Triple Bottom Line

[Gryffyn]

I was discussing this concept with girlfriend the other day and realised I'm fairly ambivalent on it. On one hand companies like the Warehouse practice it without it seeming to impact their core business of making money. On the other hand many business leaders complain that it's not their job blah blah

Knowing how forthright (even rabid) ST posters opinions can be, both left and right, I wondered if any posters have first hand experience of working for companies that either actively practice or eschew this.

[Noddy]

Just to clarify what triple bottom line is for the non accountants out there. Its looking at the company's performance from a financial, social, and environmental perspective.

A lot of companies will preach the triple bottom line but actually putting it into practice is another matter. Look at the banks. Closure of hundreds of branches and loss of thousands of jobs yet non of this is really mentioned in their annual reports with them being more concerned with pictures of happy sports teams and rescue helicopters.

If we look at environmental issues consider BHP with its investment in PNG. Whilst profits were generated this came at the cost of pollution of the Fly River effecting the lives of thousands down river.

Look at McDonalds. Food which promotes health problems, plastic junk toys which pollute the environment and deplete resources. But hey they have Ronald McDonald House.

The issue is whether profitability and the triple bottom line are compatible in the long run... Research indicates that they are. In the US there is the Dow Jones Sustainability Group Index where companies are ranked by their awareness and performance on social and environmental issues. As a group these companies have tended to out perform the market

[David Renwick]

Triple-bottom-line reporting is bunkum and public companies that embrace it do so as they're short on true merit.
Here's an example:
McDonalds produce predominantly cr@p (nutritionally poor) food, and target kids and the working-class predominantly. Poor diet contributes to a poor immune system. A poor immune system is ineffective at fighting cancer and other avoidable diseases. Supporting kids with cancer, leukemia etc is great P.R. - enter Ronald McDonald House. Their hypocrisy makes me puke.

Show me a company that always treats it's employees well, uses mainly renewable resources, never sells cr@p (poorly made fripperies begging to break or collect dust) never sells goods made by people against their will (children, inmates etc), and is always willing to accept for recycling worn-out or unwanted merchandise.
Can't think of any.

[zyreon]

interesting

we just covered this topic in financial accounting.

Old Dick seems to be leading the way in NZ, with his generic commodity; cereals, branded by excessive PR marketing etc.
Anyhow he has done a reasonable job of it, if you're interested in this subject you should have a look at his triple bottom line report http://www.hubbards.co.nz/TBL01.pdf


It is somehwat of a disturbing issue for profit motive business purists, and seems unlikely to disapate any time soon.

[TheBossMan]

zyreon

what books / text did you use for this topic? I'm currently doing an assignment on corporate social responsibility and would be keen to get your input.

My take is that it should be voluntary, as the cost to report non-monetary stuff for SMEs would be huge. However, I'd like all public companies to include a separate statement of business risk/threats.

[Gryffyn]

Thanks so far chaps. All good stuff.

[blackcap]

Yes, institutions teaching contempory financial accounting are really pushing this one as the "new way" of accounting. I take it that whilst studying this in Financial Accounting there is a great push to corporate responsibility and I dare say the lecturers/professors are all in agreeance of what a great benefit it will be to any business that adopts this approach.

I am still skeptical and have read many articles on the benefits, perceived or otherwise. I still beleive that it is in organisations best interests to maintain their social contract, however if they can get away with not producing a triple bottom like it is surely in shareholders favour not to do so.

I guess it boils down to if you are a beleiver in Positive Accounting Theories and Agency Theory, or on the otherhand if you beleive in Normative Theories.

An interesting subject and I think that in the future we will see more of the triple bottom reporting but as always this will be manipulated and distorted by the bean counters and will end up being useless information.
THe one question that I ask is: Is it the accountants role to provide the triple bottom line? (ie do they have enough expertise in the required field, e.g. environmental)

[star]

This triple bottom line or susutainable reporting thing has been pushed by environmentalists and contempory accounting academics too far.

Taking New Zealand businesses for example, most of buinsess are small, how can they spend so much resource to quantify their social and environmental impact even the environmentalist and accounting academics still have not found the sure measure and answer by themselves.

The business' first responsibility is to make profit for shareholders while providing employment opportunities to the community. If the financial bottom line is not sound, the business can not survive so no jobs can be provided. Among these three bottom lines, the financial should be the most important. Why these people say the three bottom lines are equal?

As long as the business does not produce too much pollution, has the concern to environment, comply with law and regulation, it should not and can not take extra social responsibilities that the government should take care of.

In practice some of so-called sustainable or triple bottom line reports really drive the readers nowhere and seem a waste of resource.

[JAMP]

I personally found the annual and sustainable development reports put out by Sanford (http://www.sanford.co.nz/) on 18Dec03 to be a mighty good read. Worth tracking down and having a browse through them. You are certainly left in no doubt that where possible they have embraced social and environmental practices into their work ethic.

Plenty of examples in the reports for anyone wanting to prepare a case study too.

Regards JAMP
NZX: MCH MFT RBD SAN SKX SPN VTX WRI
UCM: KCE

[zyreon]

TheBoss

New Zealand Financial Accounting 2nd ed
-Deegan & Samkin


I agree that it should be voluntary.

I consider it to be more of a marketing tool (public relations) because if it is applied with sufficient tact and cleverness it can prey upon consumer attitudes and produce product differentiation and a competitive advantage(assuming competitors either don't do it, or do it poorly).
And it is essential for some businesses, especially where elements of consumer backlash, and ignorance and suspicion are present at levels which actually affect the long term viability of the co.
And there is the not unimportant issue of employee morale, especially in labour intensive businesses...

complex issue; economics, environment, accounting, psychology, marketing, politics, management...

[thereslifeafter87]

Zyreon, I agree with you.

I think a business's only objective is profit. However, that said it will make better profits if it has a happy and productive staff, and is perceived by its customers as a well-meaning environmentally and socially responsible entity.

Triple bottom line is definitely a marketing tool, and one that could work well. Business will make better profits if it engages with the community and has a clean green image.

[TheBossMan]

thanks zyreon. I'm currently reading an interesting book by John Elkington "cannibals with forks - triple bottom line of 21st century biz'.

[Gryffyn]

TB - let us know what you think at the end. Might be one for our book club.