Triple Bottom Line： the Future Development Direction of Enterprises

馮莉

【Abstract】According to the principle of the Triple Bottom Line， the enterprises not only need to fulfill the economic responsibility， but also need to fulfill the environmental responsibility and social responsibility. The article discusses the significant role played by the Triple Bottom Line （TBL） strategy and the execution of sustainability in achieving success by business enterprises.

【Key words】sustainability； Triple Bottom Line； social responsibility； environmental responsibility； economic responsibility

Sustainability has been an often mentioned goal of businesses in the past decade， yet measuring the degree to which an organization is being sustainable or pursuing sustainable growth can be difficult. In traditional business accounting and common usage， the “bottom line” refers to either the “profit” or “l(fā)oss”， which is usually recorded at the very bottom line on a statement of revenue and expenses. Over the last 50 years， environmentalists and social justice advocates have struggled to bring a broader definition of bottom line into public consciousness by introducing full cost accounting. Whereas traditional financial models are based primarily on profit， Triple Bottom Line is a set of ideas that balances profit with positive social conditions and the preservation of the environment. Many organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value.

Concept of Triple Bottom Line

The triple bottom line （TBL or 3BL） is a phrase credited to John Elkington， author and founder of the consultancy firm Sustainability. He developed the term in 1994， and it became more widely known in 1998 with his popular book Cannibals with Forks： the Triple Bottom Line of 21st Century Business. Basically， the term expresses a way to measure companies by more than their ability to be profitable. Instead it measures performance of a company be evaluating its social， environmental and economic success. It encourages companies to not just endeavor to make money but also to be concerned about what kind of position they hold in the world， and what kind of environmental stewards they become. This differs from traditional reporting frameworks as it includes ecological （or environmental） and social measures that can be difficult to assign appropriate means of measurement. The TBL dimensions are also commonly called the three Ps： people， planet and profits. It stands for：

People

This term refers to the interests of employees， customers， suppliers， shareholders and the local community. For instance， a business can support and interact with the local community via apprenticeships， sponsorship or donations.

An enterprise dedicated to the triple bottom line seeks to provide benefit to many communities and not to exploit or endanger any group of them. A TBL business also typically seeks to “give back” by contributing to the strength and growth of its community with such things as health care and education.

Planet

This term refers to the direct and indirect impacts a business has on the environment. This includes factors such as： waste disposal， land use， the impact on flora and fauna， resource and material usage， recycling， carbon offsets， reuse of materials， and the amount and type of energy consumed. A TBL business will strive to minimize its environmental impact.

A TBL company endeavors to benefit the natural order as much as possible or at least do no harm and minimise environmental impact. A TBL endeavour reduces its ecological footprint by， among other things， carefully managing its consumption of energy and non-renewables and reducing manufacturing waste as well as rendering waste less toxic before disposing of it in a safe and legal manner. “Cradle to grave” is uppermost in the thoughts of TBL manufacturing businesses， which typically conduct a life cycle assessment of products to determine 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.

Profit

This term balances commercial viability with the principles of People and Planet. It is not limited to the traditional definition of profit but takes a broader view of how the business contributes to the greater economic environment. For example， a TBL business might include in its annual report information about money invested in research and development， or money invested in establishing a parental leave program for staff.

“Profit” is the economic value created by the organization after deducting the cost of all inputs， including the cost of the capital tied up. It therefore differs from traditional accounting definitions of profit. In the original concept， within a sustainability framework， the “profit” aspect needs to be seen as the real economic benefit enjoyed by the host society. It is the real economic impact the organization has on its economic environment.

Application of Triple Bottom Line in Reality

Triple Bottom Line can be a powerful marketing tool. The Body Shop is a global business that was built on the principle of TBL， and in doing so， created a niche market of consumers interested in natural and ethical beauty products. The Body Shop website demonstrates that TBL is an important part of their brand and marketing： “We are constantly launching fabulous new products， sourcing new ingredients and campaigning on social issues. These are just some of the ways we strive to grow our business – both commercially and ethically.”

However， critics of TBL claim it is often marketing spin rather than a genuine business philosophy. As there is no single reporting standard， businesses can choose which data points they report upon. The large American retail chain Wal-Mart has been praised for its ambitious sustainability policy which includes a ‘sustainability index that measures the environmental impact of every single item it stocks. At the same time， however， hundreds of thousands of former Wal-Mart employees have joined class action lawsuits alleging that Wal-Mart forced them to work off the clock. In 2009 they were embroiled in at least 73 class action lawsuits regarding working conditions and labour policies at Wal-Mart stores.

Therefore， an example of an organization seeking a triple bottom line would be a social enterprise run as a non-profit， but earning income by offering opportunities for handicapped people who have been labelled “unemployable”， to earn a living recycling. The organization earns a profit， which is controlled by a volunteer Board， and ploughed back into the community. The social benefit is the meaningful employment of disadvantaged citizens， and the reduction in the society's welfare or disability costs. The environmental benefit comes from the recycling accomplished.

