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A Triple Bottom Line Approach: Corporate Sustainability

1056 words - 5 pages

In recent years, there has been a push for companies to look further than the traditional bottom line. While profit metrics such as net income seem to have some of the strongest reaction in the market, firms have now begun to see that their value should extend past that. As a KPMG report on corporate sustainability defined, “…corporate sustainability is defined as: ‘adopting business strategies that meet the needs of the enterprise and its stakeholders today while sustaining the resources, both human and natural, that will be needed in the future.” (pg.12) It shouldn’t be taken to mean that corporate sustainability is simply a “green”, or environmentally friendly, strategy. It encompasses ...view middle of the document...

One important aspect here for a company is to ensure that it is aligning its employee’s efforts with the long-term vision of the firm as well as focusing on capacity development strategies. The third and final bottom line is referred to as the “planet account” and measures how environmentally responsible a firm has been in conducting its operations. Items such as greenhouse gas emissions and the firm’s stewardship over the use of its resources are measured under this “account”. A firm that considers all of the factors takes in the full cost of doing business.
Societal trends over the past decade have put pressure on companies to adopt sustainable business practices and triple bottom line reporting. A study from 2007 showed that at that time, “…68% of the top 250 companies on the Fortune 500 have embraced triple bottom line public reporting…” (Colbert, 2007) One of the biggest reasons societal forces have started to have such an impact on firms is because of the idea of stakeholders. The term stakeholder has been expanded by modern theory and is now thought of as much more inclusive than the shareholders of a corporation. It includes those individuals or groups that affect or can be affected by the firm or organization. Firms have begun to realize the importance of stakeholders in the organization and the impact they have on the perception of the company in the marketplace. Given the importance now placed on these stakeholders, corporate executives have moved away from the traditional “we know best mentality” and are now incorporating the ideas and concerns of groups such as the community in which it operates, its consumers and suppliers, employees, and much more. This relates back to the adoption of the triple bottom line reporting by an increasing number of companies. These stakeholders need a way to judge the firms and how effectively they are aligning the company’s operations with their concerns. This has driven companies to report on their sustainability efforts in financial information that is released. As will be discussed later in the paper, measurement of these sustainability efforts is lagging the initiative but that ways are still being developed and improved upon. In the near future we may even...

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