Introduction: Triple Bottom Line – Does it All Add Up? – The Triple Bottom Line

Introduction: Triple Bottom Line -
Does it All Add Up?

Adrian Henriques and Julie Richardson

There are two main kinds of approach to sustainability – ‘top down’ and ‘inside out’. Top-down approaches emphasize management, measurement and control. on this path, while you may know what you have done, it may not be enough – and it may not be possible to do enough within the structures and systems within which you are operating. Perfectly implemented environmental management systems that deliver poor environmental performance with the utmost care fall into this category. Working within the structures of the current paradigm can lead to lowest common denominator approaches and anomalies that reward process without regard to performance and vice versa.

Inside-out approaches stress the importance of change and innovation. It may not be entirely possible to predict what you will do, but you can bet the process will be exciting! Innovation allows new systems and methods to be tried and may facilitate a quantum leap towards a higher, and more sustainable, level of operation. This is about working outside and beyond the structures of the current paradigm. Going inside out is about relationships and ‘connectedness’. Being connected and responsive to shareholders, suppliers, communities and customers is the foundation of sustainability. But going inside out can also be uncomfortable. Any creative process embraces risk and uncertainty and the emergence of unexpected outcomes; but it also has its shadow or destructive side as we move beyond the comfort of the known and old ways of doing things. Yet, it is only when stakeholders can see your vulnerability that you can be trusted.

The subject of this book is a metaphor that is drawn from the top-down world of accounting: the ‘triple bottom line’ or ‘TBL’. This book is, therefore, about the powers and limits of that metaphor – from both a top-down and an inside-out perspective. To describe these limits, we must describe what is within the power of the metaphor or paradigm and what is beyond it. For example, if the metaphor were ‘as good as gold’, we would point out that gold is good for making electrical connections, that it sort of works as a medium of exchange; but, in the end, you cannot eat it – it will not sustain us.

The triple bottom line has become one of the main rallying cries for businesses trying to address sustainability. The task of this book is to assess it in several ways including:

  •   Does it provide a coherent framework?
  •   How far does it work in practice?

To do this we are presenting the views of a number of the key practitioners and academics in the field. The book is organized into a number of chapters that cover the history, background and theoretical issues; a critique of how the metaphor is being used, including an account of some tools based upon it; and, finally, some examples of how it is being used to good effect in practice.

History and theory

Chapter 1, ‘Enter the Triple Bottom Line’, has been written by John Elkington. He invented the TBL term and had a large part to play in its astonishing uptake. What is interesting in his chapter is how he emphasizes the inside-out aspect of sustainability. Much of his work has been about how change can take place, and John Elkington describes some of its necessary characteristics in his inimitable metaphorical style. He sees the TBL concept as a catalyst for moving beyond the existing paradigm towards a more pluralistic world – in which different types of corporates (from ‘locusts' to ‘honeybees’) require different responses from government and civil society.

In Chapter 2, Carol Adams, Geoff Frost and Wendy Webber provide a useful resource in reviewing the multitude of texts written on the topic. This is divided into literature that deals with management and literature that deals with reporting. The authors highlight the important role of the accountancy profession in developing sustainability metrics and the need for standardized approaches. Like many authors in this volume, they remark on how the increase in the quantity of TBL reporting is not matched by the quality in accountability discharged.

In Chapter 3, Adrian Henriques explores some of the conceptual issues in using the TBL concept to deal with sustainability. Two issues, in particular, are identified that are not naturally covered by the TBL metaphor: accountability and diversity. Each of these has a critical place in a sustainable world.

In Chapter 4, Julie Richardson looks at how far accounting formulations can be taken in unfolding the TBL concept. The pressure to account in a single unit, and especially in financial terms, leads to pressures to compromise with sustainability, whether by trading off one sort of capital for another or by ignoring whole-system qualities and relationships that are a key part of sustainability.

Governing and governance

Implementing sustainability in a top-down fashion leads to a central focus on government in managing and regulating for corporate sustainability. Inside-out approaches focus on the looser notion of ‘governance’ as self-organizing alliances between government and non-government stakeholders.

In Chapter 5, Nancy Bennet and Cornis van der Lugt describe different forms of environmental governance that are emerging in a ‘globalizing’ world. They look at the range of voluntary and inter-governmental instruments and institutions (from the Global Reporting Initiative to multilateral environmental agreements) that are emerging to fill the governance gap at the global level. Their chapter assesses the effectiveness of these instruments and institutions, and reviews the practical and methodological problems that must be faced. one of the key issues that emerges is how to define boundaries of responsibility for individual organizations – across economic, legal and ecological systems.

In Chapter 6, Jonathon Porritt explores the role that the financial system and government will have to play in order to achieve sustainability. In addition to any monitoring or regulation that may be necessary, he points out that ‘government’ is also an organization in its own right. As such, it must also report on and manage its own impacts.

Moving on from the role of government, Chapters 7 to 9 reflect upon how effective corporate social and environmental responsibility has been as a model for corporate self-governance. All three chapters are critical of current practice and identify specific steps for improvement.

Rob Gray and Markus Milne, in Chapter 7, are very far from convinced that much of the current sustainability reports are anywhere near the level of development that they need to attain. They conclude, with a point that a number of contributors make, that sustainability is a systems concept and therefore cannot be captured at the individual organizational level alone. Again, Deborah Doane, in Chapter 8, describes the disillusionment of many in the nongovernmental organization (NGo) community at what the bright new hope of ‘social auditing’ seems to have become. For her, it seems more like a broken promise – and one that cannot be mended without legislation. Finally, Rupesh Shah in Chapter 9 offers a personal reflection on involvement in the corporate social responsibility (CSR) industry. He observes the rise in the CSR profession but is pessimistic about whether the technocratic solutions that it offers are really able to change mind-sets or transform entrenched structures of power and inequality.

Metaphorical practice

Chapters 10 to 13 are based on tools, approaches or methods that have been applied in practice in various ways. Each of these draws on the top-down approach to sustainability. Rupert Howes, in Chapter 10, provides a clear account of a tool that shows the way in which key environmental impacts have been accounted for in financial terms for a number of companies. Tom Baxter, Jan Bebbington and David Cutteridge, in Chapter 11, describe a full-cost accounting method for modelling the economic, social and environmental impacts of an oil project for British Petroleum (BP). This concentrates on impacts that can be expressed financially. They specifically ask the question of whether it makes sense to add up the three components of sustainability across the triple bottom line.

Much less work has been done on accounting for the capital side of sustainability. Although Rupert Howes identifies the need for this, progress in accounting for natural capital or social capital has been slow. Alex MacGillivray, in Chapter 12, reviews a number of attempts to define and understand social capital and brings them together in a new framework for measuring this somewhat elusive concept.

The wealth of interest in the area of sustainability has led to a plethora of sustainability tools and standards. Ros Oakley and Ian Buckland, in Chapter 13, describe the SIGMA (sustainability integrated guidelines for management) project that attempts to bring together tools and standards to build a coherent approach to implementing sustainability. They address the oft-asked question: what are the arguments for and against moving towards harmonization of sustainability tools and standards?

Good practice

Although earlier chapters describe the work done with or by companies in implementing TBL concepts, Chapters 14 and 15 take a broad view of how large organizations see the task. Paul Monaghan writes about the Co-operative Bank in Chapter 14, describing the ‘whys and hows of producing a leading edge sustainability report’.

Vernon Jennings, in Chapter 15, describes not only how Novo Nordisk approaches the task of implementation, but specifically concentrates on how to approach ‘economic foot-printing’. This is an area that, outside financial performance, has barely been addressed by the corporate world.