Measurement of Triple Bottom Line

There is no universal standard method for calculating the TBL. Neither is there a universally accepted standard for the measures that comprise each of the three TBL categories. This can be viewed as a strength because it allows a user to adapt the general framework to the needs of different entities （businesses or nonprofits）， different projects or policies （infrastructure investment or educational programs）， or different geographic boundaries （a city， region or country）.

Many of the traditional sustainability measures， measures vetted through academic discourse， are presented below.

Economic Measures

Economic variables ought to be variables that deal with the bottom line and the flow of money. It could look at income or expenditures， taxes， business climate factors， employment， and business diversity factors. Specific examples include：

· Personal income

· Cost of underemployment

· Establishment churn

· Establishment sizes

· Job growth

· Employment distribution by sector

· Percentage of firms in each sector

· Revenue by sector contributing to gross state product

Environmental Measures

Environmental variables should represent measurements of natural resources and reflect potential influences to its viability. It could incorporate air and water quality， energy consumption， natural resources， solid and toxic waste， and land use/land cover. Ideally， having long-range trends available for each of the environmental variables would help organizations identify the impacts a project or policy would have on the area. Specific examples include：

· Sulfur dioxide concentration

· Concentration of nitrogen oxides

· Selected priority pollutants

· Excessive nutrients

· Electricity consumption

· Fossil fuel consumption

· Solid waste management

· Hazardous waste management

· Change in land use/land cover

Social Measures

Social variables refer to social dimensions of a community or region and could include measurements of education， equity and access to social resources， health and well-being， quality of life， and social capital. The examples listed below are a small snippet of potential variables：

· Unemployment rate

· Female labor force participation rate

· Median household income

· Relative poverty

· Percentage of population with a post-secondary degree or certificate

· Average commute time

· Violent crimes per capita

· Health-adjusted life expectancy

Execution of Triple Bottom Line

Change the mind

Currently， more and more stakeholders require business management to consider greater social responsibility， rather than focus on financial returns to investors. In other words， the financial success itself is not only dependent on economic sustainability is also dependent on social and environmental sustainability.

Empower a team to drive results

In most companies， the sustainability strategy involves many parts of the organization. These may include the teams that manage real estate and buildings， supply chain， transportation， procurement， and product design. Business unit leads， marketing and human resources also may have an interest in the sustainability agenda and in publicizing the progress made. So， empower a team to build alignment and cohesion between the work of these different groups.

Set goals and report progress

The sustainability teams performance will be accelerated by clear goals： reducing carbon footprint by a compelling percentage by a certain date， or improving supplier diversity over a given period， for instance. In the tug-of-war of sustainability progress， having everyone pulling toward the same key objectives will speed the positive impacts and strengthen communication.

Strengthen the implementation

Obviously， the unchecked consumption and waste will lead to the fact that our future generations cannot survive. The enterprises should be committed to the sustainable development of the enterprise， pay attention to the current resources and environmental issues， the use of sustainable development theory， the economic development of circular economy theory. The enterprises should also regulate and strengthen the impact on the environment， the use of environmental protection projects to subsidize the use of investment costs and investment income and other accounting information disclosure.

Conclusion

Triple Bottom Line consciousness force of an organization's impact on society and the environment to conduct regular evaluation， so that the board of directors of the company will be subject to increasing pressure to ensure positive social and environmental results， rather than the more traditional financial results， which improve corporate governance efficiency and the ability to create good power. The awareness of Triple Bottom Line can improve corporate governance and reduce business risks in the future to attract the enthusiasm of investors.

Triple Bottom Line is not an award， accreditation or a certification the enterprises can achieve – its an ongoing process that just helps a company keep on track towards running a greener business and demonstrates to the community at large they are working not just towards riches， but the greater common good – and thats what consumers are increasingly wanting to see these days.

References：

[1]John Elkington，“Towards the Sustainable Corporation： Win-Win-Win Business Strategies for Sustainable Development，” California Management Review 36，no.2（1994）：90–100.

[2]Andrew Savitz，The Triple Bottom Line（San Francisco：Jossey-Bass，2006）.

[3]C Onyali，Innocent，Research Journal of Finance & Accounting，Vol.5（2014）No 8，p.12-16[4]B Duane，T Taylor，W Stahl-Timmins，J Hyland，P Mackie，Public Health，Vol.128（2014）No 10，p.92-94.

[4]Terre Satterfield，Paul Slovic and Robin Gregory，“Narrative Valuation in a Policy Judgment Context，”Ecological Economics 34（2000）：315–331.

[5]B Duane，T Taylor，W Stahl-Timmins，J Hyland，P Mackie.Public Health Nursing，2014.

[6]Stephen R.J.Sheppard and Michael Meitner，Using Multi-Criteria Analysis and Visualization for Sustainable Forest Management Planning with Stakeholder Groups，“Forest Ecology and Management 207（2005）：171–187.Another example can be found in Katrina Brown et al.，”Trade-Off Analysis for Marine Protected Area Management，Ecological Economics 37，no.3（June 2001）：417–434.