How might triple-bottom-line accounting improve the social and environmental behavior of companies?

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Michael Ugulini | (Level 3) Educator

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Triple Bottom Line Accounting can improve the social and environmental behavior of companies through helping them realize and understand that going beyond the financial numbers is conducive to an organization being a good corporate citizen. A business operating in today's society must measure their social as well as environmental effectiveness. In other words, are they being accountable and responsible when it comes to concerns for people, the planet, as well as their profits?

In the past, a single bottom line was at the forefront of enterprises' concerns - this was, and still is the Profit Motive. Businesses existed to make a profit, and rightly so. This was the primary focus of their energies and resources. Today, while profitability is still at the heart of a business enterprise - without profits the business will shut down - many have given more credence to their social and environmental responsibilities. Therefore, Triple Bottom Line (TBL) Accounting will reveal to a company where they stand as concerns profits, people, and the planet.

TBL measuring highlights how a company is performing as concerns their commitment to environmental stewardship, and their social contract with people in their organization as well as the greater community at large. Of course, TBL also highlights their financial health in tandem with these other two elements.

The issue in Triple Bottom Line (TBL) Accounting is in the measuring. It's not difficult to measure profits...numbers are numbers and dollars and transactions can be easily accounted for. It is difficult to put methods in place that measure the environmental effectiveness of an organization. It's also difficult to measure a company's impact on people - both within and without of the organization.

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