Recognition that TBL reporting does not end with data collection and analysis but extends into the planning process arises from the straightforward observation that planning sustainable development is a process, not a singular event. Carroll, G., & Delacroix, D. (1982). For example, Ricoh uses a formula dividing the gross profit by the total social cost to provide a ratio of profit to social cost. triple bottom line (3BL): The triple bottom line (3BL) is an expanded version of the business concept of the bottom line that includes social and environmental results as well as financial results. Institutions and economic theory. Potential and probable conflicts between the different principles are not covered adequately. Dartington: Schumacher Society. The lack of systems focus in TBL approach is perhaps the fundamental flaw that negates the basic premise of the approach. An Empirical analysis of Triple Bottom-Line reporting and its determinants: Evidence from the United States and Japan. For example, Canon has instilled as their corporate philosophy Kyosei which means harmony between mankind and earth. The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. The TBL approach is often accompanied by an assumption that sustainability is about balancing (Hacking and Guthrie 2008), which contradicts both the key insights concerning the interdependence of factors and the need for mutually supporting advances on all fronts (Archel et al. Hence, all forty corporations provide evidence that corporations do not see the need to provide summaries that bring different parts of information to provide a coherent picture, as they are all uniform in their approach in terms of providing a summary or discussion of the TBL results in their sustainability reports without a guide for future performance or initiatives. Leading change toward sustainability: a change-management guide for business, government and civil society. https://doi.org/10.1007/s13520-012-0019-3, DOI: https://doi.org/10.1007/s13520-012-0019-3. But beyond those, some software tools have been developed that are specifically focused on the triple . Some sectors and industries are unique, and the environmental and social performance can only be understood if a certain level of alignment to the issues and problems present in that industry context is mapped out in the guidelines of the GRI. Sheffield: Greenleaf Publishing. GRI and the camouflaging of corporate unsustainability. (2003). Sydney. The more balanced focus on the economic, the environmental and the social has provided a framework for institutions and markets around the world who want to focus indicators towards a sustainable future. Westpac uses a performance scorecard which grades the corporation's performance relative to the three categories. Finally, the sum total of the empirical analysis leads to the conclusion that TBL as an institutional lever for sustainability performance needs to be improved. Figure4 illustrates the Dunphy framework: Dunphy et al's work shows a pathway to a more sustaining approach. Based on past research, the amount of reporting done on social aspects of corporate responsibility is significantly lower than reporting done on environmental issues (Adams 2002; Kolk 2003). Moneva, J., Archel, P., & Correa, C. (2006). For example, in 2007, in Navajo, USA, BHP failed to protect topsoil from erosion after seeding and planting, which cost them a fine. Organization Science, 21, 10921107. As they weigh the effects of their actions on the environment and on society, they are likely to make more environmentally beneficial decisions. The Triple Bottom Line (TBL) is a conceptual tool that companies use to prioritize sustainability and social betterment. Doppelt, B. This will be investigated in the survey. The third limitation found in the TBL approach is the lack of integration. Procurement is an essential part of a corporation's activities, and sourcing products and services from environmentally friendly suppliers is a move in the right direction. Other weaknesses of TBL and sustainable reporting methods include:The belief that companies/investors must sacrifice one value over another (Profit vs. We want to investigate whether corporations tend to highlight their certifications prominently throughout their sustainability reports. Gray, R. (2002). The GRI offers a high number of indicators which makes it hard for corporations to determine the materiality or importance of their key issues and its relation to the indicators. This will benefit the larger society in the long run. Those corporations reporting and performing well on a TBL basis should enjoy increasing market-share while those businesses that resist pressure to embrace TBL are likely to suffer a loss of investor and consumer confidence over the longer term. If the reporter was informed that an indicator assumed global operation, it would be better placed to make materiality decisions with its stakeholders. Next is the criticism of measurement. Frameworks like AccountAbility 1000 have made progress in the area of social measurement and with the advent of the GRI, social measurement is not an illusionary goal but in fact, a realistic evolution. It functions on a principles-based approach, and continues the multi-stakeholder process. There are also repercussions of ignoring your business's responsibility to People and the Planet, these include; exploitation of labor, fueling inequality, and destruction to the environment such as; over forestry, pollution of oceans, and damage to the ozone layer. More attention should be paid not only on how to measure but also how reliable are the values once obtained. Our