Sustainability Reporting

There are many approaches to Sustainability. The following will describe the Triple Bottom Line (TBL) Approach. This includes the Accountability of a company not only for its Financial Responsibility, but also for a company’s Environmental Responsibility and also the Corporate Social Responsibility (CSR). Sustainability has become a synonym for TBL and in the US the emphasis for Sustainability is often on the Environmental Responsibility, however in Europe, Sustainability will often emphasize the Social Responsibility.

The term “Sustainability” generally refers to the question, “What must we do now to assure that we will be just as viable 50 years from now?” Just as financial sustainability requires long-term strategies, so do the environmental and social responsibilities of a company.

One of the most established means of reporting for TBL is by using the guidelines as presented in the Global Reporting Initiative (GRI) which is described with more detail within this site. Sustainability has become a burgeoning topic with colleges and universities – especially with educational institutions offering degrees in B-Corporations. Sustainability approaches have also spread out from business applications to governments at all levels from national to local.

Sustainability from Wikipedia:

In traditional business accounting, the "bottom line" refers to the sum of revenue minus expenses, which is either "loss" if negative, or "profit" if positive. The term originated because profit is always shown as the very "bottom line" on a statement of revenue and expenses. Over the last 50 years, environmentalists and social justice advocates have struggled to bring a broader definition of "bottom line" into public consciousness, by introducing full cost accounting. For example, if a corporation shows a monetary profit, but their asbestos mine causes thousands of deaths from asbestosis, and their copper mine pollutes a river, and the government ends up spending taxpayer money on health care and river clean-up, how do we perform a full societal cost?

The concept of a triple bottom line (abbreviated as TBL or 3BL) adds two more "bottom lines"; social and environmental concerns. The three together are often paraphrased as "Profit, People, Planet", or referred to as "the three pillars"  With the ratification of the United Nations and ICLEI TBL standard for urban and community accounting in early 2007, this became the dominant approach to public sector full cost accounting. Similar UN standards apply to natural capital and human measurement to assist in measurements required by TBL, e.g. the EcoBudget standard for reporting ecological footprint.

An example of an organization seeking a triple bottom line would be a social enterprise run as a non-profit, but earning income by offering opportunities for handicapped people who have been labelled "unemployable", to earn a living recycling. The organization earns a profit, which is controlled by a volunteer Board, and ploughed back into the community. The social benefit is the meaningful employment of disadvantaged citizens, and the reduction in the society's welfare or disability costs. The environmental benefit comes from the recycling accomplished.

In the private sector, a commitment to corporate social responsibility (CSR) implies a commitment to some form of TBL reporting. This is distinct from the more limited changes required to deal only with ecological issues.

Sustainability Definitions

For reporting their efforts companies may demonstrate their commitment to CSR through the following:

  • Top-level involvement (CEO, Board of Directors)

  • Policy Investments

  • Programs

  • Signatories to voluntary standards

  • Principles (UN Global Compact-Ceres Principles)

  • Reporting (Global Reporting Initiative)

Triple bottom line (TBL) accounting expands the traditional reporting framework to take into account social and environmental performance in addition to financial performance. In 1981 Freer Spreckley first articulated the triple bottom line in a publication called 'Social Audit - A Management Tool for Co-operative Working'. In this work, he argued that enterprises should measure and report on social, environmental and financial performance.

The concept of TBL demands that a company's responsibility lies with stakeholders rather than shareholders. In this case, "stakeholders" refers to anyone who is influenced, either directly or indirectly, by the actions of the firm. According to the stakeholder theory, the business entity should be used as a vehicle for coordinating stakeholder interests, instead of maximizing shareholder (owner) profit.

A growing number of financial institutions incorporate a triple bottom line approach in their work. It is at the core of the business of banks in the Global Alliance for Banking on Values, for example.

Sustainability Bottom lines

The triple bottom line is made up of "social equity, economic, and environmental" factors.

