Elkington, J. (2009) Enter the Triple Bottom Line Environmental Management: Readings and Cases

Graphic describing the three types of lesser lines

The triple bottom line (or otherwise noted as TBL or 3BL) is an accounting framework with iii parts: social, environmental (or ecological) and financial. Some organizations take adopted the TBL framework to evaluate their performance in a broader perspective to create greater business organisation value.^[1] Business concern writer John Elkington claims to accept coined the phrase in 1994.^{[2] [iii]}

Background [edit]

In traditional business accounting and common usage, the "bottom line" refers to either the "profit" or "loss", which is normally recorded at the very bottom line on a argument of revenue and expenses. Over the last fifty years, environmentalists and social justice advocates have struggled to bring a broader definition of bottom line into public consciousness by introducing full price bookkeeping. For example, if a corporation shows a monetary profit, but their asbestos mine causes thousands of deaths from asbestosis, and their copper mine pollutes a river, and the government ends upwardly spending taxpayer coin on health care and river clean-up, how practise we perform a full societal cost benefit analysis? The triple bottom line adds two more "bottom lines": social and environmental (ecological) concerns.^[iv] With the ratification of the Un and ICLEI TBL standard for urban and customs accounting in early 2007,^[5] this became the dominant approach to public sector full cost accounting. Similar UN standards apply to natural majuscule and human being capital measurement to assist in measurements required by TBL, e.g. the EcoBudget standard for reporting ecological footprint. Use of the TBL is fairly widespread in S African media, as found in a 1990–2008 report of worldwide national newspapers.^[6]

An case of an organization seeking a triple bottom line would be a social enterprise run as a not-turn a profit, simply earning income by offer opportunities for handicapped people who have been labelled "unemployable", to earn a living past recycling. The organization earns a profit, which is invested back into the customs. The social benefit is the meaningful employment of disadvantaged citizens, and the reduction in the society's welfare or disability costs. The ecology benefit comes from the recycling accomplished. In the private sector, a commitment to corporate social responsibleness (CSR) implies an obligation to public reporting about the business organisation' substantial impact for the ameliorate of the surround and people. Triple bottom line is one framework for reporting this material impact. This is distinct from the more than express changes required to bargain just with ecological problems. The triple bottom line has as well been extended to encompass four pillars, known as the quadruple bottom line (QBL). The fourth pillar denotes a future-oriented arroyo (future generations, intergenerational disinterestedness, etc.). It is a long-term outlook that sets sustainable development and sustainability concerns apart from previous social, environmental, and economic considerations.^{[ commendation needed ]}

The challenges of putting the TBL into practice relate to the measurement of social and ecological categories. Despite this, the TBL framework enables organizations to take a longer-term perspective and thus evaluate the future consequences of decisions.^[1]

Definition [edit]

Sustainable development was divers by the Brundtland Commission of the United Nations in 1987.^[7] Triple bottom line (TBL) accounting expands the traditional reporting framework to take into account social and environmental performance in addition to financial performance.

In 1981, Freer Spreckley first articulated the triple bottom line in a publication called Social Audit - A Direction Tool for Co-operative Working.^[8] In this piece of work, he argued that enterprises should measure and report on financial operation, social wealth creation, and environmental responsibleness. The phrase "triple bottom line" was articulated more fully by John Elkington in his 1997 book Cannibals with Forks: the Triple Bottom Line of 21st Century Business,^[9] where he adopted a question asked by the Polish poet Stanisław Lec, "Is it progress if a cannibal uses a fork?" equally the opening line of his foreword. Elkington suggests that it can be, particularly in the case of "sustainable capitalism", wherein competing corporate entities seek to maintain their relative position by addressing people and planet issues as well equally profit maximisation.^[9]

A Triple Lesser Line Investing group advocating and publicizing these principles was founded in 1998 past Robert J. Rubinstein.^[ten]

For reporting their efforts companies may demonstrate their commitment to corporate social responsibleness (CSR) through the post-obit:

