Description
This is a document explaining the triple bottomline report.
TRIPLE BOTTOM LINE REPORTING
Sustainability: “using, developing and protecting resources in a manner that enables people to meet current needs and provides that future generations can also meet future needs, from the joint perspective of environmental, economic and community objectives.”
Accounting is concerned with the translation of business events into the language of moneyunits. It is the simplest and most effective way yet discovered to collect information about the operations of enterprise and to transmit that information to interested persons.” Reporting Tools • • • The Triple Bottom Line The Balanced Scorecard Third Party Reporting and Criteria
Triple Bottom Line Reporting
The Triple Bottom Line (TBL) is one way to report on sustainable business activity. TBL defines sustainability in terms of three separate elements – 1. Financial/Economically Viable
2. Social Responsible 3. Environmentally Sound Bottom Line Defined as The last line of a financial statement, used for showing net profit or loss or The deciding or crucial factor or The ultimate result/outcome or The main or essential point.
Economically Viable
Reflects activities related to • • • •
•
shaping demand for products and services employee compensation community contributions local procurement policies Other monetary issues related to company activities.
Social Responsible
Social responsibility includes how we take care of our own employees; Social includes involvement in shaping local, national and international public policy, equality, treatment of minorities, employee issues and public concern. Social responsibility cover issues like: • • • Senior policy Health and safety Human rights (i.e. equal opportunities)
Environmentally Sound
Environmental includes impacts made through processes, products or services. These may include air, water, land, natural resources, flora, fauna and human health. • • • Environmental issues include resource consumption which would be energy, water and biodiversity. Emissions, effluents and waste and the way they are discarded. Animal experimentation, patenting and ethical considerations in relation to genetic engineering.
Overview
Companies are increasingly including economic social and environmental information in their public reporting in addition to the financial information required for statutory reporting. Some companies have a separate report or reports. A number of factors are driving this shift in public reporting including response to mandatory requirements, consistency with emerging public commitments, changing demands of the stakeholders for greater transparency about operating policies and results.
Why report- the business benefits of reporting
Alignment of company reporting with the expectations of key stakeholders serves to improve the quality of a company’s relationships with such stakeholders and thus protect and enhance the value of the organization. Some of the specific organizational benefits identified include:
•
Reputation and brand benefits – corporate reputation is a function of the way in which a company is perceived by its stakeholders. Effective communication with stakeholders on one or more of the environmental, social and economic dimensions can play an important role in managing stakeholder perceptions and, in doing so, protect and enhance corporate reputation.
•
Securing a ‘social license to operate’ – a ‘license to operate’ is not a piece of paper, but informal community and stakeholder support for an organisation’s operations. Business is increasingly recognizing the link between ongoing business success and it ‘license to operate’, especially in the resources sector where the concept of a social license to operate has been central for some years. Communication with stakeholders is often critical to securing and maintaining a ‘license to operate’
•
Attraction and retention of high calibre employees – existing and prospective employees have expectations about corporate environmental, social and economic behaviour, and include such factors in their decisions. The publication of TBL-related information can play a role in positioning an employer as an ‘employer of choice’ which can enhance employer loyalty, reduce staff turnover and increase a company’s ability to attract high quality employees.
•
Improved access to investor market – a growing number of investors are including environmental and social factors within their decision-making processes. The growth in socially responsible investment and shareholder activism is evidence of this. Responding to investor requirements through publication of TBL-related information is a way of ensuring that the company is aligning its communication with this stakeholder group, and therefore enhancing its attractiveness to this segment of the investor market.
•
Establish position as a preferred supplier - obtaining a differentiated position in the market place is one way to establish the status of preferred supplier. Effectively communicating with the stakeholder groups on environmental, social and economic issues is central to obtaining a differentiated position in the market place.
•
Reduced risk profile – there is an expanding body of evidence to suggest that performance in respect of economic, social and environmental factors has the capacity to affect the views of the market participants about the company’s exposure to, and management of, risk. TBL reporting enables a company to demonstrate its commitments to effectively managing such factors and to communicate its performance in these areas. A communication policy that addresses these issues can play an important role in the company’s overall risk management strategy.
