 12 people that reported directly to the HR manager, followed by Country B, with three. The main duties of personnel within these departments were to “report and calculate emissions and energy consumption, make sustainability suggestions, be involved with sustainability accounting and reporting” (A9). They were also “responsible for quality and management systems, including internal audits, risk management and contingency plans” (C1). However, while personnel in the sustainability department, generally the new graduates with prior sustainability training, were eager to address sustainability issues in a more substantive sense than in previous periods, the responsibility for meeting targets was pushed further down the hierarchy to operational/site managers. Furthermore, the extent of strategic organisational integration further down the hierarchy was questioned:

There were even internal fights for resources between different (groups of) employees to implement actions:

Although there were more discrete sustainability roles in the newly formed sustainability departments, there was nevertheless more collaboration between financial and sustainability accountants and controllers to develop calculation models, which were then assigned to the sustainability controllers to run. This collaboration was deemed necessary not only because the “climate figures [were] quite heavily influenced by the financial figures” but also because there was the feeling that “the sustainability people in the countries [didn’t] really have the tools or expertise to do the calculations by themselves”, even if they had the “sustainability” decision-making expertise (A15). Additionally, more staff were being recruited to work with sustainability data analysis and calculations in the two main countries in response to the incoming legislative demands. For Countries C and D, there was one person designated as sustainability responsible: “I am a one-person team [in Country C], no one under me and my head is in real estate and sourcing, not really connected to sustainability. I am part of a virtual team, working with others abroad” (C1). For those individuals, sustainability data calculations were considered complex, and they had to draw on the expertise of personnel from the sustainability departments of Countries A and B rather than driving changes that integrate systems themselves.

In 2022, an “intra-organisational initiative called ‘sustainable by EuroLogistics’” (A10) began to develop a “clear strategy for the different types of goals and the various KPIs” (A10). It was described as “even more than sustainability – as a strategy and vision” (C1). This initiative included members of the country-level sustainability departments and some group-level managers who belonged to different working groups (e.g. changing vehicles and net-zero buildings). The initiative functioned as “a cross-country sustainability department […] responsible for taking the [sustainability] decisions” (B1). The addition of this structure suggested that sustainability departments existed both within country organisations and across them, by creating a space for cross-country sustainability decisions to happen. However, some noted that “progress is slow because everything done is divided into micro-tasks. There is no follow-up or disciplinary action, so it becomes hard to see the overall progress” (C1).

While the general trend seemed to be incorporating sustainability more into organisational structures and discrete roles, other more sceptical views remained:

There were also discussions around whether (environmental) sustainability accounting and control work could, or even should, be conducted by financial accountants:

During 2017/2018, elements of technical integration were apparent, particularly when it came to the costs of fuel and energy, “which are hard to separate” (A4). There was also a balanced scorecard with non-financial targets such as “sick leave, carbon dioxide, diversity and equality” (A4). However, some of these non-financial targets and controls were challenging, meaning a degree of creativity was required in terms of meeting them:

Both financial and non-financial goals were nevertheless treated “diligently and taken very seriously” (A5). There was an evident “performance measurement culture [in the group] with long-term goals and yearly KPIs” (A1) that was considered good. The information from these targets was used to guide group strategy as well as provide information for the Annual and Sustainability Report. However, sustainability data were treated separately from financial data and came from different departments and levels (e.g. sick leave and diversity information from the HR department, environmental information from the sustainability personnel within communications and supply chain information from group sourcing), meaning that: “The numbers are put together in one report, but not integrated with each other” (A2).

Into 2022/2023, the legislation really pushed the “development of IT tools” to provide accounting data for reporting information. However, “most of the sustainability data [were] still in climate” even if “more recently, the social targets [had] begun to trickle down” (A10). Existing financial accounting systems were often used to obtain this environmental data, and some models had been developed through collaborations between the financial and sustainability controllers in Country A:

Using existing accounting systems meant that there was “more internal control for the non-financial figures because it’s very hard to remove data” (A15). Still, each country did it “their own way, with the numbers then going into a common group model, meaning that there [were] different standards or inputs into getting the numbers” (D1). These “different data systems” for sustainability information contrasted the “standardised systems for financial accounting information” used by the group (A9) and made it difficult for cross-country comparison: “I would like to know the km of biogas and electric vehicles from centralised systems, but every month I have to send out an Excel file and that is manual work” (D1).