• Elevation-level involvement (CEO, Board of Directors)
• Policy Investments
• Programs
• Signatories to voluntary standards
• Principles (UN Global Compact-Ceres Principles)
• Reporting (Global Reporting Initiative)

The concept of TBL demands that a company'due south responsibleness lies with stakeholders rather than shareholders. In this instance, "stakeholders" refers to anyone who is influenced, either directly or indirectly, by the deportment of the firm. Examples of stakeholders include employees, customers, suppliers, local residents, government agencies, and creditors. According to the stakeholder theory, the business entity should be used equally a vehicle for coordinating stakeholder interests, instead of maximizing shareholder (possessor) turn a profit. A growing number of financial institutions contain a triple bottom line approach in their work. It is at the core of the business concern of banks in the Global Alliance for Banking on Values, for case.

The Detroit-based Avalon International Breads interprets the triple bottom line as consisting of "Earth", "Customs", and "Employees".^[11]

The 3 bottom lines [edit]

The triple bottom line consists of social equity, economic, and ecology factors. The phrase, "people, planet, and turn a profit" to describe the triple lesser line and the goal of sustainability, was coined past John Elkington in 1994 while at SustainAbility,^{[3] [9]} and was afterwards used every bit the title of the Anglo-Dutch oil company Beat out'south first sustainability written report in 1997. Every bit a result, ane land in which the 3P concept took deep root was The Netherlands.

[edit]

The people, social equity, or homo capital bottom line pertains to fair and beneficial business practices toward labour and the customs and region in which a corporation conducts its business. A TBL company conceives a reciprocal social construction in which the well-being of corporate, labour and other stakeholder interests are interdependent.

An enterprise dedicated to the triple bottom line seeks to provide do good to many constituencies and not to exploit or endanger any group of them. The "upward streaming" of a portion of profit from the marketing of finished appurtenances dorsum to the original producer of raw materials, for example, a farmer in off-white trade agricultural practice, is a mutual feature. In concrete terms, a TBL business concern would non utilise child labour and monitor all contracted companies for child labour exploitation, would pay fair salaries to its workers, would maintain a safe piece of work environment and tolerable working hours, and would not otherwise exploit a customs or its labour force. A TBL business also typically seeks to "give back" by contributing to the force and growth of its community with such things as wellness care and education. Quantifying this lesser line is relatively new, problematic and often subjective. The Global Reporting Initiative (GRI) has developed guidelines to enable corporations and NGOs akin to comparably report on the social touch of a business.

Planet, the environmental bottom line [edit]

The planet, environmental lesser line, or natural capital bottom line refers to sustainable environmental practices. A TBL company endeavors to benefit the natural order as much as possible or at the least do no harm and minimize environmental touch. A TBL endeavour reduces its ecological footprint by, among other things, carefully managing its consumption of energy and non-renewables and reducing manufacturing waste every bit well as rendering waste material less toxic before disposing of it in a condom and legal fashion. "Cradle to grave" is uppermost in the thoughts of TBL manufacturing businesses, which typically behave a life bicycle assessment of products to make up one's mind what the true environmental cost is from the growth and harvesting of raw materials to manufacture to distribution to eventual disposal by the end user.

Currently, the price of disposing of non-degradable or toxic products is born financially and environmentally by future generations, the governments, and residents near the disposal site and elsewhere. In TBL thinking, an enterprise which produces and markets a product which will create a waste material problem should non be given a free ride by society. Information technology would exist more equitable for the business which articles and sells a problematic production to comport part of the cost of its ultimate disposal.

Ecologically destructive practices, such as overfishing or other endangering depletions of resources are avoided past TBL companies. Often environmental sustainability is the more profitable course for a business concern in the long run. Arguments that it costs more to be environmentally sound are often specious when the course of the business is analyzed over a period of time. Generally, sustainability reporting metrics are better quantified and standardized for environmental problems than for social ones. A number of respected reporting institutes and registries be including the Global Reporting Initiative, CERES, Institute for Sustainability and others.

