Corporate Impact Management

Sustainability and the Triple-Bottom-Line

 

The need for sustainable development

The concept of sustainability and the sustainable development of our global society were brought sharply into focus in 1987 in a publication called ‘Our Common Future’. This had been published by the Bruntland Commission’s (formerly known as the World Commission on Environment and Development). The report stated “Sustainable development is development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs”. It also highlighted the dilemma that as a global society we are dependent on natural resources but that we are depleting these resources more quickly than they can be replenished. As a result the report concluded that it needed to be recognised that the use of environmental resources needed to be limited in some way. These issues and the phrase ‘sustainable development’ were then brought in to the wider public area by the Rio de Janerio Earth Summit in 1992. More than 20 years later we are continuing to grapple with these issues with limited success. There is still a pressing need to find a long-lasting way to enable the growth of global prosperity without entirely depleting our diminishing natural resources.

 

A two-way street

The issue of sustainability highlights the fact that as individuals or organisations our relationship with the surrounding communities and environment is not one-way. It is not all about worrying about the impact we have on the world for the world’s sake. It is about acknowledging that the state of the world around us also impacts on us. Therefore if the quality of our world is diminished the quality of our life is also diminished. Therefore how we affect the quality of the world today affects the quality of our future. This cyclical relationship can in theory be maintained in balance but risks spiraling out of control.

 

Sustainable businesses

Sustainability is rooted in the need for on-going survival. While the sustainability of the human race is a global issue, the lessons can be applied to any organisation to support its long-term future. Planning now for the business needs of the future is an established principle of good practice. However we now need to consider a wider agenda, including a business’s global impact, as a part of these traditional planning processes. In practical terms, in order to improve your businesses sustainability, you will need to assess the impact you are having on natural resources and communities on which you are dependent. You will need to ensure that the effects of your business are not so dramatic that places and people cannot rejuvenate quickly enough to provide you with what you may need in the future. In short, if you take too much too quickly from the world around you, you may well destroy the things you need to survive.

 

Life-Cycle Assessment (LCA)


Thinking through sustainability requires a long-term view and the acknowledgement that our impact affects our future in a cyclical way. This cyclical thinking lies at the heart of Life-Cycle Assessment (LCA).  A product does not exist at a single point in time – it is not spontaneously created and used in a moment – it has a life-span. It is designed, built, delivered, used, and eventually disposed of. The same is true of projects or processes. LCA is a technique that can be used to analyse the impact of a product, project or process during the various stages of this life-cycle.

LCA also high-lights the fact that in reality there are cycles within cycles in the life of every business and product. How a product is used can be as important (if not more important) than how it is made because the use phase of its life-cycle is likely to be the longest with the greatest impact over time. An example of this thinking is the move by laundry detergent manufacturers to produce detergents that can work at low temperatures. This move stems from the recognition through LCA that the greatest levels of Green House Gas (GHG) emissions are during the ‘use’ phase. An organisation that is serious about tackling its impact needs to be able to identify when and where its impact is greatest.

Enabling products to be used in less energy intensive ways can be an important way to reduce a company’s global impact. LCA encourages resource and energy efficiency across an entire life-cycle which is sometimes referred to as ‘cradle-to-grave’ thinking. However there is now a move to look at life-cycles from a ‘cradle-to-cradle’ perspective i.e. what happens to a product after it is disposed of and how could it be used to create new products. This idea of today’s waste being designed to be tomorrow’s resource is becoming more popularly known as the Circular Economy. Work in this area is currently focused on environmental resource efficiency and the economy. However it is important to remember that sustainable development requires a strong social/human element. Fortunately most of the related high-level principles can be applied across social, environmental, and economic resources.

 

The Triple-Bottom-Line

Triple-Bottom-Line accounting is a technique which is used to help businesses think more broadly about long-term success. Rather than focusing exclusively on financial measures – the traditional bottom line – it also takes into account impact on people and the planet. As such, Triple-Bottom-Line accounting records and reports on an organisation’s impact on Environmental, Social, and Economic resources. This simple framework can be a useful tool to help managers begin to consider if a business decision is likely to strengthen or weaken each bottom line. A consolidated view of all such decisions across an organisation can then act as a useful indicator of the organisation’s long-term sustainability. Taken further, the approach can be used to capture how the activities of an organisation impact on various stakeholders in-terms of changes to their TBL account. In its simplest form this could show what social, environmental or economic resources have been lost or gained during an activity or transaction.

 

Reputational risk

It should be noted that the approach to corporate sustainability above is very pragmatic and survival-based rather than an ethical or moral stance. The moral case is also compelling and companies that are blind to this also risk severe reputational damage.

 

 

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