XSMatter

Some months ago, I was introduced to the concept of the triple bottom line. It was in one of the presentations that was made during the TED conference last year. The introduction of that concept made me look at things rather differently and, finally, I’ve decided to sit down and read about the Triple Bottom Line in greater details.

Because I’m still reading the book, I figured I’d write about my journey through the book…So hopefully, this will be a multi-part series with a rather succinct view of what this entire thing is about.

Credits for the entire series goes to Wikipedia and also the book “Cannibals with Forks” by John Elkington. My recommendation is…read the book. It’s darn good.

Let’s begin…

We are used to living in a capitalistic world where many decisions are made based on individual interests. Making those decision often entails us to perceive this world in a 3-D fashion. It is, however, beginning to seem that it has become imperative that we start to look at more dimensions in order to bring about better outcomes.

And it is here that the triple bottom line approach begins.

The triple bottom line approach is really about bringing about sustainability in our day-to-day practices(more so in business and politics) through the harmonizing of the traditional financial bottom line with emerging thoughts about the environmental and social bottom lines. Increasingly, we must think in terms of the ‘triple bottom line’- focusing on economic, environment and social value.

There are 7 main trend areas that support why we must act in the interest of overall sustainability:

1. Markets
2. Values
3. Transparency
4. Life Cycle Technology
5. Partnerships
6. Time
7. Corporate Governance

1.      Markets – Driving the Change

A lot of changes are really market driven. Where corporations and governments drive changes from the top, markets can also provide an impetus for change from the bottom up. And it is here that we can really see how unlike in the past where businesses and governments had the advantage of delivering products they thought were good and had the ability of forcing the market to accept it, today much efforts are market driven.

This trend, running concurrently with the other trends, become a strong reason why the triple bottom line is an approach that we have to consider.

One mistake made by many businesses is to ignore this change as one that is irrational – a fad that will die out. Well, once you look at point (2), you’ll realize that it’s not just a fad by a new form of value that the market will demand from the businesses and governments.

2.      Values – Fueling the Drive

Consumer values are changing to take on one that is more holistic – people are taking notice of issues pertaining to social and environmental development. Ethical practices in many fields have become a major topic of debate and action in many parts of the world. It has already become apparent in companies like Shell where they’ve felt the heat of large lawsuits being brought against them for environment issues. Another example worth noting is how the international community reacted towards the research fraud committed by the South Korean cloning scientist Hwang Woo-suk.

One interesting I found out reading the book was this…That businesses feel that to pay more attention to environmental and social issues might actually cause them to deviate from their core competency of creating economic value. While that might be true, it has definitely become a transition that is necessary. Saying that however, it involves a bigger picture with much societal, economic and political transitions.

3.      Transparency – People are watching.

This has been on the rise with consumers today paying a lot attention to not just the outputs of corporations but also to their processes. One recent example would be how the Bill & Melinda Gates Foundation is being scrutinized for actually investing in companies whose efforts actually contradict the goal of their own grants(whose aim is to do good)[ Read more here ].

One point worth noting in this area is that no one can escape this increasing demand for transparency. It is no longer the case where only huge corporations are being scrutinized as smaller firms are also now being looked upon for their social and environmental efforts.

4.      Life Cycle Technology

While in the past consumers were concerned about the final product, more consumers today are taking notice of the entire production chain – from the point of extraction of raw material all the way to the disposal/recycling of the product. It is no longer a case where businesses are only responsible to the point that their products get shipped out of the factories.

5.      Partnerships

In the past, businesses used to be content with mimicking certain aspects of their competition, but in a world where technology and competition so quickly, everyone is finding it a lot productive to form healthy, mutually beneficial relationships with other companies. Even social organizations are looking at new ways of working with the businesses they once scorned so as to find a win-win solution that can protect both the interests of the corporation and their cause.

We are entering an age where collaboration is much more profitable than simply pure competition.

6.      Time

We have been spending far too much efforts trying to increase the productivity per unit time that we forget that many areas in social and environmental development do not just require that actions be taken now…they also require that the action be sustained over a long period of time. It is a question of “Wide Time” Vs “Long Time”.

This shift in mindset is hampered by the fact that many politicians and business leaders find it difficult to see beyond several years(the usual length of their office). This problem is not new as it one that has frequently been debated about and even raised in popular movies such as “Day After Tomorrow” and “An Inconvenient Truth”.

7.      Corporate Governance

In this final area lies the ultimate decision maker. With all the changes in the demand of new forms value, it is the corporate board that had the responsibility of actually fulfilling the triple bottom line agenda. The spins from the other 6 areas are causing a new kind of corporate board that goes beyond just profit and loss sheets to asking questions pertaining to the purpose of their company, their role in the greater society and most importantly, how they can positions themselves such that there is maximum benefit to society while protecting their interests as a corporation.

With time - if there more adopters - the increasing quality of corporate governance pushing the triple bottom line agenda will work towards providing a framework for a sustainable form of capitalism.

Having said that, the adoption of the triple bottom line clearly increases the factors involved in decision making and is by no means a simple task. It is however, not an impossible task.

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