The ecological bottom line is akin to the concept of eco-commercialism.^[12]

Profit, the economic lesser line [edit]

The turn a profit or economic bottom line deals with the economic value created past the organization after deducting the cost of all inputs, including the cost of the uppercase tied up. It therefore differs from traditional bookkeeping definitions of turn a profit. In the original concept, inside a sustainability framework, the "turn a profit" aspect needs to exist seen as the existent economic benefit enjoyed by the host society. It is the existent economical bear upon the organization has on its economic environs. This is often confused to be limited to the internal profit made past a company or organization (which however remains an essential starting betoken for the computation). Therefore, an original TBL approach cannot exist interpreted as simply traditional corporate accounting profit plus social and environmental impacts unless the "profits" of other entities are included every bit a social do good.^{[ commendation needed ]}

Subsequent evolution [edit]

Following the initial publication of the triple bottom line concept, students and practitioners have sought greater detail in how the pillars can be evaluated.

The people concept for instance can be viewed in three dimensions – organisational needs, private needs, and community problems.

Equally, turn a profit is a part of both a healthy sales stream, which needs a high focus on customer service, coupled with the adoption of a strategy to develop new customers to supercede those that die away.

And planet can exist divided into a multitude of subdivisions, although reduce, reuse and recycle is a succinct style of steering through this division. The initial understanding is at present supplanted past thinking BEYOND TBL. The to a higher place examples give good reason why. Added to the TBL concept of Economics Ethics and Surroundings is the idea of thinking of the Environment as a Mantel that the other pillars concur up, and add to Economics and Ethics, the notions of Energy, and Health or the four E'south.

Supporting arguments [edit]

The following business-based arguments support the concept of TBL:

• Reaching untapped market potential: TBL companies can discover financially assisting niches which were missed when coin alone was the driving cistron. Examples include:

1. Adding ecotourism or geotourism to an already rich tourism market such every bit the Dominican Republic
2. Developing profitable methods to assistance existing NGOs with their missions such as fundraising, reaching clients, or creating networking opportunities with multiple NGOs
3. Providing products or services which benefit underserved populations and/or the environment which are also financially profitable.

• Adapting to new business sectors: While the number of social enterprises is growing,^[13] and with the entry of the B Corp motion,^[14] there is more need from consumers and investors for an accounting for social and ecology touch on.^[xv] For example, Off-white Trade and Ethical Trade companies crave ethical and sustainable practices from all of their suppliers and service providers.

Fiscal policy of governments usually claims to exist concerned with identifying social and natural deficits on a less formal footing. Withal, such choices may exist guided more than past ideology than by economics. The principal do good of embedding one approach to measurement of these deficits would be kickoff to straight monetary policy to reduce them, and eventually accomplish a global monetary reform past which they could be systematically and globally reduced in some uniform way.

The argument is that the Earth'southward carrying capacity is at risk, and that in guild to avoid catastrophic breakdown of climate or ecosystems, there is need for comprehensive reform of global fiscal institutions similar in scale to what was undertaken at Bretton Wood in 1944.

With the emergence of an externally consistent green economics and agreement on definitions of potentially contentious terms such as total-price accounting, natural capital and social uppercase, the prospect of formal metrics for ecological and social loss or risk has grown less remote since the 1990s.^{[ commendation needed ]}

In the Uk in item, the London Health Observatory has undertaken a formal programme to address social deficits via a fuller agreement of what "social capital" is, how it functions in a real community (that being the Urban center of London), and how losses of it tend to crave both financial capital and meaning political and social attention from volunteers and professionals to assist resolve. The information they rely on is extensive, edifice on decades of statistics of the Greater London Council since World War II. Similar studies have been undertaken in North America.

