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The Triple Bottom Line - Essay Example

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This essay discusses the article "The Triple Bottom Line: What Is It and How Does It Work" written by Timothy F. Slaper and Tanya J. Hall highlights the importance of sustainable development. Authors argue about sustainability that has often been cited as one of the primary goals for organizations…
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The Triple Bottom Line
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The Triple Bottom Line: What Is It and How Does It Work? Introduction The article, ‘The Triple Bottom Line: What Is It and How Does It Work?’ written by Timothy F. Slaper and Tanya J. Hall highlights the importance of sustainable development. The authors argue that while sustainability has often been cited as one of the primary goals for organizations, measuring it still remains a challenge.
The authors draw the attention of the reader toward the ‘Triple Bottom Line’ (TBL) approach, also referred to as the 3Ps approach, put forth by John Elkington in the mid-1990s. The paper is a rich source of information on the TBL accounting framework which takes into consideration the economic (profit), environmental (planet) and social (people) impact of business decisions.
Variations in the TBL Approach
Prior to the emergence of the TBL approach, academicians and industry practitioners grappled with finding a true measure of sustainability. The TBL approach resolved this issue. However, the three dimensions of the TBL approach do not have a common unit of measurement so ascertaining the sustainability performance of an organization is not straightforward.
Some experts suggest assigning a monetary value to all the 3Ps. The detractors claim that while profits can be measured in dollars, the environmental impact and social impact cannot be measured in dollar terms. Another school of thought suggests that an index be created which will allow for logical comparisons of sustainability performance of organizations. The discord in this approach is regarding the weights to be assigned to the three dimensions of TBL. Which of the 3Ps is most important; people, planet or profits? Who will decide this? There is no clear cut answer. The authors opine that each of the parameters of TBL should have different units of measurement and should have different metrics.
The authors then throw light on the fact that there is no universal method of calculating the TBL. A couple of variations of the TBL measurement; namely The Genuine Progress Indicator (GPI) that comprises 25 variables and Minnesota Progress Indicator that includes 42 variables and have also been mentioned in the paper.
Another important learning from the paper is the appropriate measures to be used while gauging the TBL performance of an organization or of a particular project. Personal income, job growth, revenue generated are some of the economic measures while hazardous waste management, electricity consumption, solid waste management and change in land use are some of the environmental measures. The potential social measures include unemployment rate, relative poverty and health-adjusted life expectancy. In the ultimate analysis, the data availability will determine which measures are incorporated in the TBL accounting framework.
Application of TBL Approach
Behemoths like General Electric (GE), Unilever, Proctor and Gamble (P&G) and 3M use the TBL scorecard, albeit with different variables. Likewise nonprofit organizations use variables that fall within the ambit of their operations. For instance RSF Social Finance uses support towards sustainable food and agriculture as an economic variable, funding towards ecological stewardship as an environmental variable and financial support towards education and arts as a social variable. The use of TBL approach has made way into the government sector also. The State of Maryland has adopted the blended GPI-TBL framework to measure its wealth as well as well-being.
Conclusion
There are numerous takeaways from this article. It draws attention towards the emergence of TBL approach as a means to gauge the ramifications of decisions from a long-run perspective. The paper highlights the limitations of the TBL accounting framework and also suggests that with suitable variations and modifications, it can be applied to different settings including profit and not-for-profit organizations and the government sector.
Works Cited
Slaper, Timothy F., and Tanya J. Hall. The Triple Bottom Line: What Is It And How Does It Work?.Ibrc.indiana.edu. , 2011. Web. 11 Nov. 2015. Read More
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