broad research question is: are there TBL shortcomings within the sustainability reports analysed that can be correlated with the weaknesses in TBL found in the research? Companies that embrace the triple-bottom-line approach tend to adopt more of a compliance approach, stating that they have engaged in certain activities that are environmentally sound, for example. Corporate citizenship and the communicator: communication's role in developing the triple bottom line in the new economy. California Management Review, 49, 132157. London: Earthscan. Social impacts cannot always be precisely defined, or quantitatively valued. Corporate Environmental Studies, 9, 193207. In attempting to combine the very different and often competing, imperatives of profitability, social justice and environmental protection, we show that the Triple Bottom Line (TBL) approach is problematic, as seen in the reports. Business Ethics Quarterly, 17, 111114. Cannibals with Forks: The Triple Bottom Line of 21st Century Business. While a company may quantify financial aspects such as earnings, revenues and costs, it is difficult to quantify social and environmental aspects. It would be fair to rename TBL as IBL or integrated bottom lines, as other issues like culture, corporate governance, are bottom lines that should be factored into the calculation, if the social indicator is given such importance. Reading: Perseus Books. Tepco is one of the few corporations that have included nonconformity disclosure criteria in its sustainability report. Hawken, P., Lovins, A., & Hunter Lovins, L. (1999). Although, the market moves up or down sharply after a close below the upper trend line. The number of indicators in corporational performance is growing showing a need for diversity and plurality (Schoenberger-Orgad and McKie 2005). Adams, C. A. The model in Fig. Asahi Breweries established the cross-organizational Moderate and Responsible Drinking Committee in 2004. However, Japan Tobacco provides no information on how it is making a difference in the community, and hence fails to comply in social impacts/goals area. Corporations believe that following a TBL format would make them similar or compliant with formats that most other corporations use (mimetic & normative). Dimaggio, P., & Powell, W. (1983). These corporations display characteristics in line with the selecting criteria of the DJSI index since they are part of this ethical index. The consequences include a tendency to ignore the profound interdependence of these factors, and to see them as likely to be conflicting rather than potentially complementary. What are the boundaries for corporations in terms of what they choose to measure? Sustainable EducationRe-visioning learning and change. Hubbard, G. (2009). While the GRI Sustainability Reporting Guidelines (G3) is the leading reporting standard for the TBL approach, the analysis in this paper was centred more around the robustness of the TBL approach and the robustness around the ranking criteria of the DJSI (criteria centred around TBL) used for the analysis, to understand how TBL and the selection criteria put forth by sustainability indexes are used by corporations in order to get ranked and recognized for their efforts. Corporations are vigorously creating and publishing TBL reports in order to showcase an image of care for the economic, environmental and social dimensions of social responsibility (Raar 2002; Morland 2006; MacDonald and Norman 2007; Robins 2006). The Lexus and the Olive Tree. Next we convert the criticisms into five questions and use forty reports from acknowledged listed corporations to inform out answers to these questions. Hence, TBL can be seen as an institution that uses its institutional powers and pressures to change corporate behaviour. The money raised goes toward transportation safety, environmental protection and social welfare programs. 2007) have arisen to help focus the concerns of those seeking to make business more accountable, transparent and sustainable. All corporations ranging from Asahi Breweries to Woodside Petroleum report dollar values to their economic performance and carbon dioxide equivalent emissions (CO2e) to their environmental performance. Question #4 investigates how many corporations comply with the DJSI selection criteria (based on the TBL approach) and whether corporations have stuck to the three dimensions or have attempted to go beyond the TBL requirements and also beyond compliance, in a manner of speaking. For example, from a financial perspective, money can be arguably used as a common unit of measurement whereby expenses can be subtracted from revenues. Systems thinking entails the ability for grasping more complex relations, interactions and situations which include, but go beyond, simple cause-and-effect relationships (Doppelt 2003). The meaning of this question lies in the ability to properly measure a social investment, or a social undertaking by a corporation. The different levels of parameters and indicators allow corporations to handpick those that are important to them leading the issue of selective reporting (Moneva et al. Factors influencing corporate social and ethical reporting: moving on from extant theories. Boston: Little, Brown & Co. Hawken, P., Lovins, A., & Lovins, L. (1999). Journal of Communication Management, 10, 304322. Boston: Harvard Business School Press. Corporate Communications: An International Journal, 7, 169183. Sustaining edges: CSR, postmodern play, and SMEs. 3P Triple Bottomline: People, Planet, Prosperity. Triple-bottom-line reporting might create a conflict for such a business. A number of technology tools that