Studies of the value of Earth have tried to determine what might constitute an ecological or natural life deficit. The Kyoto Protocol relies on some measures of this sort, and actually relies on some value of life calculations that, among other things, are explicit about the ratio of the price of a human life between developed and developing nations (about 15 to 1). While the motive of this number was to simply assign responsibility for a cleanup, such stark honesty opens not simply an economic but political door to some kind of negotiation — presumably to reduce that ratio in time to something seen every bit more than equitable. As information technology is, people in developed nations tin be said to do good 15 times more from ecological devastation than in developing nations, in pure financial terms. According to the IPCC, they are thus obliged to pay 15 times more than per life to avoid a loss of each such life to climatic change — the Kyoto Protocol seeks to implement exactly this formula, and is therefore sometimes cited as a first step towards getting nations to accept formal liability for damage inflicted on ecosystems shared globally.

Advocacy for triple bottom line reforms is mutual in Green Parties. Some of the measures undertaken in the European Marriage towards the Euro currency integration standardize the reporting of ecological and social losses in such a manner as to seem to endorse in principle the notion of unified accounts, or unit of business relationship, for these deficits.

To address financial lesser line profitability concerns, some argue that focusing on the TBL volition indeed increment turn a profit for the shareholders in the long run. In exercise, John Mackey, CEO of Whole Foods, uses Whole Foods's Community Giving Days as an example. On days when Whole Foods donates 5% of their sales to charity, this action benefits the community, creates goodwill with customers, and energizes employees—which may lead to increased, sustainable profitability in the long-run.^[xvi]

Criticism [edit]

While many people agree with the importance of skilful social weather condition and preservation of the environment, there are likewise many who disagree with the triple bottom line as the mode to enhance these weather condition. The following are the reasons why:

• Reductive method: Meantime the environment comes to exist treated as an externality or groundwork feature, an externality that tends not to have the homo dimension build into its definition. Thus, in many writings, fifty-fifty in those critical of the triple-bottom-line approach, the social becomes a congeries of miscellaneous considerations left over from the other 2 prime categories.^[17] Culling approaches, such every bit Circles of Sustainability,^[18] that treat the economical equally a social domain, alongside and in relation to the ecological, the political and the cultural are now being considered every bit more appropriate for understanding institutions, cities and regions.^{[17] [19] [20]}
• Inertia: The difficulty of achieving global understanding on simultaneous policy may render such measures at best advisory, and thus unenforceable. For case, people may be unwilling to undergo a low or even sustained recession to replenish lost ecosystems.^{[ citation needed ]}
• Application: According to Fred Robins' The Challenge of TBL: A Responsibility to Whom? i of the major weaknesses of the TBL framework is its ability to be applied in the practical earth.
• Equating ecology with environment: TBL is seen to be disregarding ecological sustainability with ecology effects, where in reality both economical and social viability is dependent on ecology well-beingness. While greenwashing is not new, its use has increased over contempo years to meet consumer need for environmentally friendly goods and services. The problem is compounded by lax enforcement by regulatory agencies such as the Federal Merchandise Commission in the United states of america, the Contest Agency in Canada, and the Committee of Advertising Exercise and the Broadcast Commission of Advertising Practise in the United Kingdom. Critics of the exercise suggest that the rise of greenwashing, paired with ineffective regulation, contributes to consumer skepticism of all dark-green claims, and diminishes the power of the consumer in driving companies toward greener solutions for manufacturing processes and business organization operation.
• Fourth dimension dimension: While the triple bottom line incorporates the social, economic and ecology (People, Planet, Profit) dimensions of sustainable development, it does not explicitly address the fourth dimension: time. The time dimension focuses on preserving current value in all three other dimensions for later. This means cess of short term, longer term and long term consequences of whatever action.^[21]
• "One problem with the triple bottom line is that the three split accounts cannot hands be added up. It is hard to measure the planet and people accounts in the aforementioned terms as profits—that is, in terms of cash."^[3] This has led to TBL being augmented with toll-benefit analysis in Triple Lesser Line Cost Benefit Assay (TBL-CBA).
• Elkington himself has called for a rethink on TBL and a "production recall" on apply of the concept. He argues that the original idea was to encourage businesses to manage the wider economical, social and environmental impacts of their operations, only its applied use equally an bookkeeping tool has at present undermined its value.^[two]

