Triple Bottom Line Reporting And Its Use Essay

Length: 11 pages Sources: 8 Subject: Business Type: Essay Paper: #31993657 Related Topics: Financial Reporting, Sustainability, Transparency, Sustainable Development
Excerpt from Essay :

¶ … triple bottom line reporting and its use in gauging the level of corporate sustainability. The concept of triple bottom line reporting is shown to be effective in ensuring that the corporate sustainability concerns are addressed and business takes account of the outcomes. This is done using a review of relevant literature in order to point out the success factors as well as the threats that face TBL reporting programs.

The contemporary corporate environment and culture has been steadily leaning towards the increasing need of higher levels of transparency and accountability in regard to public reporting as well as communication. This is a trend that demands for increased disclosure of the nature and level of corporate performance and engagements in matters of social-economic and environmental dimensions (G100 2003).In a nutshell, the public is in need of information regarding the level of sustainability in which various corporations engage in. In order to gauge the level of sustainability, it is important that a standard of reporting be adopted. Triple Bottom Line reporting is one of the techniques of reporting sustainability.

The definition of TBL reporting

A standard definition of triple bottom line reporting does not exist. This therefore means that no universally accepted definition exists. It can loosely be defined as the a form of corporate communication which engages stakeholders and holds the key to the corporation's accepted approach to the management of social, economic and environmental dimensions via clearly instituted communication channel that provides information on the above mentioned three dimensions (G100 2003). The elements of social, economic and finally the environmental dimensions in an organization are what constitutes sustainability/sustainable development.TBL can therefore basically be used to refer to the official publication of social, economic and environmental information of a given business entity in a manner that is integrated to reflect both the activities as well as the results of a corporation's performance on the basis of the three dimensions.

The factors driving the general trend towards the adoption of TBL reporting

There are quite a number of factors that are driving corporation towards the adoption of TBL reporting. Some of these factors are; mandatory requirements, the need to be consistent with the high level of public vigilance on the corporate code of behavior, and the increase in the level of stakeholder requirement for high level of transparency as well as results.

The idea of "Triple Bottom Line" (TBL) reporting has in the previous year's become progressively more stylish in organizations; consulting firms, investment firms, and also the NGOs extensively employ it in the management of their operations. The thought lies behind the TBL model is that a firm's final can be gauged not merely by the customary financial end result, but again by its social, moral as well as ecological performance. For quite a long time, the majority individuals who are both in the corporate world and outside have come to an agreement that organizations are required by the stakeholders to perform their tasks responsibly. Firms are not capable of flourishing in the long run when they constantly ignore the interests of the main stakeholders. The evident uniqueness of TBL is lying in the contention of its supporters that the general accomplishment of responsibilities to the society, workers, clients, and suppliers ought to be calculated, reviewed and the information provided to the stakeholders the same way that the financial results of public corporations is being conducted. If we strongly believe that moral practices of the business and also social responsibility are significant purposes of corporate authority and administration, then we ought to accept the efforts to come up with tools that are capable of making much clearer to the administrators, shareholders besides the other stakeholders how well a corporation is performing in this regard. This paper looks at the usefulness of TBL, the advantages of socially responsible practices by the businesses, and the probable effectiveness of tools that are capable of being used to assess and report on performance.

Triple bottom line reporting is making firms liable for not only economic and social effects but also for environmental results of doing businesses. Indeed it...


To these firms, both the ecological and also social performance also significant the way financial performance is important.

The concept of triple bottom line reporting was originally applied by John Elkington in the year 1995. He published a book concerning this topic in the year 1998. The book was entitled "Cannibals with Forks: the Triple Bottom Line of 21st Century Business." Indeed, Triple bottom line reporting has got drive in all sectors and industries and not for the not for profit making organizations and also for government organizations as it has been presumed.

As stated above, the term 'triple bottom line' was supposedly invented by John Elkington in the year 1995 (Sarre & Treuren 2001) despite the fact that it was not made popular until the book that he published became widespread in the year 1997.

The Triple Bottom Line (TBL) is an idea that has got authorized imprimatur as a structure to give confidence to the organizational concerns regarding sustainability. Despite the fact that at first it was viewed as a mere idea or a method of thinking about sustainability, similar to the notion of corporate social responsibility, it has now become a device for both accounting and reporting. Other authors are arguing that Triple Bottom Line is essentially imperfect in the things it is offering, and besides, they are saying it is transmitted by proponents who are mainly uninformed of the other approaches that are in existence.

The Need of Triple bottom line reporting

The concept of triple bottom line (TBL) reporting needs the corporations to socially be responsible to both the shareholders and also to every stakeholder of the respective firms. Stakeholders usually entail all the shareholders, workers, clients, goods and services providers and any other person who is influenced by the events and proceedings of the business. It is demand that the firm be sustainable in all aspects of business.

The Benefits of Triple bottom line reporting

The social feature of triple bottom line reporting is focusing on reasonable treatment of a firm's human resources. In addition to the provision of a safe place of work and also reasonable salary for workers, being responsible socially involve performing responsible and helpful corporate practices within the society in which the business operates . Triple bottom line reporting is requiring a corporation to be involved in sustainable ecological activities. Corporations and firms ought to put great efforts to conserve the surroundings, or to significantly minimize the harm that they are inflicting on to the surroundings. A corporation using triple bottom line reporting is capable of managing the utilization of energy, minimizes waste, recycles resources and also shuns the production of very dangerous substances like chemicals and weapons.

The Significance of Triple bottom line reporting

When a business appears to be both socially and environmentally responsible to its clients, it will be capable of maximizing the profits that it is making. It is very common situation to see many companies making headlines because of being involved in accounting scandals, giving their workers very unjust salaries, unsafe work conditions and prejudice. All these reports are affecting the reputation of the firms that are involved besides their goodwill, thereby resulting into the lost of many revenues.

TBL is capable of making a firm to reach the untapped market. Indeed TBL firms are capable of finding niches that are financially profitable, and which were previously missed by the firms when their driving force was money only.

TBL is capable of developing highly profitable ways to aid the NGOs that are in existence with their missions like fundraisings, getting to the customers, or generating networking opportunities with other numerous NGOs.It is also capable of providing goods and services which will be of great use to the populations that are languishing in poverty.

It is capable of making businesses to become familiar with new business ventures. Due to the fact that numerous business opportunities are coming up in the sphere of social entrepreneurship, the businesses that are having hopes of reaching this growing market have to prepare themselves of being profitable financially, socially helpful and economically sustainable or else they will not be able to compete with the firms which are not designing themselves that way. For instance, just trade and ethical Trade firms need moral and sustainable practices from every supplier providing them with goods and services. Any businesses that are having plans of working with the firms that are dealing in just Trade or moral Trade have to design the models of their business to become TBL.

Firms usually issue TBL reports mainly for two purposes: to meet the demands of the investors and also to be recognized for the actions that the firms do. For instance, firms like Shell and Nike have in the past…

Sources Used in Documents: [accessed

26 February 2004].

Tschopp, D. 2003. It's Time for Triple Bottom Line Accounting. The CPA Journal. 73(12): 11.

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