The Triple Bottom Line: How Today's Best-Run Companies Are Achieving Economic, Social and Environmental Success -- and How You Can Too 
asked by papi on November 22, 2006 5:19 PM
The Triple Bottom Line is the groundbreaking book that charts the rise of sustainability within the business world and shows how and why financial success increasingly goes hand in hand with social and environmental achievement. Andrew Savitz chronicles both the real problems that companies face and the innovative solutions that can come from sustainability. His is a hard-line approach to bottom-line fundamentals that is re-making companies around the globe.
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If you were traditionally trained a long time ago, you probably heard that the purpose of a corporation is to reward its shareholders with earnings, dividends and stock-price gains. Since then, the counterview has been growing that companies need to be responsible as well for the impact they create on users, customers, employees, suppliers, partners, distributors, lenders, the communities affected and the environment. That counterview is common sense in many dimensions today for a typical corporate manager or executive. If you harm people directly or indirectly, they will sue you, boycott your products, make life miserable, and help drive away profit.
The Triple Bottom Line attempts to go beyond that common sense view to establish the concept of a sustainable company, one that "creates profit for its shareholders while protecting the environment and improving the lives of those with whom it interacts." As you can see, improving lives goes beyond the idea of "not harming lives" so it's a proactive concept.
The authors use the example of the whaling industry running their stocks into virtual extinction as a poor way to create long-term profits and jobs. A more recent extended example is the ruckus created when the Hershey Trust decided to sell its controlling block of stock in Hershey Foods for a premium. The trust ultimately backed down due to pressure from all directions. The point: You just cannot optimize the solution for one set of stakeholders any more.
The book takes a long time to establish this premise. I assume that the authors have run into lots of skeptics in the past.
But if you accept the premise, it makes much of the book not terribly helpful.
The substance begins in chapter 13 on page 209 where the authors begin to address measuring and reporting. There's a brief description of the work being done in environmental and social reporting, such as the Global Reporting Initiative (GRI). If you're not familiar with GRI, you'll get a little background. But you won't know what to do next.
In the future, this kind of reporting will be more important. Stock exchanges in Scandinavia, France, Britain, South Africa and some other countries now require that listed companies report Triple Bottom Line results. It's all part of an atmosphere of the public wanting more disclosure.
But if you want practical advice about what to do, you won't find it here.
Think of this book as an appetizer to wake up your taste buds. The major issues involved in how to do this well are substantial and will take many years to work out. I suspect that taking the pathway of the Balanced Scorecard to work on these tasks is a surer route than Triple Bottom Line reporting.
I favor more measuring, reporting and focusing, but this book doesn't provide enough meat to satisfy me. Find a meatier book if you can if this subject interests you.
The Triple Bottom Line attempts to go beyond that common sense view to establish the concept of a sustainable company, one that "creates profit for its shareholders while protecting the environment and improving the lives of those with whom it interacts." As you can see, improving lives goes beyond the idea of "not harming lives" so it's a proactive concept.
The authors use the example of the whaling industry running their stocks into virtual extinction as a poor way to create long-term profits and jobs. A more recent extended example is the ruckus created when the Hershey Trust decided to sell its controlling block of stock in Hershey Foods for a premium. The trust ultimately backed down due to pressure from all directions. The point: You just cannot optimize the solution for one set of stakeholders any more.
The book takes a long time to establish this premise. I assume that the authors have run into lots of skeptics in the past.
But if you accept the premise, it makes much of the book not terribly helpful.
The substance begins in chapter 13 on page 209 where the authors begin to address measuring and reporting. There's a brief description of the work being done in environmental and social reporting, such as the Global Reporting Initiative (GRI). If you're not familiar with GRI, you'll get a little background. But you won't know what to do next.
In the future, this kind of reporting will be more important. Stock exchanges in Scandinavia, France, Britain, South Africa and some other countries now require that listed companies report Triple Bottom Line results. It's all part of an atmosphere of the public wanting more disclosure.
But if you want practical advice about what to do, you won't find it here.