In short, the criticisms tin exist summarised as:

• attempting to divert the attention of regulators and deflating pressure level for regulatory change;
• seeking to persuade critics, such as non-government organisations, that they are both well-intentioned and take inverse their ways;
• seeking to expand marketplace share at the expense of those rivals not involved in greenwashing; this is especially attractive if fiddling or no additional expenditure is required to change performance; alternatively, a company tin engage in greenwashing in an effort to narrow the perceived 'dark-green' advantage of a rival;
• reducing staff turnover and making it easier to attract staff in the first place;
• making the company seem bonny for potential investors, specially those interested in ethical investment or socially responsive investment;
• disability to add upward the three accounts unless tools such as cost-benefit analysis are added to put social and environmental externalities in monetary terms.

Legislation [edit]

A focus on people, planet and turn a profit has led to legislation changes effectually the world, often through social enterprise or social investment or through the introduction of a new legal form, the Community Interest Company.^[22] In the United States, the BCorp motility has been part of a phone call for legislation change to allow and encourage a focus on social and environmental bear on, with BCorp a legal class for a company focused on "stakeholders, not only shareholders".^[23]

In Western Australia, the triple bottom line was adopted every bit a office of the Country Sustainability Strategy,^[24] and accepted by the Government of Western Commonwealth of australia only its status was increasingly marginalised by subsequent premiers Alan Carpenter and Colin Barnett.

Encounter likewise [edit]

• B Corporation (certification)
• Bottom of the pyramid
• Circles of Sustainability
• Community interest company
• Conscious business concern
• Double bottom line, a similar concept predating the UN standard
• EC3 Global
• Eco-commercialism
• Grassroots Business Fund
• Bear upon investing
• Depression-turn a profit limited liability company
• Permaculture ethics
• Social entrepreneurship
• Triple top line
• Value network
• Value network analysis

References [edit]

