Triple Bottom Line – A Source of Competitive Advantage for Modern Corporations

The notion of “Triple Bottom Line” (3BL) accounting tbl 2has become increasingly fashionable in management, consulting, investing, and NGO circles over the last few years. The idea behind the 3BL paradigm is that a corporation’s ultimate success or health can and should be measured not just by the traditional financial bottom line, but also by its social/ethical and environmental performance. Of course, it has long been accepted by most people in and out of the corporate world that firms have a variety of obligations to stakeholders to behave responsibly. It is also almost a truism that firms cannot be successful in the long run if they consistently disregard the interests of key stakeholders. The apparent novelty of 3BL lies in its supporters’ contention that the overall fulfilment of obligations to communities, employees, customers, and suppliers (to name but four stakeholders) should be measured, calculated, audited and reported—^just as the financial performance of public companies has been for more than a century. This is an exciting promise. One of the more enduring cliches of modern management is that “if you can’t measure it, you can’t manage it.” If we believe that ethical business practices and social responsibility are important functions of corporate governance and management, then we should welcome attempts to develop tools that make more transparent to managers, shareholders, and other stakeholders just how well a firm is doing in this regard.

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