Sustainability Management and Local Governments

Abstract

After highlighting the breadth and complexity of the concept of sustainability and highlighting the role of local authorities in sustainable development, this chapter aims to interpret how sustainability management can consider the concept of financial sustainability in the context of local governments. It does this through the following specific objectives: 1) defining financial sustainability, considering it not only autonomously, but in an integrated manner with respect to the typical sustainability dimensions (environmental, social, and economic) that are usually involved in the local authorities activity; 2) proposing the main stages of the sustainability cycle in the local authorities to highlight the key moments and the role of financial sustainability; 3) analyzing some aspects of financial indicators as tools for measuring the financial side of the sustainability profile of a local government. In order to reach the aim of the chapter, the research methodology followed is the literature review.

An appraisal of financial indicators for local government: a structured literature review

“…What is more surprising is that most research on financial indicators for LGs does not draw comparisons across countries. Only five contributions (Citro et al, 2018;De Matteis and Preite, 2018;Heged} us and Lentner, 2020;Hruza, 2015;Padovani et al, 2018) look at LGs in more than one country, while all other selected publications focus on analyses at national, provincial or solely local level (Table 3f). Hence, notwithstanding the adoption of accruals and IPSAS, common financial indicators for LGs are just beginning to emerge, meaning international comparative studies are still difficult to conduct (Carmeli, 2002).…”

“…First of all, financial LG's condition can only be partially evaluated by examining their financial position, financial performance and cash flows (Caruana et al, 2019). Unlike the rather straightforward evaluation of the financial condition of a business entity based on the analysis of its profitability by means of well-understood financial ratios, such an evaluation for public sector entities involves judgments about the interplay of complex social, organizational and financial factors (Cohen, 2008;De Matteis and Preite, 2018;Walker and Andrews, 2015). On the one hand, public sector organizations have long term aims which may not be revealed by the analysis of yearly indicators (Carmeli, 2002;Hruza, 2015).…”