Further challenges were noted regarding the inputs into systems for sustainability data, which entailed assumptions (e.g. types of electricity being used) when not known. The general approach was to adopt a worst-case scenario, meaning being “cautious when calculating and reporting” (A9). This approach worked for the environmental data; however, it entailed problems for social sustainability concerns:

For some working in sustainability roles, these technical challenges were viewed as especially frustrating:

Back in 2017/2018, what employees knew or thought about how EuroLogistics worked with sustainability was mainly tied to strategic and tactical managerial levels of “top management and three levels down” (A4), even though there was the general ambition to engage more employees in sustainability “so that everyone understands” (A2). There was the general feeling that further down the hierarchy, employees were engaged in sustainability issues “not because of customers or the owners, but more because of their hearts” (A4). Further still, many of the interviewees at the strategic level of the group spoken to did not have prior training or experience in working with sustainability issues. This implied that roles had been imposed on them, rather than sought out by them. Additionally, structural barriers were noted in terms of communicating sustainability: “you can’t go out to 400 locations to talk to all site managers [tiers three and four]. We don’t have the resources for that. […] I mean, it is such a big organisation, 33000 employees” (A4). Notwithstanding, there was mandatory e-learning training for managers on environmental issues and a voluntary mentorship programme where different managers from different units get together to discuss various sustainability issues.

Moving into 2022/2023, those working with sustainability seemed to be highly engaged in a cognitive sense, as noted:

Environmental sustainability issues were also considered important for financial accountants and controllers. However, rather than wanting to be responsible for sustainability work, they were happy to collaborate with the sustainability department to integrate (primarily environmental) sustainability data into existing accounting systems. Here, the “data” (facts, figures and metrics) were deemed important for integrating sustainability into the mindsets of employees by “having a common foundation […] to truly shift mindsets” (A15). However, cognitive integration remained within the first three tiers of managers (i.e. group level to operations), which was put down to the nature of the business:

Beyond operational levels, there was also the perception that “people working in logistics [were] mainly interested in economics, which leads to a lot of resistance [to sustainability decisions] mainly about money” (D1). Others suggested more diverse patterns regarding how (groups of) certain employees (with distinct roles) viewed sustainability within the group:

In contrast to the previous period, mandatory sustainability e-training (including information safety, the code of conduct, GDPR, environmental sustainability and security in the workplace) was extended “to all employees and integrated into [the] academic function” (A10). Additionally, managers were expected to take specific courses, depending on their roles, such as labour law, environmental law and hazardous cargo. Such control initiatives were deemed important to relay sustainability mindsets further down the hierarchy:

Yet, even though attempts were being made to cognitively integrate sustainability into the mindsets of employees throughout the hierarchy, not only top managers, there was also the recognition that:

Table 3 summarises the two time periods in relation to the institutional framework introduced at the beginning of this paper. This is followed by Figures 2 and 3, which summarise the main relationships identified in the findings in relation to the different functions of control.

During 2017/2018, the focus was on a more strategic type of integration based on a (limited sustainability) BSC approach. This was evident in the design of controls at the group level in relation to both decision-making and behavioural alignment functions, which remained with the top three tiers. The sustainability focus was primarily on financial concerns (e.g. through restructuring and budgeting) and, to a limited extent, on environmental aspects. An additional challenge during this period was the difficulty of accessing information for decision-making and sustainability reporting.

By 2022/2023, the restructuring of sustainability had resulted in decisions and the design of controls being delegated further down the hierarchy to the tactical level of country organisations. At the same time, mainly environmental sustainability performance information had become easier to access. Efforts were also being made to align sustainable behaviours at the operational level through increased awareness embedded in certain controls.

Nonetheless, some limitations persisted, particularly regarding the different accounting systems used by country organisations to report mandatory sustainability information, the reliance on these existing systems for sustainability data capture, and the cognitive distance between logistics operators and social or environmental sustainability concerns.

In the following analysis, we draw on the institutional framework to discuss these findings more theoretically in terms of what they mean for sustainability integration that moves beyond system design into system use for driving change based on the situated realities of personnel throughout the hierarchy.

Figure 4 incorporates the findings from the preceding section into the adapted institutional model (ter Bogt and Scapens, 2019) as the basis for our analysis in terms of what they mean for the different levels (e.g. strategic, tactical and operational) and dimensions of integration (e.g. organisational, technical and cognitive). It illustrates the two levels of why and how integration is achieved in relation to institutions for our case company. Additionally, our analysis reveals the need to consider the different or parallel integration pathways (i.e. between social and environmental sustainability). The discussion that follows relates this analysis to extant research on institutionalisation and integration for sustainability from a management accounting and control perspective and is operationalised around the following themes: resistance to integration, and stability and change in system use. These key findings imply certain problems with the integration concept, as indicated in previous empirical research (e.g. Battaglia et al., 2016; Beusch et al., 2022), and help elaborate on the notion of change in institutional theorising as now described.

