Sustainability Management and Local Governments: A Proposal to Define the Role of Financial Sustainability

Sustainability Management and Local Governments: A Proposal to Define the Role of Financial Sustainability

Fabio De Matteis (Salento University, Italy) and Daniela Preite (Salento University, Italy)
DOI: 10.4018/978-1-5225-3713-7.ch002

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.
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Introduction

The main dimensions that make up the concept of sustainability (Agenda 21) are traditionally three: environmental, social and economic. These highlight the variety and complexity of the issues underlying the concept of sustainability and, at the same time, they highlight the indispensable role of local governments in achieving sustainable development. In fact, local authorities govern the territory and they are the closest institutions to citizens and to economic and social organizations. Therefore, they are institutionally entrusted with an active role in spreading the culture of sustainability and in implementing it.

Using the methodology of literature review (Research Methodology), highlighting the breadth and complexity of the concept of sustainability and considering the role of local authorities in sustainable development (Sustainability and Local Governments), the aim of this chapter is to interpret how sustainability management can consider the concept of financial sustainability (as a fourth dimension of sustainability along with the three traditional ones) in the context of Local Governments.

In order to explore the concept of financial sustainability in terms of definition, role during the sustainability cycle and tools for the financial sustainability measurement, the above-mentioned general aim of the chapter can be achieved through the following specific objectives:

  • 1.

    Defining financial sustainability (Financial Sustainability as Part of Each Traditional Sustainability Tradition), considering it not only autonomously, but in an integrated manner with respect to environmental, social and economic objectives that are typical of the concept of sustainability and that are typical of local authorities’ activity. Therefore, financial sustainability is considered a transversal dimension of the other dimensions of sustainability;

  • 2.

    Proposing the main stages of the sustainability cycle in the local authorities in order to highlight, within this cycle, the key moments and the role of financial sustainability (Proposal of a Sustainable Cycle and the Importance of the Financial Sustainability);

  • 3.

    Analyzing some aspects of financial indicators as tools for measuring the financial side of the sustainability profile of a local government (The Role and Transversality of Financial Sustainability Indicators).

Therefore, Sustainability and Local Governments analyzes the concept of sustainability and the role of local government in sustainable development (to highlight the complexity of the concept of sustainability and the role of local authorities in sustainable development), while Financial Sustainability as Part of Each Traditional Sustainability Tradition (related to objective 1) is on the importance and the role of financial sustainability in local government as a sustainability dimension that needs to be considered during the sustainability cycle in order to realize also the traditional sustainability dimensions (environmental, social and economic). Proposal of a Sustainable Cycle and the Importance of the Financial Sustainability (related to objective 2) contains the proposal of a sustainability cycle in order to better understand the potential role of the financial dimension, considering it as a transversal aspect with respect to the three traditional sustainability dimensions. The Role and Transversality of Financial Sustainability Indicators (related to objective 3) analyzes some aspects of financial indicators as immediately usable instruments to support financial sustainability management in local authorities. Finally, the Conclusion contains some concluding reflections.

As explained above, the contribution that the chapter can give to this book (that explores – among other aspects - the definition and measurement of financial sustainability in public administration) is realized by proposing different aims (n. 1, 2 and 3 previously highlighted), through a literature review on the definition and measurement of financial sustainability.

Therefore, the chapter contributes to managerial literature:

  • By helping to fill the existing void and expand knowledge in the field of financial sustainability in public administration;

  • By supporting the recent emerging literature on this subject in exploring the financial dimension of sustainability, going beyond the three traditional dimensions (environmental, social and economic).

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