•
Cost savings – TBL reporting often involves the collection, collation and analysis of data on resource and materials usage, and the assessment of business processes. For example, this can enable the company to better identify opportunities for cost savings through more efficient use of resources and materials.
•
Innovation – The development of innovative products and services can be facilitated through the alignment of R&D activity with the expectations of the shareholders. The process of publishing TBL reporting provides a medium by which companies can engage with stakeholders and understand their priorities and concerns.
•
Aligning shareholder needs with management focus – External reporting of information focuses management attention on not only the integrity of the data but also on the continuous improvement of the indicator being reported.
•
Creating a sound basis for shareholder dialogue – Publication of TBL reporting provides a powerful platform for engaging in dialogue with stakeholders. Understanding stakeholder requirements and alignment of business performance with such requirements is fundamental to business success. TBL reporting demonstrates to stakeholders the company’s commitment to managing all of its impacts, and, in doing so, establishes a sound basis for stakeholder dialogue to take place.
Progression toward Triple Bottom Line Reporting
1. Brief marketing publications including newsletters and brochures
2. Inclusion of limited environmental/ social information within statutory reporting.
3. Commencement of Consistent annual reporting on environment/social issues.
4. Publication of separate environment and/or community reports. 5. Annual reporting based upon detailed environment/social performance data with
linkage to objectives and outcomes.
6. Integration of environment, social and economic performance measurement into a
single report – Triple Bottom Line Reporting.
Qualities and Characteristics of Information in TBL Reports
TBL report usually contains both quantitative and qualitative information. The report should contain certain characteristics such as
•
Reliability – information should be accurate and should provide with a true picture of the activities and performance of the company. Usefulness – the information must be relevant internal and external stakeholders and be relevant to their decision making. Consistency of presentation – throughout there must be consistency of data and informant on be it graphs, format, timeframe and metrics. Full Disclosure – open explanation of specific actions undertaken and performance outcome. Reproducible – information on an ongoing basis. Auditability – all the data and statements but be readily substantiated.
•
•
•
• •
When the reported information possesses these characters then the reporting is said to be objective, balanced and credible which not only benefits stakeholders but also minimises risk associated with the publication or TBL Reporting.
Reporting Process
1) Planning for reporting
a) Understand national international and industry trends in TBL reporting
b) Indentify key stakeholders c) Secure support from the board and senior executives
d) Indentify resource requirement an determine budget
2) Setting the direction for TBL reporting a) Engage with stakeholders to understand their requirements
b) Set overall objectives for TBL reporting
c) Identify gaps and barriers associated with current approach and prioritize risk associated with overall reporting objective d) Review legal implications
e) Develop a strategy
f) Determine performance indicators
g) Establish proper content and structure o the report
3) Implementation of TBL reporting strategy a) Collecting data and review process
b) Clarify relationship to statutory financial reporting.
4) Publication of TBL report a) Prepare drat report b) Review and modify accordingly c) Obtain external verification d) Publish TBL report e) Seek feedback and incorporate in the next period report
Report Content
1. Manager’s or Owner’s Statement 2. Vision, purpose and core values • Big goals for the company • Explain why you are writing the report and its scope 3. Description of the company • What do you do? • How many staff etc? 4. The key areas in which you want to make a difference, and why • How does it relate to your business?
• What are your positive and negative impacts? • What do stakeholders expect? • What are the objectives and targets in each area? • How has your business performed against your targets? • What key initiatives and targets for next year reflect your commitment to improvement?
Example –
Triple Bottom Line Reporting of Siam City Public Company Limited. It is a cement company in Thailand.
ECONOMIC RESPONSIBILITY • Improve operational efficiency and performance through more efficient use of resources
ENVIRONMENTAL RESPONSIBILITY
SOCIAL RESPONSIBILITY
•
Work with customers to find sustainable solutions to their waste management challenges that can help to minimize the environmental footprint of their businesses. Reduce dependence on natural fuels and raw materials Manufacture a key building material, Portland cement and improve the overall environmental stewardship of the earth.
•
Closely tied to economic performance and environmental responsibility Improve the quality of life of our employees, their families and the communities near our operations.