The case reveals instances of resistance to integration along all three dimensions. With the help of institutional theorising, we now point to reasons for this resistance.

While sustainability positions increased over time and moved more deeply into the tactical levels of the country organisations, they nevertheless remained separate (or decoupled) from traditional management accounting functions. Indeed, financial accounting systems were used for (environmental) sustainability purposes, and there was the joint development of models for climate and emission calculations by financial and sustainability controllers, but the people using this data did not belong to the finance department. This loose coupling was explained by the need for the knowledge of financial controllers on the formal, pre-existing accounting systems (i.e. rules) to be shared and then used by sustainability controllers (i.e. in their daily routines) to calculate environmental sustainability data. Hence, any collaborations (or full integration in a hybridised sense [see Bui et al., 2024]) stopped when the models were operational. Further, the general opinion remained on the need for specialised sustainability competences to analyse this environmental data, albeit embedded within existing financial accounting systems, for environmental decision-making and reporting purposes. What is more, collaboration between financial and sustainability personnel for social data remained absent.

These findings suggest that organisational integration was not necessary for EuroLogistics to move its sustainability strategy forward in response to external institutional demands. Even though there was a growing number of dedicated sustainability personnel in the tactical levels between 2017 and 2023 as a response to increasing coercive regulations and normative expectations, these personnel worked independently and sometimes in collaboration with financial accountants and controllers for environmental sustainability matters, only to the extent that knowledge regarding “how to use” the existing accounting systems for environmental sustainability purposes was shared by financial personnel.

This separation of accounting and sustainability functions supports prior integration research that organisational decoupling may be necessary to coordinate sustainability work in larger organisations (e.g. Riccaboni and Leone, 2010; Frostenson and Johnstone, 2023). Yet, we extend this by suggesting that in instances characterised by rapid changes from the external institutional environment, full organisational integration is sub-optimal. This is because discrete departments, individuals and roles may be needed to make sense of such externally induced changes that require the reporting of environmental data in financial terms for investor purposes (e.g. CSRD) and how they can be addressed considering the existing management accounting and control systems.

From a more critical perspective, this suggests that while external institutional developments stimulate internal collaborations between different functions (e.g. financial and sustainability departments), the degree of internal change or integration may be currently limited to the extent of reporting environmental data (see also Atkins et al., 2015), rather than substantively working with social and environmental sustainability activities daily. This means that for organisational and technical integration, the changes relate to the character of collaboration between groups of previously separate employee categories to meet regulatory requirements (interactive changes related to system use); that is, rather than any extensive changes to the rules of existing accounting systems (changes in system design).

Additionally, cognitive resistance was noted as the financial logic of logistics “people” prevailed. This means that sustainability primarily remained decoupled and sometimes loosely coupled to financial systems in a cognitive sense as sustainability was considered important for sales. Even though there were attempts to break down barriers and integrate sustainability into the minds of lower tier employees over time through formal controls as a means of behavioural alignment (e.g. by extending sustainability e-learning programs), the extent of cognitive integration (i.e. having shared understandings of sustainability issues [cf. Gond et al., 2012]) remained within the group and tactical-level of Tier 1–3 managers and those with discrete sustainability roles.

Issues pertaining to the cognitive integration of sustainability are considered important for improved sustainability performance. These have been concepualised in various ways in prior sustainability control literature (e.g. cultural control [Crutzen et al., 2017], social control [Johnstone, 2018], internalised motivations [Johnstone and Beusch, 2025] etc.) but with the common theme that the knowledge, skills and sustainability competences of “sustainability” personnel are necessary for integrating sustainability within different types of organisations (ibid.). While many of the interviewees (sustainability personnel) in this study conferred to the central role of cognitive integration for improved sustainability performance, they had nevertheless felt “quite disenchanted” in practice. Thus, we build on previous works by suggesting that cognitive integration throughout the organisational hierarchy should be considered an important first step for breaking down any internal institutional barriers. This can be achieved by making sustainability more visible in the everyday rules (e.g. accounting systems, structures) and routines (e.g. system use) that affect the daily actions (i.e. daily tasks) of all employees, not only managers or those with sustainability positions.

As previously described, the formal rules of existing accounting systems were not changed in the case organisation over time to include different types of sustainability data. Rather, there was a novel use of these systems by sustainability personnel to calculate environmental information for reporting purposes. This indicates that rather than being integrated along Gond et al.’s (2012) definition, the same systems were used for different purposes (cf. Beusch et al.’s [2022] expanded definition of technical integration), and there is a certain obscurity regarding the boundaries between formal rules and informal routines in terms of action. Meanwhile, the “softer” social sustainability data (not conditioned by external regulation) – and other non-financial data (e.g. motivation, inspiration and brand awareness) – remained decoupled from financial systems, embedded in the work of the HR department.

