Question

Analyze the key tenets of the concept of environmental sustainability and the concept of the triple bottom line. Explain how striving for environmental sustainability impacts strategic initiatives involving a company's shareholders, its employees, and the environment, and then include a second paragraph in your answer to explain the meaning of the triple bottom line concept and how this concept is used to assess financial performance of these types of companies.

Answer 1

Every business these days has to be a sustainable one. Though profit and wealth maximization of the shareholders is a major goal of all companies, they are also concentrating on making the business sustainable as well. The term sustainability means to grow at a certain level without harming the environment or ecological balance. The term environmental sustainability means interaction with the environment in such a way that the depletion of environmental resources is reduced and protects the environment for a longer time period. Companies which are striving for environmental sustainability include several ways of incorporating it in their business activities. For example: banks have now started sending e-statements to their customers instead of given them printed bank account statements in paper. This is a small step towards protecting the environment. A company that tries to protect the environment will be appreciated by its customers and other stakeholders. It only shows that the company is aware of its responsibilities and it is fulfilling those responsibilities.

Triple bottom line concept is an accounting concept that concentrates on protecting the environment by including the social and environmental responsibilities in the business. The term triple bottom line was first used by John Elkington. A company generally measures its economic profit only but the triple bottom line concept states that a company should measure its environmental impact, social responsibility along with its economic value. The triple bottom line includes the planet, people and profits. Generally in the rat race of today's world, all companies are only concentrating on earning more and more profits. They do not bother about the working conditions of the people in the company or the people residing outside the company. A company that follows the triple bottom line will take care of the planet that is providing the resources needed for the manufacturing process and they also take care of the people who are working in the company for production. Thus, the social and environmental responsibilities are now becoming a part of the corporate governance of the company.