The triple bottom line, does it all add up?

Henriques & Richardson

Enter the triple bottom line – John Elkington ....

It was in 1994 when the term ‘Triple Bottom Line’ (TBL) was first coined by John Elkington as a way to
further elaborate the findings of the Bruntland commission and encourage the progress of
integrating social and environmental factors into the business agenda.

Elkington puts forward that the TBL approach draws the focus of firms to not only the “economic
value that they add but also the environmental and social value that they add – or destroy”.

Seven drivers of the revolution

We are embarking on a global cultural revolution and businesses will be in the driving seat.

Markets will become more intense through the increase in competition. It is possible that entire
businesses and even industries will disappear. Furthermore there will be increased pressure for
businesses to conform to the TBL.

Values – there will be a worldwide shift in societal values that businesses must anticipate and adapt
to. For example when Shell tried to ditch the Brent Spar into the sea they thought that no one would
really notice but there was massive outcry about it. It became a massive moral issue and it could
have easily cost the firm its survival.

Transparency – more stakeholders will be requesting information, businesses will need to become
more transparent on a voluntary basis. There will be increased scrutiny, benchmarking and ranking
which the companies will need to do well in to survive.

Life cycle technology – a shift in thinking as is already happening with the move from cradle to grave
to cradle to cradle. Businesses’ supply chains will also need to be sustainable. What are the impacts
of the product on disposal after its useful life?

Partnership – former rivals will begin to form alliances in order to seek advantage and meet the
requirements of the TBL, NGOs will need to both challenge and work with companies

Time – at present Elkington thinks time is wide because we can access so much information from
around the world within seconds, however a shift will begin to emerge as sustainability requires
businesses to think in the long-term instead – decades, generations and even centuries. This is
already taking place, for example Shell uses its 50 year scenarios called blueprint and scramble.

Corporate Governance – the business side of TBL is ultimately down to the corporate board,
however questions will begin to be posed, e.g. what is the business for? Who should have a say in
how its run? It will also question the fundamental design of the organisation and suggests that in
order to be successful, sustainability must be in the DNA of the business.

Shows how the responsibility for sustainability has shifted from PR managers to the CEOs.

Three Waves of pressure

• Wave 1 in the 1960s (until 1973) brought an understanding that environmental impacts
and natural resource demands have to be limited, resulting in an initial outpouring of
environmental legislation. The business response was defensive, focusing on compliance, at
best.

• Wave 2 (1988 – 1991) directly following the Brundtland report in 1987 entitled ‘our
common future brought a wider realization that new kinds of production technologies and
new kinds of products are needed, culminating in the insight that development processes
have to become sustainable – and a sense that business would often have to take the lead.
The business response began to be more competitive.

• Wave 3 1992-2002 (kicked off by the UN world summit for sustainable development in
1992) focuses on the growing recognition that sustainable development will require
profound changes in the governance of corporations and in the whole process of
globalization, putting a renewed focus on government and on civil society. Now, in addition
to the compliance and competitive dimensions, the business response will need to focus on
market creation.

Each wave is followed by what’s known as a ‘downwave’ where public concern over
environmental issues dip, interestingly Elkington predicted that the downwave following
2002 would last between five and eight years, the Copenhagen Conference in Dec 2009
could be the beginning of Wave 4. The 4th and 5th are expected to develop the chrysalis
economy.
The Chrysalis economy
- Chrysalis means butterfly!
The chrysalis economy will emerge through the metamorphosis of the technological, social,
economic and political spheres. The key driver of this will be the unsustainable patterns of
wealth creation and distribution because the gap will continue to widen and social and
environmental problems will continue to worsen because of it.

In order to reach the chrysalis economy, the government must implement legislation that
understands each one of the four types of business.

Caterpillar
- Local impact
- Unsustainable if business model is projected to a large scale
- Has potential for transformation as it may already be operating in a industry with
competitors that have begun to morph.

Must provide incentives and opportunities for old companies to transform and ensure that
they do this in a sustainable way

Locust
- Regional/global impact
- Destructs economic, social, human and natural capital
- Overwhelms carrying capacity of social and natural capital
- Doesn’t see negative impacts of its business, won’t learn from mistakes and
unwilling to heed early warning signs

Must extend regulation to companies that are currently out of jurisdiction

Butterfly

- Tend to be small businesses

- Sustainable model of business and committed to CSR and sustainable development
- Powerful voice despite their relative economic size
- Big network among other butterflies
Honeybees

- Similar to butterflies but are more innovative and therefore slightly more sustainable
- Helps the bees, moderates caterpillars in their supply chain and learns from the
mistakes of the locusts
- Creates lots of partnerships