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TURKI ALTURKI
Triple Bottom Line
COLLAPSE
The conventional way to measure the success of a business is the bottom line. But the concept of
a triple bottom line, where social and environmental factors are considered along with economic
ones, is also getting a lot of attention.
Triple bottom line thinking holds that a company should combine standard metrics of financial
success with those that measure environmental stewardship and social justice. It is sometimes
called the 3P approach — People, Planet and Profits. In each case it requires thinking in three
dimensions, not one. Triple bottom line isn’t new. When John Elkington first mentioned it in the
mid 1990’s, he also laid the groundwork for defining environmental and social impacts of a
company’s activities.
Today, quantifiable environmental impacts include consumption of finite resources, water
quality and availability, and pollution emitted. Social impacts include community health, worker
safety, education quality, and diversity. It is argued by many that companies that factoring these
impacts into their overall corporate balance sheets will be more successful because it delivers
greater efficiency, makes them more competitive and sparks innovation — all drivers of
profitability over time. But intuitively, doesn’t it also just make sense? Don’t you want to leave
the planet a little better than you found it? Don’t you want to work for a company that operates
ethically and acts with integrity and cares about the people it employs and serves? Don’t you
want to make products that really enhance people’s lives? Don’t you want to help our country
become less vulnerable to oil supply disruptions?
We certainly don’t measure the success of our families by how much money we have saved. Our
family’s health, our kid’s education, and the amount of love and caring in our family, count as
much, if not more, than our financial security. So why do we have to measure the success of our
companies with only one metric? Another concept often linked to triple bottom line is that of
sustainability. We sometimes speak of adopting sustainable business practices or building
sustainable businesses. But what does that really mean?
The best definition I’ve heard was created in 1987 by the United Nations Bruntland Commission,
which defined sustainability as “Meeting the needs of the present generation without
compromising the ability of future generations to meet their own needs.” It’s a simple, powerful
statement. Make sure our decisions today take future costs into account. By adding time it asks
us to think in four dimensions and not one. There is a strong argument that triple bottom line or
building sustainable businesses creates more profitable and successful business. Pursuing
environmental and social objectives doesn’t have to be at the expense of financial objectives and
often is reinforcing.
Take the desire to reduce the environmental impact of a building for example. You could just
lower the thermostat and make everyone a little more uncomfortable. Or you could do something
better and install more efficient lighting. Or you could do something even better and rethink the
entire building and design an integrated building that has better ventilation, better lighting, uses
much less energy, and is more comfortable.
People who work in LEED-certified buildings typically show 6 percent to 16 percent improved
productivity, roughly 10 times the initial energy savings. That becomes a measurable benefit that
can ultimately be linked to profitability and shareholder value. What’s more, employees feel
better about their work environment and their employer, creating stronger employee
relationships and company loyalty. One investment in building efficiency yields benefits across
multiple dimensions.
This is just the beginning. Businesses pursuing sustainability are becoming more efficient, more
innovative, more connected, more profitable, and more competitive.
I believe that triple bottom line thinking and sustainability are inevitable. To business leaders,
these are choices. We can start to make our companies more efficient or wait until costs rise. We
can redesign our products for a more sustainable world or we can try to catch up later. We can
wait until our customers or the government ask us to report our carbon footprint or we can
volunteer it now.
The triple bottom line and sustainability aren’t new management techniques. They aren’t the
latest management fads. They are concepts that challenge each of us to balance the way we
successfully run our business and the world that our children’s children will inherit from us. And
we need to start now.
References:
– Anastasia Yuni Widyaningrum, & Yuli Nugraheni. (2019). Perempuan dan pemaknaan triple
bottom line di kawasan mangrove surabaya. Jurnal Studi Komunikasi, 3(3), 444–
459. https://doi.org/10.25139/jsk.v3i3.1588
Elkington, J. (1997). The triple bottom line. Environmental management: Readings and cases, 2.
Slaper, T. F., & Hall, T. J. (2011). The triple bottom line: What is it and how does it work. Indiana business
review, 86(1), 4-8.
———————————–Hassan Maashi
Accounting week 13
COLLAPSE
Reporting is one of the basic structures in organizations. Through reporting, organizations
promote managerial accounting. The reports provide a reference point for the managers in the
organizations. The annual report to the shareholders provides an opportunity for the organizations to
present the shareholders’ financial accounts (Anvari & Turkay, 2017). Most of the standards depend
on the inputs from local and international standards such as IFRS that guide financial reporting
companies. One of the modern approaches is triple bottom line reporting. The new approach has
several differences when compared to traditional accounting approaches.
The triple bottom line approach in reporting focuses on three main areas in developing a
financial report. The organizations include the social, environmental, and profit accounts in the
statements.
Social
All organizations operate within a particular society. The societal requirements should be part
of the financial reports. Societies include the people factors and requirements, which affect the
organizations’ actualization (Rambaud & Richard, 2015). The corporate social responsibility
criterion is essential in guiding the organization towards achieving social responsibility requirements.
Environmental
Climate change has been a concern across the world. Most countries are depending on the
organizational commitments in guiding the organizations towards environmental sustainability.
Including the financial reports’ environmental sustainability factors indicates the organizational
commitments towards the planet (Anvari & Turkay, 2017). The planet factors are essential in
addressing the organizational activities that translate to sustainable practices.
Profits
The formal report focuses on statements that define corporate profits. In the triple bottom line,
the financial statements should address the profits gained through organizational activities (Rambaud
& Richard, 2015). The financial statements should define the source and scale of profits in the
organization. Investors use the profit records to define the organizational capabilities and actualize the
demands for investments. These records should reflect the actual state of the financial accounts in the
organization.
From the breakdown of the triple bottom line factors, one can derive the importance of
financial reporting. The activities’ scope enables organizations to accommodate all the factors
influencing organizational growth and development (Anvari & Turkay, 2017). The shareholders,
including the customers and investors, depending on the financial statements to evaluate the
organizational progress. The triple bottom line provides a better insight into the influencers of these
statements. Commitment to sustainable practices creates a positive image for the societies, which can
influence the achievement of the financial goals set in the organizations. While used with GAAPs, the
approach provides a better system for promoting financial accounting (Rambaud & Richard, 2015).
Although the triple bottom line approach is not a mandatory accounting strategy, it benefits
organizations. Organizations can accommodate the social, environmental, and financial factors in the
accounting systems. It is essential to define the concepts and measures used in managing the financial
accounts due to the managerial requirements and needs (Anvari & Turkay, 2017). The triple bottom
line approach benefits include having a broader scope and better managing the organization’s financial
accounts.
References
Anvari, S., & Turkay, M. (2017). The facility location problem from the perspective of triple bottom
line accounting of sustainability. International Journal of Production Research, 55(21), 62666287.
Rambaud, A., & Richard, J. (2015). The “Triple Depreciation Line” instead of the “Triple Bottom
Line”: towards a genuine integrated reporting. Critical Perspectives on Accounting, 33, 92116.
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