Whether you are a CEO, or a member of a Board of Directors, as well as if you are a C-level executive, or a Senior or Middle Manager, you have to understand why you need to help your organization increase the Triple Bottom Line (referred to also as “TBL” or “3BL” – People, Planet, Profit) – and not just the Economic Bottom Line – and improve brand reputation.
On the one hand, every manager knows the meaning of the accounting terminology “Bottom Line”, as it describes the net income or loss that an organization makes at the end of a financial or fiscal year, and that is utilized to calculate the Earnings-Per-Share (EPS) of a business.
On the other hand, not every businessman recognizes what the definition of the “Triple Bottom Line” accounting method is about: i.e. analysis, management, measurement and communication of an organization’s environmental responsibility, its social awareness and economic profitability.
According to such all-inclusive, innovative approach to business management, an organization must operate within the society not only to reward its shareholders through enhanced profits, but also to improve its environmental and social performance for the benefit of major and minor stakeholders, as well as the overall local and global community in which it performs.
An organization that want to be profitable, successful and sustainable has to take into account not only conventional tangible assets and financial considerations to judge performance locally and globally, but it also needs to consider intangible assets – e.g. people, relationships, customer awareness, marketplace position, corporate knowledge, intellectual property and so on – and its environmental sustainability performance and social responsibility actions, as key aspects to use as further accounting criteria, in addition to the traditional economical and financial principles.
In particular, the intangible asset of “customer awareness” needs to be taken into account, and under continuous control and examination by every businessman.
The main reasons of such consideration about this specific intangible asset deals with the fact that:
1) Customers level of information, their interest and understanding of environmental and social issues are increasing, and will continue to growth in the near future;
2) Customers concerns deal with key human health problems, as well as safety product and natural resources conservation topics more now than ever before;
3) Customers take into account sustainability issues in the buying decision process, and such increasing of commercial awareness and ethical behavior effect management and communications;
4) Customers have a lot of sustainability needs that are still unknown and unmet by mid-to-large organizations, and such demand requires careful consideration and in-depth analysis;
5) Customers value quality and price of products and services differently, and such perception is linked to corporate culture on sustainability, and not only to the peculiarities of a traditional quality system.
Having said that, it is easy to understand why the TBL Accounting System can help businesses and the economy stop being “unsustainable” in the medium-long term by sustaining people and preserving the environment, as well as by expanding management and communications frameworks towards intangible factors, otherwise difficult to identify, measure and communicate, e.g. “customer awareness” in relation to brand image and reputation’s perception.
We help our clients and partners address the most pressing economical, political, social and environmental challenges. If you want to learn more about our sustainability practices, please Contact Us for an initial introductory consultation to discuss what management and communications systems you may need for complete sustainability legislative and regulatory compliance, and better measurement and reporting of TBL performance.