"People, planet and profit" succinctly describes the triple bottom lines and the goal of sustainability. The phrase, "people, planet, profit", was coined by John Elkington in 1995 while at SustainAbility, and was later adopted as the title of the Anglo-Dutch oil company Shell's first sustainability report in 1997. As a result, one country in which the 3P concept took deep root was The Netherlands.

"People" pertains to fair and beneficial business practices toward labor and the community and region in which a corporation conducts its business. A TBL company conceives a reciprocal social structure in which the well-being of corporate, labor and other stakeholder interests are interdependent.

A triple bottom line enterprise seeks to benefit many constituencies, not exploit or endanger any group of them. The "upstreaming" of a portion of profit from the marketing of finished goods back to the original producer of raw materials, for example, a farmer in fair trade agricultural practice, is a common feature. In concrete terms, a TBL business would not use child labor and monitor all contracted companies for child labor exploitation, would pay fair salaries to its workers, would maintain a safe work environment and tolerable working hours, and would not otherwise exploit a community or its labor force. A TBL business also typically seeks to "give back" by contributing to the strength and growth of its community with such things as health care and education. Quantifying this bottom line is relatively new, problematic and often subjective. The Global Reporting Initiative (GRI) has developed guidelines to enable corporations and NGOs alike to comparably report on the social impact of a business.

"Planet" (natural capital) refers to sustainable environmental practices. A TBL company endeavors to benefit the natural order as much as possible or at the least do no harm and minimize environmental impact. A TBL endeavor reduces its ecological footprint by, among other things, carefully managing its consumption of energy and non-renewables and reducing manufacturing waste as well as rendering waste less toxic before disposing of it in a safe and legal manner. "Cradle to grave" is uppermost in the thoughts of TBL manufacturing businesses, which typically conduct a life cycle assessment of products to determine what the true environmental cost is from the growth and harvesting of raw materials to manufacture to distribution to eventual disposal by the end user. A triple bottom line company does not produce harmful or destructive products such as weapons, toxic chemicals or batteries containing dangerous heavy metals, for example.

"Profit" is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up. It therefore differs from traditional accounting definitions of profit. In the original concept, within a sustainability framework, the "profit" aspect needs to be seen as the real economic benefit enjoyed by the host society. It is the real economic impact the organization has on its economic environment. This is often confused to be limited to the internal profit made by a company or organization (which nevertheless remains an essential starting point for the computation). Therefore, an original TBL approach cannot be interpreted as simply traditional corporate accounting profit plus social and environmental impacts unless the "profits" of other entities are included as a social benefit.

Sustainability Supporting Arguments

The following business-based arguments support the concept of TBL:

  • Reaching untapped market potential: TBL companies can find financially profitable niches which were missed when money alone was the driving factor.

  • Adapting to new business sectors: Since many business opportunities are developing in the realm of social entrepreneurialism, businesses hoping to reach this expanding market must design themselves to be financially profitable, socially beneficial and ecologically sustainable or fail to compete with those companies who do design themselves as such. For example, Fair Trade and Ethical Trade companies require ethical and sustainable practices from all of their suppliers and service providers. A business which is planning to work with Fair Trade or Ethical Trade companies must design their business model to be TBL.

The argument is that the Earth's carrying capacity is itself at risk, and that in order to avoid catastrophic breakdown of climate or ecosystem, there is a need for a comprehensive reform in global financial institutions similar in scale to that undertaken at Bretton Woods in 1944. 

With the emergence of an externally consistent green economics and agreement on definitions of potentially contentious terms such as full-cost accountingnatural capital and social capital, the prospect of formal metrics for ecological and social loss or risk has grown less remote through the 1990s.


Legislation permitting corporations to adopt a triple bottom line is under consideration in some jurisdictions, including Minnesota and Oregon.

Some businesses have voluntarily adopted a triple bottom line as part of their articles of incorporation or bylaws, and some have advocated for state laws creating a "Sustainable Corporation" that would grant triple bottom line businesses benefits such as tax breaks.


Add your comment