are helping to optimize a company's performance -- from traceability technology to supply chain analytics -- can also be used to boost sustainability efforts. The TBL approach substitutes three bottom lines for a single bottom line of financial performance. A coalition in search of organizational measures supportive of sustainability has attempted to achieve greater visibility and legitimacy (Gray 2002; Lehman 1999; Perrini and Tencati 2006). However, no such common unit of measurement exists for the social indicator of the triple bottom line reporting system, thus making the aggregation principle that much harder to execute. Sridhar, K., Jones, G. The three fundamental criticisms of the Triple Bottom Line approach: An empirical study to link sustainability reports in companies based in the Asia-Pacific region and TBL shortcomings. Disadvantages of Applying the Triple Bottom Line A key challenge of the triple bottom line is the difficulty of measuring certain social and environmental bottom lines. National Australia Bank (NAB) and BHP have such a procurement policy but do not report on performance of suppliers. Whole Systems Thinking as a Basis for Paradigm Change in Education: Explorations in the Context of Sustainability. Two examples are provided below of a social initiative undertaken by a corporation that can lead to results in the future that are measureable: In April 2008, the company established the Magokoro Fund which is a fund made up of monthly contributions of 100 yen deducted from the salaries of participating employees with matching funds from the company. (2006). The social accounting project and Accounting Corporations and Society Privileging engagement, imaginings, new accountings and pragmatism over critique? Human ecology. While developing a common metric to measure social performance of corporations can be difficult, it certainly isn't impossible. Corporations like POSCO and Ricoh measure community involvement and voluntary days under their social performance. This process is open to research that in turn offers the prospect of facilitating the integration of social, environmental and economic reporting. 1 and 2.Footnote 1 The key questions were the basis of analysis, and they are shown in each column of the figures below. There are currently three sets of indicators: core, additional and sector-specific (which could, for that sector include core and additional). These are HR statistics isolated from their social impacts. The Triple Bottom Line Defined The TBL is an accounting framework that incorporates three dimensions of performance: social, environmental and financial. Still, it is increasingly becoming best practice, with penalties for non-compliance. In this question, coercive forces come in the form of the sustainability index through their selection criteria, mimetic forces comes from the similarities in TBL reporting among the corporations, and normative forces is displayed through the norm that is TBL reporting and whether corporations have moved on from this framework or not. This is evident in the growth of independent watchdog agencies, while more traditional institutions are also taking appropriate steps, particularly in support of corporate governance initiatives. Hence, this is a limitation in terms of trying to study the findings from an Asian context as the majority of companies are based out of one particular region. Triple bottom line is a balancing act. Hence, the basis on which DJSI chose to include the two corporations into their Top-40 Index is mysterious because the corporations fail to report on thirty percent of the grading scale. The stage of strategic proactivity is where systems thinking become salient. The argument is that integration of social, economic and ecological considerations are the essence of the concept of sustainability and must be a central consideration in the design and implementation of sustainability-based assessment. Available: http://www.grig3.org [Accessed 30/07/2009]. 2006). New York: Macmillan. We faced a choice of how we should select a sample of large corporations. This leads to the other point of criticism which is a lack of a common unit of account for each of the three categories which was part of the promise in the original conception of TBL (Elkington 1994, 2004). Triple bottom line reporting as social grammar: integrating corporate social responsibility and corporate codes of conduct. These guidelines have inherent limitations as a one size fits all approach doesn't bode well for different corporations. These three elements are financial, environmental, and social. Moving beyond the three legged stool and reporting on more areas material to corporations is a move beyond compliance as the traditional TBL framework is simply not adequate. Another avenue for further research is to deconstruct TBL purely from an institutional theory or systems theory point of view. Raar, J. Enter the Triple Bottom Line. Corporations that may lack in their environmental/social reporting can highlight the fact that they are certified by certain industry standards showing their desire to be compliant with requirements of the DJSI, which in turn gets them ranked. While the first question dealt with the integration of the TBL principles, the final question here is whether the reports have a discussion at the end that summarizes the overall performance/sustainability based on the tracking of the social/economic/environmental performance from the report. Robins, F. (2006). Based on the survey results, fourteen corporations went beyond compliance with the DJSI criteria; four corporations did not meet the nine dimensions, while twenty two corporations were compliant with the nine dimensions. Ho, L.