The need for environmental reporting and a performance measurement system (PMS) in municipalities has developed as a response to the development of municipal strategies to become environmentally responsible.

This case study provide empirical evidences for the underlying motives during several development phases for an environmental PMS, with focus on a sustainability strategy implementation in one Swedish municipality.

Our results indicate a gradual strategy process, with several phases, which started with an initial passive approach focusing on solving environmental problems through a proactive and limited emphasis on existing environmental issues. During later phases, we found support for an even more proactive and broad approach taking into consideration ambitious and broader sustainability issues. As a consequence the development of the PMS has been two-dimensional. Firstly, from narrow focus on few aspects of environmental reporting (mainly fossil fuel emission and quality of drinking water) to broader issues of the environment and eventually a lot broader sustainability development. Secondly, from few non-financial indicators to an integration of non-financial and financial indicators (costs and revenues from environment) and then back again to focusing on a substantial number of non-financial indicators.

This research add to prior literature by providing additional insight in the set of motives for the use of PMS during different development phases. Major stakeholders, i.e. politicians and managers of municipal departments and municipality owned companies have revealed several “layers” of motives which have shaped the development of the PMS. The research also showed that the PMS in itself has a noticeable symbolic importance in promoting and communicating of the green strategy to citizens and businesses in the region.