Think of this book as an appetizer to wake up your taste buds. The major issues involved in how to do this well are substantial and will take many years to work out. I suspect that taking the pathway of the Balanced Scorecard to work on these tasks is a surer route than Triple Bottom Line reporting.
I favor more measuring, reporting and focusing, but this book doesn't provide enough meat to satisfy me. Find a meatier book if you can if this subject interests you.
reviewed by shakeonit on November 28, 2006 10:54 AM
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Triple bottom line (3BL) accounting promises to keep score of "people, profits, and planet" -- meaning that it enables a company to measure not only its financial results, but also its environmental, and social impact as well.
It is, to be sure, a very good idea for companies to pay attention to their impact on the environment and to the contribution they make to their community and to society at large. And in business, what gets measured gets done -- so what is not to like about triple bottom line thinking?
At one level, there is nothing not to like. It is a minor fad and a fairly low nuitrition fad at that. There is nothing wrong with the occassional bite of ice cream -- but that hardly recommends it as a diet.
There are two problems with 3BL, and this book glosses over or ignores both of them. The first problem is one of measurement. We can measure financial result with standard accounting tools. This is not pure science and as with any performance measurement system, some people cheat -- but we know what cheating is and what results we are trying to measure. Moreover, we have a common unit of currency -- money.
There is no comparable way to measure environmental or social impact. Quick example: a company that is passionate about its 3BL principles recently explained to me how they were avoiding dumping excess product into landfill by donating it to needy Africans. They proudly gave themselves environmental credit for avoided landfill and social credit for a donation. Problem is, the Africans don't want this stuff, so they dump it in their own landfills. The program is completely wasteful, but the company tells its employees and customes that it is a 3BL business.
Social and environmental accounting are in any case not new. The Global Reporting Initiative (GRI), the SA 8000 from Social Accountability International, the AA 1000 from AccountAbility, as well as parts of various ISO standards are all efforts by international agencies or accounting firms to report non-economic aspects of company behavior. 3BL contributes nothing to this beyond packaging -- and occassionally misleading packaging at that.
Andy Savitz seems like a capable and well-meaning guy. But his book is built on a caricature of the corporation as a greedy, self-interested monolith. Unfortunately, the new thinking he brings to 3BL isn't very good -- and the good thinking isn't very new.
It is, to be sure, a very good idea for companies to pay attention to their impact on the environment and to the contribution they make to their community and to society at large. And in business, what gets measured gets done -- so what is not to like about triple bottom line thinking?
At one level, there is nothing not to like. It is a minor fad and a fairly low nuitrition fad at that. There is nothing wrong with the occassional bite of ice cream -- but that hardly recommends it as a diet.
There are two problems with 3BL, and this book glosses over or ignores both of them. The first problem is one of measurement. We can measure financial result with standard accounting tools. This is not pure science and as with any performance measurement system, some people cheat -- but we know what cheating is and what results we are trying to measure. Moreover, we have a common unit of currency -- money.
There is no comparable way to measure environmental or social impact. Quick example: a company that is passionate about its 3BL principles recently explained to me how they were avoiding dumping excess product into landfill by donating it to needy Africans. They proudly gave themselves environmental credit for avoided landfill and social credit for a donation. Problem is, the Africans don't want this stuff, so they dump it in their own landfills. The program is completely wasteful, but the company tells its employees and customes that it is a 3BL business.
Social and environmental accounting are in any case not new. The Global Reporting Initiative (GRI), the SA 8000 from Social Accountability International, the AA 1000 from AccountAbility, as well as parts of various ISO standards are all efforts by international agencies or accounting firms to report non-economic aspects of company behavior. 3BL contributes nothing to this beyond packaging -- and occassionally misleading packaging at that.
Andy Savitz seems like a capable and well-meaning guy. But his book is built on a caricature of the corporation as a greedy, self-interested monolith. Unfortunately, the new thinking he brings to 3BL isn't very good -- and the good thinking isn't very new.
reviewed by ivan on November 29, 2006 10:44 AM