-C., & Taylor, M. (2007). Every fine imposed on BHP is mentioned in their sustainability report. Hence, the single objective of profit is replaced by three different objectives due to the TBL approach. A businesss management traditionally aims to maximize returns to shareholders. With any new regulation or . Slider with three articles shown per slide. If a corporation looks at each of the stages in Fig. the Triple Bottom Line (TBL) is a method of pushing social problems and pressures towards economics and changing corporate behaviour through institutional pressure and self-regulation. However, in this category, the corporation flourishes its ISO and OHSAS accreditations eight times in the report while other corporations average about four times. United Kingdom: EarthScan Publications Ltd. Hawley, A. Version for Public Comment.2 January 200631 March 2006. . 2023 Springer Nature Switzerland AG. People and corporations need to develop the idea of thinking holistically and look for interrelationships among the Earth's natural and social systems. A system consists of individual parts that can be looked at individually; the whole cannot be entirely defined without recognizing the relationships among those parts. The Global Reporting Initiative is arguably the largest and most widely accepted framework for corporate sustainability reporting. Scott, P., & Jackson, R. (2002). This differs from traditional reporting frameworks as it includes ecological (or environmental) and social measures that can be difficult to assign appropriate means of measurement. A sustainable form of thinking is the best way to develop a systemic, effective and efficient solution. New York: Free Press. The DJSI, in the context of TBL as the subject of research, has not been identified in numerous literary works and hence this is the basis for adopting this dataset. Firstly, the integration between the three dimensions of TBL will be hard as people are trained to be experts in each of the three dimensions and not across all of them, and this leads to the data collection within each area separately (Gibson 2006). Gri. For example, Google has committed to operating carbon-free by 2030, Walmart has promised to reach zero emissions by 2040, and . London: EarthScan. The corporation conducts heavy analysis on its products and its life cycle and how resources can be saved as well as improved. The need for research in this area has not been raised in other articles. This paper presents a criticism of the TBL approach that adds to the limited information on the pervasiveness of this approach. Over the past three decades the works of Capra and Sterling have put pressure on environmentalists to adopt a systemic approach when trying to understand and cope with environmental issues (Capra 1975, 1996; Sterling 2001, 2005). Business Strategy and the Environment, 18, 177191. A response to Getting to the bottom of Triple Bottom Line. Hence, there is a paradox when corporations that are highly transparent about their legal breaches and fines lose investors turned off by their social and legal irresponsibility. The main function of the TBL approach is to make corporations aware of the environmental and social values they add or destroy in the world, in addition to the economic value they add (Henriques and Richardson 2004; Elkington 1997; Berger et al. The Triple Bottom Line is a novel and unique concept, worthy of the focus it receives from scholars, practitioners and citizens interested in economic, community and environmental development. And at a more fundamental level, failings in areas like pollution and employee relations can incur hefty fines, remediation costs and reputational damage. Companies are geared to making profits and typically focus on the impact of their actions on their bottom line, or earnings. Sustainability and Stakeholder Management: Need for New Corporate Performance Evaluation and Reporting Systems. This concept suggests that a company and its business have to sustain themselves for a longer time. USA: New Society Publishers. Capra, F. (1996). Asystematic review. Triple-bottom-line reporting means that a business has to report the effect of social and environmental aspects of the business, rather than just financial aspects. However, Origin Energy and NTT DoCoMo Ltd. excluded this information from their CSR report. Administrative Science Quarterly, 27, 169198. Ultimately, the goal of every corporation should move into this stage. 2002). Friedman, T. (1999). This means that the ability to quantify impacts with respect to these two components is possible. The company has not only complied with the nine dimensions of the DJSI, but also gone beyond and attempted to establish its own metrics in the area of health, safety and also on environmental fines as a proxy for misbehaviour. John Elkington came up with the concept of the triple bottom line. TBL reporting has been institutionalized as a way of thinking for corporate sustainability. The TBL as an approach has multiple flaws and it is necessary for corporations that want to become more sustainable to identify these flaws and eliminate them in the course of creating their sustainability report. A further avenue for research would be incorporate corporations from various sustainability indexes, and those that are listed as well as not listed. The primary purpose of this research was to examine sustainability reports of corporations and how much did they correlate to the criticism of the TBL approach made in the literature review.
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