Question

What is Triple bottom line principles? How to apply triple bottom line principles in work planning(in Australian Accounting environment) (Please type your answer)

Answer 1

The triple bottom line which is otherwise known as the TBL or 3BL is an accounting framework with three parts:

1.Social.

2.Environmental

3.Ecological and financial.

Some organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value.

In traditional business accounting and common usage, the "bottom line" refers to either the "profit" or "loss", which is usually recorded at the very bottom line on a statement of revenue and expenses.An example of an organization seeking a triple bottom line would be a social enterprise run as a non-profit, but earning income by offering opportunities for handicapped people who have been labelled "unemployable", to earn a living by recycling.

The challenges of putting the TBL into practice relate to the measurement of social and ecological categories. Despite this, the TBL framework enables organizations to take a longer-term perspective and thus evaluate the future consequences of decisions.

So the TBL is dependent on the factors like social equity, economic, and environmental factors.

The following are the arguments or the principles which supports the TBL concepts mainly described below:

• Reaching untapped market potential: TBL companies can find financially profitable niches which were missed when money alone was the driving factor. Examples include
  • Developing profitable methods to assist existing NGOs with their missions such as fund raising, reaching clients, or creating networking opportunities with multiple NGOs.
  • Providing products or services which benefit underserved populations and the environment which are also financially profitable.
• Adapting to new business sectors: With the growth of social enterprise and entry of Corporations there is more demand from consumers and investors for an accounting for social and environmental impact.
• Fiscal Policy of the government :The primary benefit of embedding one approach to measurement of these deficits would be first to direct monetary policy to reduce them, and eventually achieve a global monetary reform by which they could be systematically and globally reduced in some uniform way.
• Catastrophic breakdown of climate or ecosystems:There is need for comprehensive reform of global financial institutions in order to avoid catastrophic breakdown of climate or ecosystems since there is a risk in the environment.
• Green economics:With the emergence of an externally consistent and agreement on definitions of potentially contentious terms such as full-cost accounting, natural capital and social capital, the prospect of formal metrics for ecological and social loss or risk has grown less remote.

Some of the measures undertaken in the European Union towards the Euro currency integration standardize the reporting of ecological and social losses in such a way as to seem to endorse the principle of unified accounts, or unit of account, for these deficits.

To address financial bottom line profitability concerns, some argue that focusing on the TBL will indeed increase profit for the shareholders in the long run.