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Triple Bottom Line

7 December 2009 - Features - Editor

With more than 100 heads of state currently gathered in Copenhagen to discuss the global ramifications of climate change, the focus is on individual, governmental and corporate accountability for environment damaging practices and encouraging commitment to make the necessary changes. The world of finance and investing has also been impacted by environmental concerns, giving rise to ethical consumerism, green brands and socially responsible investing, with corporate companies paying more attention to what has become known as the Triple Bottom Line.

The Triple Bottom Line (TBL), also referred to as the 'three pillars' or 'people, planet, profit' presents a set of standards for measuring economic, ecological and social accountability in an organization. In 2007 TBL was adopted as the standard for community accounting by the United Nations and ICLEI Local Governments for Sustainability. In the non-governmental business sector, TBL is reflected in a commitment to corporate social responsibility by reporting a company’s financial, social and ecological performance. A growing number of investors are taking corporate social responsibility into account when making investment decisions. The TBL concept in business promotes the interests of, not only shareholders, but all stakeholders – anyone who is directly or indirectly influenced by the actions of the company. The term ‘Triple Bottom Line’ was first used by John Elkington in 1994, with his 1998 book entitled 'Cannibals with Forks: The Triple Bottom Line of the 21st Century Business' expounding the term.

As would be expected, TBL has both critics and supporters. Proponents point out that TBL companies are likely to reach sections of the market that they would not have reached when focusing on money alone. These could include ecotourism, as well as non-government organizations and their associated supporters. TBL companies have an advantage when it comes to doing business with Fair Trade and Ethical Trade companies which require all their suppliers and service providers to conform to ethical and sustainable practices. Criticism looks at aspects such as its effectiveness and measurability in a monetary-based economic system. A number of these issues have been addressed in the book entitled 'The Challenge of TBL: A Responsibility to Whom?' by Fred Robin.

Tags:

investing, business sector, triple bottom line, social responsibility, climate change, united nations,

 



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