Triple Bottom Line

“Social license” generally refers to a local community‘s acceptance or approval of a company‘s project or ongoing presence in an area. It is increasingly recognized by various stakeholders and communities as a prerequisite to development. The development of social license occurs outside of formal permitting or regulatory processes, and requires sustained investment by proponents to acquire and maintain social capital within the context of trust-based relationships. Often intangible and informal, social license can nevertheless be realized through a robust suite of actions centered on timely and effective communication, meaningful dialogue, and ethical and responsible behavior.

Local conditions, needs, and customs vary considerably and are often opaque, but have a significant impact on the likely success of various approaches to building social capital and trust. These regional and cultural differences demand a flexible and responsive approach and must be understood early in order to enable the development and implementation of an effective strategy to earn and maintain social license. Governments could facilitate the necessary stakeholder mapping in regions for which they are responsible and provide a regulatory framework that sets companies on the right path for engagement with communities and stakeholders. Social media tools empower stakeholders and communities to access and share information on company behaviors, technologies, and projects as they are implemented around the world. Understanding and managing this reality will be important for companies seeking social license. Voluntary measures integral to corporate-responsibility frameworks contribute to achieving social license, particularly through enhancing a company‘s reputation and strengthening its capacity for effective communication, engagement, and collaboration. However, such measures do not obviate the need for project-specific action to earn license. Potential business benefits

The scale and nature of the benefits of CSR for an organization can vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones (e.g., Deming’s Fourteen Points, balanced scorecards). Orlitzky, Schmidt, and Rynes found a correlation between social/environmental performance and financial performance. However, businesses may not be looking at short run financial returns when developing their CSR strategy. Intel employs a 5-year CSR planning cycle.

The definition of CSR used within an organization can vary from the strict “stakeholder impacts” definition used by many CSR advocates and will often include charitable efforts and volunteering. CSR may be based within the human resources, business development or public relations departments of an organization, or may be given a separate unit reporting to the CEO or in some cases directly to the board. Some companies may implement CSR-type values without a clearly defined team or programme.

The business case for CSR within a company will likely rest on one or more of these arguments:

People planet profit, also known as the triple bottom line, is words that should be used and practiced in every move an organization makes. People relates to fair and beneficial business practices toward labour, the community and region where corporation conducts its business. Planet refers to sustainable environmental practices. A triple bottom line company does not produce harmful or destructive products such as weapons, toxic chemicals or batteries containing dangerous heavy metals for example. Profit is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up. It therefore differs from traditional accounting definitions of profit.

Sustainability has been an often mentioned goal of corporates, non-profits organisations and governments in last few decades, yet measuring the degree to which an organization is pursuing sustainable growth can be difficult.

John Elkingto, a CSR expert, strove to measure sustainability during mid-1990s which was intended to advance the goal of sustainable practices in business. The three measures established by him included: profit, people and planet. This accounting framework, is called the triple bottom line (TBL), which went beyond the traditional measures of profits, return on investment, and shareholder value to include environmental and social dimensions.

There is no standard method or measure for calculating the TBL. This allows the organisation to adapt according to the framework of different entities, projects, policies or even geographic boundaries. Let us see some of the traditional sustainability measures evaluated by academician and companies.

Profit

Profit is the economic value created by the company, or the economic benefit to the surrounding community. TBL recognizes that while making money is essential to any business, it is also vital to consider its own sustainability which rest on its ability to work acceptably in its social and environmental settings. These economic measures are the variables that deal with the bottom line and flow of money. Specific examples include:

• Income or expenditures
• Taxes
• Cost of underemployment
• Cost of pollution
• Job growth

Planet

Without a question, committing to use sustainable environmental practices and reduction of environment impact is good for business. Organisations can save money and reduce their environmental footprints by adopting environmental measure such as waste reduction, energy conservation, and safe manufacturing processes, maintenance of air and water quality and appropriate use of land. TBL identifies entire life cycle of the business and try to determine the true cost in regards to the environment. Environmental variables recognise the impacts of a project or policy which in turn can result into sustainable business practice. Specific examples include:

• Sulphur dioxide or nitrogen oxides concentration
• Electricity consumption
• Water usage
• Fossil fuel consumption
• Solid waste management

People

It is very essential for business to practice in fair and favourable environment with respect to labour and the community in which the company conducts its business. An organization have certain responsibilities towards its employees and communities which include measurement of education, equity and access to social resources, health and well-being, quality of life, and social capital. TBL understands the various practices affecting the organisation and its stakeholders, and helps to promote all to their best interest. Such social measures refer to social dimensions of a community which goes hand in hand with economic and environmental variables. Specific examples include:

• Unemployment rate
• Health-adjusted life expectancy
• Female labour force participation
• Education institutions
• Relative poverty in community

Conclusion

The level of the entity, type of project and the geographic scope will drive many of the decisions about what measures to include. This will determine the particular approach to secure stakeholder participation and input in designing the TBL framework. Ultimately, it will be the organization’s responsibility to produce a final set of measures applicable and to sustain a friendly business environment.

Despite the fact that adopting this triple measure has helped some companies be more conscious of their social and moral responsibilities, the triple bottom line has its critics. The first criticism is that the reporting of environmental and social/moral responsibilities is selective and ignores some real moral demands, thus substituting the adopted list for a company or its members paying attention to its myriad moral obligations. The second criticism is that there is no guaranteed-upon way to carry out the environmental and social/moral audits comparable to the way that companies carry out their financial audits-much of which is governed by government requirements. An inherent difficulty with any social reporting is that it is not quantifiable in the way that a financial report is. There is no quantitative method that captures what is significantly at issue and no agreed-upon way to represent qualitative measures.