•
• •
doc_947718394.doc
This is a document explaining the triple bottomline report.
TRIPLE BOTTOM LINE REPORTING
Sustainability: “using, developing and protecting resources in a manner that enables people to meet current needs and provides that future generations can also meet future needs, from the joint perspective of environmental, economic and community objectives.”
Accounting is concerned with the translation of business events into the language of moneyunits. It is the simplest and most effective way yet discovered to collect information about the operations of enterprise and to transmit that information to interested persons.” Reporting Tools • • • The Triple Bottom Line The Balanced Scorecard Third Party Reporting and Criteria
Triple Bottom Line Reporting
The Triple Bottom Line (TBL) is one way to report on sustainable business activity. TBL defines sustainability in terms of three separate elements – 1. Financial/Economically Viable
2. Social Responsible 3. Environmentally Sound Bottom Line Defined as The last line of a financial statement, used for showing net profit or loss or The deciding or crucial factor or The ultimate result/outcome or The main or essential point.
Economically Viable
Reflects activities related to • • • •
•
shaping demand for products and services employee compensation community contributions local procurement policies Other monetary issues related to company activities.
Social Responsible
Social responsibility includes how we take care of our own employees; Social includes involvement in shaping local, national and international public policy, equality, treatment of minorities, employee issues and public concern. Social responsibility cover issues like: • • • Senior policy Health and safety Human rights (i.e. equal opportunities)
Environmentally Sound
Environmental includes impacts made through processes, products or services. These may include air, water, land, natural resources, flora, fauna and human health. • • • Environmental issues include resource consumption which would be energy, water and biodiversity. Emissions, effluents and waste and the way they are discarded. Animal experimentation, patenting and ethical considerations in relation to genetic engineering.
Overview
Companies are increasingly including economic social and environmental information in their public reporting in addition to the financial information required for statutory reporting. Some companies have a separate report or reports. A number of factors are driving this shift in public reporting including response to mandatory requirements, consistency with emerging public commitments, changing demands of the stakeholders for greater transparency about operating policies and results.
Why report- the business benefits of reporting
Alignment of company reporting with the expectations of key stakeholders serves to improve the quality of a company’s relationships with such stakeholders and thus protect and enhance the value of the organization. Some of the specific organizational benefits identified include:
•
Reputation and brand benefits – corporate reputation is a function of the way in which a company is perceived by its stakeholders. Effective communication with stakeholders on one or more of the environmental, social and economic dimensions can play an important role in managing stakeholder perceptions and, in doing so, protect and enhance corporate reputation.
•
Securing a ‘social license to operate’ – a ‘license to operate’ is not a piece of paper, but informal community and stakeholder support for an organisation’s operations. Business is increasingly recognizing the link between ongoing business success and it ‘license to operate’, especially in the resources sector where the concept of a social license to operate has been central for some years. Communication with stakeholders is often critical to securing and maintaining a ‘license to operate’
•
Attraction and retention of high calibre employees – existing and prospective employees have expectations about corporate environmental, social and economic behaviour, and include such factors in their decisions. The publication of TBL-related information can play a role in positioning an employer as an ‘employer of choice’ which can enhance employer loyalty, reduce staff turnover and increase a company’s ability to attract high quality employees.
•
Improved access to investor market – a growing number of investors are including environmental and social factors within their decision-making processes. The growth in socially responsible investment and shareholder activism is evidence of this. Responding to investor requirements through publication of TBL-related information is a way of ensuring that the company is aligning its communication with this stakeholder group, and therefore enhancing its attractiveness to this segment of the investor market.
•
Establish position as a preferred supplier - obtaining a differentiated position in the market place is one way to establish the status of preferred supplier. Effectively communicating with the stakeholder groups on environmental, social and economic issues is central to obtaining a differentiated position in the market place.
•
Reduced risk profile – there is an expanding body of evidence to suggest that performance in respect of economic, social and environmental factors has the capacity to affect the views of the market participants about the company’s exposure to, and management of, risk. TBL reporting enables a company to demonstrate its commitments to effectively managing such factors and to communicate its performance in these areas. A communication policy that addresses these issues can play an important role in the company’s overall risk management strategy.