These findings extend prior institutional work on the co-existence of stability and change (e.g. Burns and Scapens, 2000) by implying “change in system use” rather than “change in system design”, as previously suggested (e.g. Siti-Nabiha and Scapens, 2005). Meanwhile, there are very few examples in this study whereby lower lever employees redesign other types of control systems from the bottom up as a type of formative change evidenced in prior institutional (e.g. Börner and Verstegen, 2013) and control works (e.g. Frostenson and Johnstone, 2023). Through the concept of “loose coupling”, it is the change in the informal routines (see van der Steen, 2011) that emerges through the working practices or actions of sustainability personnel within the group in their calculations of environmental data, rather than the change of formal management accounting systems and their connection to routines.

Relatedly, the role of both the external and internal institutions on the taken-for-granted assumptions (i.e. the situated realities) of sustainability personnel was highlighted through this example of stability and change. This is because the coercive demands of broader institutions impact the technical accounting work, particularly in terms of providing information to external parties through reporting, information which is also important for strategic control decisions (cf. Burritt and Schaltegger, 2010; Maas et al., 2016; Traxler et al., 2020). At the same time, the status quo of existing internal institutions remained, as accounting systems were used by tactical-level sustainability personnel (often controllers within the country organisations) to abstract environmental information.

This extends prior institutional sustainability from the strategic level (e.g. Kerr et al., 2015; Wijethilake et al., 2017) to the tactical one by illustrating the complex interaction between external and internal institutions for the daily technical accounting work of sustainability personnel, although further research is needed in this area because of the limited examples from this case. It implies the importance of sustainability personnel (see also Egan and Tweedie, 2018; Rodrigue and Picard, 2023) for interpreting and acting upon external institutional demands within the frame of internal institutions. This was achieved by adapting the internal routines as the means to discharge environmental information (cf. Contrafatto, 2014).

Finally, the institutional concerns for social sustainability data were less evident and, thus, less integrated in the formal rules or routines in the case organisation. This implies an additional type of institutional decoupling between environmental and social sustainability issues that may well create two internal integration pathways, whereby environmental integration is prioritised over time. This observation is implicitly reflected in the broader sustainability control literature, where social sustainability issues remain underexplored in comparison to environmental ones.

While prior integration research has considered sustainability integration to include both social and environmental systems, alongside financial ones (e.g. Gond et al., 2012; Beusch et al., 2022), the institutional context of the case company (e.g. logistics sector and subject to European legislation) can be put forward as a reason for integration decoupling between environmental and social sustainability concerns. Here, we put forward two parallel integration pathways as an extension to Gond et al.’s (2012) initial work. This means that there may be a “more integrated” or tightly coupled environmental sustainability strategy and a “less integrated” or loosely coupled social sustainability strategy (along different dimensions) at the same time as organisations, and particularly actors therein, strive to make sense of institutional (f)actors in their daily sustainability work. This is because the external institutions mandating environmental sustainability issues have typically been more prominent and thereby reflect the trajectory of the company and its focus on the “environment”. Importantly, the design of control systems as more or less integrated does not imply more or less optimal, but rather one that reflects changes in system design and use in response to an evolving regulatory context.

This study aimed to better understand the role of institutions for sustainability integration within organisations and whether “full” integration along organisational, technical and cognitive dimensions, as proposed by Gond et al. (2012) in their seminal work, was optimal. These aims were considered necessary because the substantive integration of sustainability within organisations is an increasing feature of organisational life, yet the extant sustainability integration literature gives mixed results. This is where institutional theorising was considered useful to help elaborate on both why and how organisations, such as the case one, integrate sustainability in practice.

Using ter Bogt and Scapens’ (2019) institutional framework, we found that the integration process was affected in different ways by both external (e.g. coercive legislative demands) and internal (e.g. existing financial accounting systems and logics) institutions, especially regarding the technical dimension of integration. External institutions spurred tactical-level managers to use the existing accounting systems for obtaining environmental data. This maintained the stability of internal institutional “rules” that were, nevertheless, changed in terms of how they were used by sustainability personnel, often controllers, in response to external reporting demands.

Next, we found that holistic integration along all three of Gond et al.’s (2012) dimensions may (currently) be sub-optimal given the broader institutional landscape of large firms, such as the case company, operating in Europe. This is because sustainability positions and departments appear to be needed to coordinate and facilitate the sustainability accounting and control work. This implies that indeed integration remains a “fragile” concept (Battaglia et al., 2016) in that sustainability structures, systems and cognition remained decoupled. Nevertheless, cognitive and, to some extent, technical integration appeared to be more important first steps for integrating sustainable strategy further down the corporate hierarchy. Based on these findings, we make the following contributions to the integration concept, as well as institutional studies on change and practice.

