The Triple Bottom Line Cover Story The economy

Tuesday, 01 May 2001


    There is a growing interest in the "triple bottom line" approach as a way of assessing and comparing companies. The first "bottom" line is the traditional way of assessing how a company’s finances are going. The second "bottom line" is the company’s environmental record. The third "bottom line" is the company’s social record. The problem for unscrupulous companies is that there is a need for ethics to grow out of a company’s basic nature.

    You cannot fake integrity. Eventually, a company's sins will catch it out. For example, a disgruntled employee will become so sick of what they see in the company that they go to the media. Therefore, there is a need for a good value base to start with. Many companies and community organizations are coming around to this point of view - hence the interest in the "triple bottom line". But even if there is an interest in the "triple bottom line", there may not be the tools automatically available to implement this desire. This is an evolving field and discussions continue on how best to quantify the second and third bottom line

    However, this is a challenge worth persisting with. First, there is a reformation underway in the business world. It seems as though some people have become so appalled by the excesses of some companies, that there is now greater public demand for higher standards in businesses and community organizations. For example, some companies have responded to this concern by issuing reports on what impact their activities have on the environment. Second, companies themselves now realise that they can do well by doing good. For example, people will buy products from companies they trust in and in which they have confidence. They will feel good in doing so. Third, workers work better when associated with companies in which they feel pride. They have less interest in their work if they are working for companies they are embarrassed to admit to their relatives and friends that they work for. An ethical company has high morale. Fourth, Australia now has more investors than ever before. On a per capita basis, Australia has one of the world's highest rates of shareholders. This is due partly to the privatisation process of government assets and the increase in superannuation arrangements.

    Some of the shareholders have a concern in the impact that companies have on the environment and society. "Ethical investment" is big business in the US and it is growing in Australia, with the Ethical Investment Association formed last May. Finally, the community expects companies to have a greater a sense of social responsibility and so put something back into the community. This is an era of transparency, when the media are eager to publicise the errors of companies. Companies need to be careful as to what their policies are doing to the community and the environment. A corporate culture of triple bottom line thinking will be of great assistance to companies.

    *Keith Suter is the chairman of the AICD's Environment Committee. AICD through its courses, publications, conference and seminar programs has been active in providing directors with information and education on corporate sustainability. For information contact your local AICD Division or the National Office.


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