Triple Bottom Line Analysis

Introduction

Traditionally, financial reporting discloses only financial information to determine its financial performance. However, nowadays, success of one business is no longer solely depending on monetary gain, instead the impacts of companies’ activities have on society and environment as a whole is highly important. This trend has come across to increase the public expectation for organization to take responsibility for their non-financial impacts for example the impacts on the environment and community. Hence, Triple Bottom Line (TBL) which was first described in 1994 by John Elkington can be an ideal integrated approach that fit in to this approach in order to support the sustainability growth of the companies. Triple Bottom Line incorporate three dimension of performance and measurement namely social (people), environment (planet) and financial (profit) which attached to the theory of sustainable development reporting. It is an expansion of the traditional performance framework as it takes into consideration not just financial outcome but also social and environmental performance that businesses are dealing with. The explanations of the three pillars are as follow.

Social (People)

The first element in TBL is stakeholder which deals with people within and outside of the business. Stakeholders include the community, customers, suppliers, employees, management team and anyone that can relate to the business. Companies that adopt triple bottom line reporting concern about the impact their actions have on the people involved for example, contribution to community, no child labour, safe working condition and good working hours. However, measuring social bottom line can be fairly difficult as it is hard to compare individual or...

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... above their competition. It is also a win-win situation for both the employers and stakeholders as both parties are able to get some benefits out of it. In order for company to derive maximum value from the public reporting, alignment with stakeholders’ requirements and maintaining the qualitative characteristics of reported information is very critical. There are increasingly that company performing TBL reporting as it can deliver them a rapid level of evolution and respect in the business environment. Although TBL reporting is not a mandate requirement by government currently, it is much harder for any organization to ignore the TBL impacts on the environment, economic and social. Therefore, organizations are ought to make an effort to address their TBL performance, to gain both reputational as well as economic, environmental and social benefits in the long run .