The findings contribute to the limited understanding of the sustainability integration concept in various ways.

First, we contribute by connecting the strategic (cf. Burritt and Schaltegger, 2010; Maas et al., 2016; Traxler et al., 2020) with the more tactical or operational levels of integration (cf. Gond et al., 2012; Battaglia et al., 2016; Beusch et al., 2022) by using the institutional framework of ter Bogt and Scapens (2019). Second, we contribute by nuancing the discussion on integration as a fragile concept (Battaglia et al., 2016; Beusch et al., 2022). This is illustrated by emphasising the importance of cognitive integration and the use of controls to achieve this within tactical and organisational levels, while suggesting that organisational structures may best remain decoupled considering the current institutional context. Third, we contribute by illustrating how different forms of resistance to integration can occur in practice along all three dimensions and, using the institutional framework, explain why this can happen. Finally, we emphasise two discrete integration pathways whereby the social sustainability pathway, in this case, lags the environmental one. This can be explained partly given the emphasis of the CSRD on providing financial information (mainly on environmental issues) for investor purposes and the nature of the case company in the logistics sector with its financial (and environmental) logics.

Theoretically, we contribute to institutional studies on management accounting change. First, we provide an example of how change and stability co-exist when integrating sustainability through technical accounting and control systems. We propose that this change occurs in system use or informal routines, rather than through making design changes to existing financial accounting systems for (sustainability) data as previously described (Siti‐Nabiha and Scapens, 2005). Second, we suggest that resistance to change also manifests at the strategic level (e.g. through the concerted design of separate organisational structures for sustainability as a group-wide strategy) and the individual one as discussed (ibid.). Thus, we emphasise the internal aspects of integration at the micro level of situated realities of sustainability personnel as important. This is supported by recent sustainability control research that emphasises practice and psychological perspectives in different ways for integrating sustainable workplace behaviours (e.g. Ligonie, 2021; Johnstone and Beusch, 2025).

For managers in large European organisations, it is essential to design management controls that actively address and reduce cognitive resistance to sustainability across all organisational levels. To do this effectively, external institutional changes – such as new sustainability regulations or societal expectations – should be translated into clear internal messaging and communicated consistently throughout the hierarchy.

This can be achieved through targeted training and education programmes tailored to different roles and functions, alongside the use of both formal controls (e.g. performance indicators, reporting requirements) and informal controls (e.g. leadership role-modelling, internal campaigns). Embedding sustainability into day-to-day processes and decision-making will help ensure that employees at all levels understand its relevance and are motivated to support the organisation’s sustainability goals within the evolving legislative landscape.

The paper is limited to a single case study in a European context, which is heavily shaped by sustainability regulations and with a particular emphasis on environmental issues. Future research should be conducted in different types of organisations (e.g. public sector, SMEs) and empirical contexts (e.g. different countries such as those in the global south, regions and/or industries) to better understand the integration concept, as well as the degree of integration and different integration pathways and the types of controls necessitated therein. The degree of integration between social sustainability is especially relevant to continue research, as there remains comparatively little work on sustainability control for social sustainability issues.

It could also be important to conduct multiple case study designs for both analytical and theoretical generalisation opportunities. This is because understanding how sustainability is integrated into established systems of management accounting and control is important, yet empirical studies on this topic are limited. Beyond this, studies on the role of institutions for sustainability integration should be continued, especially for social sustainability issues, given that these appear to be less integrated in our case and, generally, less studied in the sustainability control literature.

Furthermore, given the general lack of sustainability control studies focused on change from an institutional perspective, future studies could continue to elaborate on the relationship between management accounting change and stability for sustainability systems. Particularly, developing an understanding of if and how sustainability management accounting routines change, as well as having the potential to change existing management accounting roles, can lead to a more nuanced understanding of the tactical and operational processes behind sustainability integration. A limitation of our study was the few explicit examples on the micro-level of agency (that is, by individual actors throughout the hierarchy) and its importance for the integration concept. Future studies should continue to understand how the situated realities of such actors can drive formative change from below. This could be framed using institutional theorisations on the role of actors driving and/or resisting change (see Micelotta et al., 2017) or, as previously mentioned, practice or psychological perspectives that are increasingly being drawn on in sustainability control research (see Ligonie, 2021; Bouten and Hoozée, 2022; Johnstone and Beusch, 2025).