CSRWire – Understanding the Value of the Triple Bottom Line

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Proposed by Kaleidoscope Futures

The late 1980s and early 1990s were a turning point for our global society. As free-market neoliberals continued to push for the globalization of tariff-free trade and unlimited financial capital flows, movements for the environment, human rights and social responsibility grew. were also reinforced. In 1987, the United Nations published a report on environment and development entitled Our common future, also known as the Brundtland Report, since the UN commission was chaired by the former Prime Minister of Norway, Gro Harlem Brundtland.[i]

This landmark publication defines for the first time sustainable development as “development that meets the needs of the present generation without compromising the ability of future generations to meet theirs”. The report became the basis for the 1992 United Nations World Conference on Environment and Development in Rio de Janeiro. This global gathering, dubbed the Rio Earth Summit, became the largest gathering of political leaders ever, then or since, with 172 participating countries and 109 heads of state in attendance.

The result was Agenda 21, including various conventions and action plans on issues ranging from climate change and deforestation to ozone depletion and desertification. It outlined the major global challenges for the 21st century and the means to begin to face it. Although the Rio Earth Summit was a political meeting, business was not spared. They prepared a founding book titled To change direction and create the Business Council for Sustainable Development.[ii] The International Chamber of Commerce has also launched its Business Charter for Sustainable Development.

Despite these corporate actions, in the aftermath of the Summit, it became evident that businesses were struggling to apply the political definition of sustainable development. A breakthrough came when John Elkington reformulated the concept as a “triple bottom line” balanced between people, planet and profit.[iii] The basic idea was that in addition to traditional financial results, companies should start measuring and reporting on their social and environmental performance. In addition, the financial stance needed to be broadened to include broader economic performance.

In his book Cannibals with forks, Elkington uses a metaphor to explain the triple bottom line. The title was inspired by the Polish poet, Stanislaw Lec, who asked: “Is it progress if a cannibal uses a fork?” Elkington in turn asks, would it be progress if firms that “devour competing firms” and industries that “slice up and digest other industries” use the three-pronged fork of sustainability, that is – whether they adopt the threefold objective of economic prosperity, environmental quality and social justice? When I interviewed him about the concept of the book I wrote for Cambridge University, titled The 50 Best Books on Sustainability, he said the triple bottom line “was for business leaders like taking a pill where you suddenly saw the world slightly differently.”[iv]

This simple conception of corporate sustainability, often described as a three-circle Venn diagram, fell on fertile ground and flourished. It came of age when, in 1999, it became the basic framework for assessing sustainable businesses within the Global Reporting Initiative’s Sustainability Guidelines and the Dow Jones Sustainability Indices. Research by KPMG shows that sustainability reporting using triple bottom line is now practiced by 96 percent of global Fortune 250 companies and 80 percent of the top 100 companies in 52 countries. In addition, the Dow Jones Sustainability Indices now assess and rate around 2,500 companies each year on the basis of the triple bottom line.

For Elkington, however, the shift to a triple bottom line was probably not the smooth transition implied by the emergence of sustainability reporting standards and indices. He went on to say in our interview, “I think key parts of our economies and societies are really on a doomed path and I think it’s inevitable. We are heading into a period of creative destruction on a scale that we really haven’t seen in a very long time … So I expect that from 2020 onwards the paradigm we all live in will fracture, and this new that has been emerging for some time will appear.

In 2019, after 25 years of triple bottoming, Elkington issued a “management concept reminder,” citing its flawed design and failed application.[v] Write for harvard business review, he said: “If an industrial product like a car breaks down, the manufacturer removes it, tests it and, if necessary, retools it. Management concepts, on the other hand, work in poorly regulated environments where failures are often swept under the carpet of boardrooms or faculty. Yet poor management systems can put lives in the air, at sea, on the roads or in hospitals at risk. They can also endanger entire companies and sectors. “

The main reason Elkington recalled the triple bottom line (TBL) was because it had failed to live up to its original intent: “TBL’s stated goal from the start was system change – push for the transformation of capitalism. It was never meant to be a simple accounting system. It was originally conceived as a genetic code, a triple helix of change for the capitalism of tomorrow, with an emphasis on revolutionary change, disruption, asymmetric growth (with unsustainable sectors actively being brought to bear. gap) and the scaling up of next-generation market solutions.

[i] World Commission on Environment and Development. (1987). Our common future. Oxford: Oxford University Press.

[ii] Schmidheiny, S. & BCSD. (1992). Changing course: a global perspective of companies on development and the environment. Boston, MA: The MIT Press.

[iii] Elkington, J. (1998). Cannibals at the Fork: The Triple Bottom Line of 21st Century Business. Stony Creek, CT: New Company Publishers.

[iv] Visser, W. & University of Cambridge Institute for Sustainability Leadership. (2009). The 50 Best Books on Sustainability. Sheffield: Greenleaf Publishing.

[v] Elkington, J. (2018). 25 years ago, I coined the phrase “triple bottom line”. Here’s why it’s time to rethink it. harvard business review (online edition), June 25.

Kaleidoscope Futures

Kaleidoscope Futures

Kaleidoscope Futures is a Cambridge, UK-based think tank, education and media company focused on promoting a brighter, brighter future. Our goal is to help organizations and individuals strengthen the disruptive movement to thrive, regenerate nature, society and the economy.

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