1. ^ ^{a b} Slaper, Timothy F. and Hall, Tanya J. (2011). "The Triple Lesser Line: What Is Information technology and How Does It Work?" Indiana Business Review. Spring 2011, Volume 86, No. one.
2. ^ ^{a b} Elkington, John (June 25, 2018). "25 Years Ago I Coined the Phrase "Triple Bottom Line." Hither's Why It'south Time to Rethink Information technology". Harvard Business concern Review . Retrieved October eleven, 2019.
3. ^ ^{a b c} "Triple Bottom Line". The Economist. November 17, 2009. Retrieved Baronial 14, 2014.
4. ^ Sustainability – From Principle To Practice Goethe-Institut, March 2008.
5. ^ "Enhancing the function of industry through for example, private-public partnerships" (PDF). Un Environment Programme. May 2011.
6. ^ Barkemeyer, Ralf; Figge, Frank; Holt, Diane; Wettstein, Barbara (one March 2009). "What the Papers Say: Trends in Sustainability. A Comparative Analysis of 115 Leading National Newspapers Worldwide". Journal of Corporate Citizenship. 2009 (33): 68–86. doi:10.9774/GLEAF.4700.2009.sp.00009.
7. ^ "Egypt's sustainable finance trailblazer". Retrieved 2018-10-xi .
8. ^ Spreckley, Freer (1981). Social Audit: A Direction Tool for Co-operative Working. Beechwood College.
9. ^ ^{a b c} Elkington, John (1999). Cannibals with forks: the triple bottom line of 21st century business. Oxford: Capstone. ISBN9780865713925. OCLC 963459936.
10. ^ Thorpe, Devin. "One Key To Bear upon Investing: Get-go Big". Forbes . Retrieved 2018-x-11 .
11. ^ "Triple Bottom Line: Earth, Community, Employees". Avalon International Breads . Retrieved 27 February 2015.
12. ^ Ekins, Paul (1992). The Gaia Atlas of Green Economics. Ballast Books. p. 191. ISBN0-385-41914-7.
13. ^ "The People'south Concern 2013". Social Enterprise UK . Retrieved July 15, 2015.
14. ^ Trapp, Roger (2015). "Business Leaders Urged To Find A Purpose In Life". Forbes . Retrieved 26 Baronial 2015.
15. ^ "Mind the gaps. The 2022 Deloitte Millennial survey" (PDF). Deloitt. 2015. Retrieved 15 July 2015.
16. ^ "John Mackey: The conscious backer".
17. ^ ^{a b} Scerri, Andy; James, Paul (2010). "Accounting for sustainability: Combining qualitative and quantitative inquiry in developing 'indicators' of sustainability". International Journal of Social Research Methodology. 13 (1): 41–53. doi:10.1080/13645570902864145. S2CID 145391691.
18. ^ James, Paul; Scerri, Andy (2011). "Auditing cities through circles of sustainability". In Amen, Mark; Toly, Noah J.; Carney, Patricia L.; Segbers, Klaus (eds.). Cities and Global Governance: New Sites for International Relations. Farnham, UK: Ashgate. pp. 110–146. ISBN978-ane-4094-0893-2.
19. ^ Scerri, Andy (2012). "Ends in view: The capabilities approach in ecological/sustainability economics". Ecological Economic science. 77: 7–10. doi:ten.1016/j.ecolecon.2012.02.027.
20. ^ Magee, Liam; Scerri, Andy (ane September 2012). "From bug to indicators: developing robust customs sustainability measures". Local Environment. 17 (8): 915–933. doi:10.1080/13549839.2012.714755. ISSN 1354-9839. S2CID 153340355.
21. ^ Lozano, R. (2012). "Towards better embedding sustainability into companies' systems: an analysis of voluntary corporate initiatives," Journal of Cleaner Production 25 pp. 14-26
22. ^ "Community Interest Companies". Great britain Authorities. Retrieved 15 July 2015.
23. ^ "Becoming a Legal BCorp". BCorp. Retrieved 15 July 2015.
24. ^ Government of Western Commonwealth of australia. (2003, September). "Hope for the Future: The Western Australia Country Sustainability Strategy", accessed Baronial thirty, 2013

• "Part I. What You Practise At present Depends on Where You lot Are Now", Why We Vote, Princeton: Princeton University Press, pp. 11–92, 2010-12-31, doi:ten.1515/9781400837618.11, ISBN978-1-4008-3761-8 , retrieved 2020-10-xvi
• https://hbr.org/2018/06/25-years-ago-i-coined-the-phrase-triple-bottom-line-heres-why-im-giving-up-on-i.

Farther reading [edit]

• Social Audit - A Management Tool for Branch Working 1981 by Freer Spreckley [1]
• The Gaia Atlas of Green Economics (Gaia Time to come Series) [Paperback], by Paul Ekins, Anchor Books
• Harvard Business concern Review on Corporate Responsibility past Harvard Business organization School Press
• The Soul of a Business: Managing for Profit and the Common Good past Tom Chappell
• Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World's Most Difficult Problems by Professor Stuart 50. Hart
• The Triple Bottom Line: How Today's Best-Run Companies Are Achieving Economic, Social and Environmental Success—and How You Can As well by Andrew West. Savitz and Karl Weber
• The Sustainability Advantage: Seven Business Case Benefits of a Triple Bottom Line (Conscientious Commerce) by Bob Willard, New Guild Publishers ISBN 978-0-86571-451-9

External links [edit]

• Explainer: what is the triple bottom line? - The Chat
• The Triple Lesser Line: What Is Information technology and How Does Information technology Work? - Indiana Business Review
• Balancing Act - A Triple Bottom Line Analysis of the Australian Economic system
• Citizens for Corporate Redesign (Minnesota)
• Triple Pundit - Weblog on Triple Lesser Line (U.s.)
• Corporate Responsibility (United kingdom)
• TBL Bookkeeping without boundaries - Australian corporate and government experiences

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Source: https://en.wikipedia.org/wiki/Triple_bottom_line

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