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Triple Bottom Line

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Momina Majid

on 11 February 2016

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Transcript of Triple Bottom Line

There isn't a specific way to measure the progress of TBL which can also be benefited towards its disadvantage. As the separate elements of TBL are difficult to be measured tangibly due to their nature, the three separate accounts cannot be added or combined, and must be considered separately.
However, it can also be considered that there are certain advantages to TBL as it helps businesses to focus on specific principles that are developed by internal and external forces.
This also helps companies to focus on the impacts they might have on the environment, economy and society.
Also as The conversation (2014) states that sustainability report would be required to input an organisation’s contribution to unsustainability, which TBL is unlikely to do.
The economic bottom line is the most widely and commonly used strategy for sustainability procedures even though the company might or might not be using TBL.
The economic aspect of TBL states that not only the CEO and shareholders, but the local economy and people should also benefit from company profits.

Chamberlain (2013) also states that economic environment impact should also be managed by the impact done from organisations.

He also states that using the TBL method ensures that the business expands by understanding its position in the economy and its ability to survive in the future.
Corporate sustainability based on impact on the environment, relationship to your community, and contribution to the economy is also likely to show how the business might progress in the future.
The Triple Bottom Line approach to maintain a sustainable environment adopts the approach that individual organisations need to take effective stance against making decisions which might be dangerous towards the environment.
The less impact a business has on the environment and the fewer natural resources are likely to be consumed and as stated in the Brundtland report, the more resources that are left for the future generations to ensure they enjoy the same resources and experiences.
Environmental managing, monitoring, and reporting your consumption and waste and emissions.
Triple Bottom Line (TBL)
John Elkington (1994) defined TBL as a sustainable framework.
Consists of three important factors including economy, environment and the society
His argument was that companies should be preparing three different bottom lines.
1. Traditional measure of corporate profit—the “bottom line” of the profit and loss account.
2. Second is the bottom line of a company's “people account”
3. The third is the bottom line of the company's “planet” account

The Social bottom line measures your business’ profits in human capital, including your position within your local society.
Social bottom line is increased by having fair and beneficial labor practices and through corporate community involvement.
The theory also states that is businesses are not nurturing positive relationships with the community, the customers and the employee relations weaken.
However, it questions the belief that the less a business pays its work force the longer it can afford to operate, by measuring the long-term sustainability of business human capital, with the understanding that a desirable workplace will always be appreciated.
Momina Majid
TBL consists of three Ps: profit, people and planet.
It aims to measure the financial, social and environmental performance of the corporation over a period of time.
Elkington (1994) states that only a company that produces a TBL is taking account of the full cost involved in doing business.
However, The Economist (2009) states that as the social aspect of TBL is intangible, the social bottom line can be difficult to measure. The Global Reporting Initiative (GRI) also has developed guidelines to enable businesses to report and measure their social impact.
On the other hand there are also social variable that can be measured including:

Unemployment rate
Female labor force participation rate
Median household income
Relative poverty
Percentage of population with a degree or certificate
Average commute time
Violent crimes per capita
Health-adjusted life expectancy

At the state and national levels, these are appropriate to use when constructing a TBL. However, as the geographic scope and the nature of the project narrow, the set of appropriate measures can change. For local or community-based projects, the TBL measures of success are best determined locally.

According to Indiana Business Review (2010) environmental protection variables measures natural resources and reflect potential influences to its ability to maintain itself and its potential.
Environmental factors also incorporate air and water quality, energy consumption, natural resources, solid and toxic waste, and land use/land cover.
The article also states that having future projections available for different environmental variables would help organisations 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
Indiana Business Review (2010) states that the economic variables ought to be important factors that deal with the bottom line and the flow of money to contribute towards the national GDP.
Factors could include 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
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