•
Cost savings – TBL reporting often involves the collection, collation and analysis of data on resource and materials usage, and the assessment of business processes. For example, this can enable the company to better identify opportunities for cost savings through more efficient use of resources and materials.
•
Innovation – The development of innovative products and services can be facilitated through the alignment of R&D activity with the expectations of the shareholders. The process of publishing TBL reporting provides a medium by which companies can engage with stakeholders and understand their priorities and concerns.
•
Aligning shareholder needs with management focus – External reporting of information focuses management attention on not only the integrity of the data but also on the continuous improvement of the indicator being reported.
•
Creating a sound basis for shareholder dialogue – Publication of TBL reporting provides a powerful platform for engaging in dialogue with stakeholders. Understanding stakeholder requirements and alignment of business performance with such requirements is fundamental to business success. TBL reporting demonstrates to stakeholders the company’s commitment to managing all of its impacts, and, in doing so, establishes a sound basis for stakeholder dialogue to take place.
Progression toward Triple Bottom Line Reporting
1. Brief marketing publications including newsletters and brochures
2. Inclusion of limited environmental/ social information within statutory reporting.
3. Commencement of Consistent annual reporting on environment/social issues.
4. Publication of separate environment and/or community reports. 5. Annual reporting based upon detailed environment/social performance data with
linkage to objectives and outcomes.
6. Integration of environment, social and economic performance measurement into a
single report – Triple Bottom Line Reporting.
Qualities and Characteristics of Information in TBL Reports
TBL report usually contains both quantitative and qualitative information. The report should contain certain characteristics such as
•
Reliability – information should be accurate and should provide with a true picture of the activities and performance of the company. Usefulness – the information must be relevant internal and external stakeholders and be relevant to their decision making. Consistency of presentation – throughout there must be consistency of data and informant on be it graphs, format, timeframe and metrics. Full Disclosure – open explanation of specific actions undertaken and performance outcome. Reproducible – information on an ongoing basis. Auditability – all the data and statements but be readily substantiated.
•
•
•
• •
When the reported information possesses these characters then the reporting is said to be objective, balanced and credible which not only benefits stakeholders but also minimises risk associated with the publication or TBL Reporting.
Reporting Process
1) Planning for reporting
a) Understand national international and industry trends in TBL reporting
b) Indentify key stakeholders c) Secure support from the board and senior executives
d) Indentify resource requirement an determine budget
2) Setting the direction for TBL reporting a) Engage with stakeholders to understand their requirements
b) Set overall objectives for TBL reporting
c) Identify gaps and barriers associated with current approach and prioritize risk associated with overall reporting objective d) Review legal implications
e) Develop a strategy
f) Determine performance indicators
g) Establish proper content and structure o the report
3) Implementation of TBL reporting strategy a) Collecting data and review process
b) Clarify relationship to statutory financial reporting.
4) Publication of TBL report a) Prepare drat report b) Review and modify accordingly c) Obtain external verification d) Publish TBL report e) Seek feedback and incorporate in the next period report
Report Content
1. Manager’s or Owner’s Statement 2. Vision, purpose and core values • Big goals for the company • Explain why you are writing the report and its scope 3. Description of the company • What do you do? • How many staff etc? 4. The key areas in which you want to make a difference, and why • How does it relate to your business?
• What are your positive and negative impacts? • What do stakeholders expect? • What are the objectives and targets in each area? • How has your business performed against your targets? • What key initiatives and targets for next year reflect your commitment to improvement?
Example –
Triple Bottom Line Reporting of Siam City Public Company Limited. It is a cement company in Thailand.
ECONOMIC RESPONSIBILITY • Improve operational efficiency and performance through more efficient use of resources
ENVIRONMENTAL RESPONSIBILITY
SOCIAL RESPONSIBILITY
•
Work with customers to find sustainable solutions to their waste management challenges that can help to minimize the environmental footprint of their businesses. Reduce dependence on natural fuels and raw materials Manufacture a key building material, Portland cement and improve the overall environmental stewardship of the earth.
•
Closely tied to economic performance and environmental responsibility Improve the quality of life of our employees, their families and the communities near our operations.
•
• •
doc_947718394.doc