Triple Bottom Line Accounting
2021 නොවැම්බර් 19
Triple bottom line (TBL) theory expands business success metrics to include contributions to environmental health social well-being, and a just economy. These bottom-line categories are often...
Triple bottom line (TBL) theory expands business success metrics to include contributions to environmental health, social well-being, and a just economy. These bottom-line categories are often referred to as the three “P’s”: people, planet, and prosperity. As a result of the Triple Bottom Line theory and application, some businesses have begun to realize the connection among environmental health, social well-being and the organization’s financial success and resilience.
TBL is a cost-accounting measure, so CFOs, controllers, and accounting directors are responsible for tracking measurements and reporting results. Because the planet and people aspects of TBL may not fall within traditional cost-accounting measures, accountants may have to use another measurement for success, such as the percentage of individual, company, or community acceptance.
The TBL measures three areas of impact:
People: Measures a company’s social responsibility, both in the workplace and community. TBL enterprises may establish initiatives to assist underprivileged people in their community through developmental programs or other economic assistance; or help their staff enhance new career, life, or wellness skills, or they may decide to boycott vendors abroad that rely on child labor. The people goals are interdependent with the goals of the enterprise. For example, a People KPI listed under TBL would include diversity and inclusivity measures such as number of different geographies from which employees have been hired or percentage of women that are part of the workforce.
Planet: Establishes business practices that reduce an enterprise’s environmental footprint. This can include employing production processes to reduce waste, using recycled materials whenever possible, or educating staff on the importance of recycling and hiring recycling services for corporate offices.For example, a planet KPI listed under TBL would include, volume of CO2 emissions and percentage reduction overtime.
Profits: Refers to traditional cost accounting reporting.
Departments that can most affect sustainability must assess their responsibilities, determine which actions impact TBL, and brainstorm how to improve operations to optimize TBL. Long-term sustainability requires that each employee be as invested in social outcomes as profitability, which means they must understand TBL and contribute to sustainability goals, for example through hiring employees with a shared purpose and aligning all employees by tying in bonuses to TBL efforts.
“The triple bottom line wasn’t designed to be just an accounting tool. It was supposed to provoke deeper thinking about capitalism and its future.”
—John Elkington in his Harvard Business Review article