MSc Triple Bottom Line (TBL). 9 6 Guidelines



in Accountancy and Financial Management

Governance, Risk and Ethics


Social and Environmental Sustainability












Number:           1611193

                             Mohammed Sadiq

of Submission:      15th December, 2017

Introduction. 2
2 The
Concept of Sustainability. 3
Approaches to Sustainability. 4
2.1.1 Weak
Sustainability. 4
2.1.2 Strong
Sustainability. 4
3 Effects of
Economic Activities. 5
Environmental Footprint. 6
3.2 Social
Footprint. 6
4 Elements
of Sustainability. 7
4.1 Social
and Environmental Sustainability. 8
Environmental Accounting/Reporting. 8
5.1 Full
cost. 9
5.2 Triple
Bottom Line (TBL). 9
6 Guidelines
for Environmental Reporting. 10
6.1 Global
Reporting Initiative (GRI). 10
International Integrated Reporting Council (IIRC). 10
6.3 Integrated Report (IR). 11
8 Corporate
Social Responsibility (CSR). 11
8.1 Ethics
and Corporate Social Responsibility. 12
8.2 Benefits
of Corporate Social Responsibility. 12
8.3 Criticism
of Corporate Social Responsibility. 13
9 Conclusion. 14
Appendix 1. 16
Appendix 2. 17
References. 18



1 Introduction


The need for businesses to be sustainable
is growing in importance than it has ever been. This increased awareness has
come on the back of the apparent impact that economic activities have on our
environment and all the more as the world get more globalised. The traditional
view of corporate world is that investments in industrialisation drive economic
growth that satisfy consumer wants. However, the processes deployed in
actualising this have devastating effect on the people and the environment (Welford
and Starkey, 1996). While it is difficult for companies to dispute this need
for environmental protection, it seems that not much has been done to this end.


As Christen and Schmidt (2012) succinctly stated,
the issues that surround CSR are quite vast and complex, therefore, the purpose
of this report is to critically evaluate this growing issue of social and
environmental sustainability. The early parts will be focused on explaining the
concept of sustainability, it various elements and the different approaches
that have adopted to the subject matter. Efforts will also be made to explore
the social-environmental impacts of economic activities and how they might be
reported by an organisation.


Importantly, the last sections will
examine corporate social responsibility (CSR), the relationship between it and ethics.
Lastly, this paper will review the benefits and the various criticisms that have
been advanced against CSR.



2 The Concept of


Traditionally, the term sustainability
refers to the ability of corporate organisations to survive over the long-term
(Visser et al., 2010). However, the concept of sustainability has come to mean
much more. Many authors (Visser et al., 2010, Aras and Crowther, 2012) consider
it a derivative of the another concept; ‘sustainable development’ which was
first introduced by the United Nations(UN).


The Brundtland Report ‘Our Common Future’
(WCED,1987) defined ‘sustainable development’ as a ‘development that meets the
needs of present generations without compromising the ability of the future
generations to meet their needs’. This definition suggests an
inter-generational equity where future generations have equal chance as the
present of having their needs met and possibly have their lot improved.


Sustainability is limiting the use of
depleting resources to the same rate at which they are being replenished
(Goodland, 1995). It is an attempt to provide the best outcomes for both human
and the environments for both now and into the infinite future. The overarching
idea of the sustainability drive is that businesses must be sustainable (Barbo,

Hegarty (2008) further noted that sustainability
relates not only to the environment, but   to social and economic concerns as well.


2.1 Approaches to Sustainability


Scholars have identified different degrees
in approach to sustainability, but this paper will only consider weak and strong


2.1.1 Weak Sustainability


Weak sustainability believes that focus
should be given to sustaining the human race while using the natural
environment as a resource (Hediger, 1999). This approach to sustainability
rests on the assumption that natural capital is completely substitutable with
other capitals and that there is no significant difference in the value they
generate. Furthermore, proponents of weak sustainability assert that it does
not matter if the amount of non-renewable resources used by the current
generation or the extent of pollution caused by their CO2 emissions, as long as
adequate machineries and amenities are given in compensation (Neumayer, 2003).


2.1.2 Strong Sustainability


Strong sustainability on the other hand
stresses the need for harmonising other capitals with the natural world
assuming that they are non-substitutable but complementary. The proponents of strong sustainability state that
natural capital cannot be viewed as a mere stock of resources (GSDR, 2015).
Rather, it is a set of limited, complex and irreversible resource that
contributes uniquely to the preservation of the human species (Ekins, 2011).
Consequently, it is important to preserve all capitals and not just the human


3 Effects of Economic


Global warming and climate change being
the most noticeable change in our environment which is partially traceable to
the emission of carbon dioxide and other greenhouse gases from the companies’
economic activities (Aras and Crowther, 2012). Businesses produce goods and
services to meet needs and wants, however, these mechanised production
processes are in turn responsible for much of the degradation in our
environment and the well- being of our communities (Welford and Starkey, 1996).
Herein is the argument of sustainability, if economic activities have such
social-environmental impacts, there is therefore a need for a change in
behaviour of people and organisations (Aras and Crowther, 2012).


The social-environmental impact of
business activities is measured in terms of ‘footprint’. The same way humans
and animals leave physical footprint of where they have been, organisations
also leave evidence of their operations in the environment and society. The
next section will explore the concepts of environmental and social footprints


3.1 Environmental Footprint


Environmental footprint is an attempt to
evaluate the size of the impact certain business activities have on the
environment. This impact is measured on three levels:


–       The
company’s resource consumption

–       Any
harm brought to the environment by emissions

–       A
measurement of the resources consumption and pollution emissions in terms of
harm to the environment in their qualitative, quantitative or replacement


In evaluating environmental footprint,
organisations are deemed to operate at a net cost to the environment. So where
the resource use exceeds provision, the particular activity is seen as


3.2 Social Footprint


Social footprint is a measure of an
entity’s impact on people and the well-being of society. This impact can be
positive such as job creation, improved standard of living through community
amenities, and it can also be negative, in the case of a plant closure leading
to huge unemployment crisis in the community.

Social footprint measures three major
areas termed ‘Anthro capitals’

–       Human
capital: This refers to resources that individuals have and use to take
effective actions. This includes personal health, knowledge, skills and

–       Social
capital: Cohen and Prusak (2001) describe social capital as the stock of
dynamic connections among people, the trust, shared understanding and
collective values and demeanours that bind the members of human networks and
communities and make cooperative action possible.

–       Constructed
capital: this consist of material things that people produce and use in order
to take effective action. This include things such as tools, technologies,
roads, utilities, infrastructures


Organisations must ensure that their
activities are sustainable in each of these areas. Sustainability is achieved
when the social capital need of the society is being met.


4 Elements of Sustainability


Having defined the concept of
sustainability and also considered the two major approaches to it, an attempt
will now be made to discuss the key elements of sustainability.

In 2005, the World Summit on Social
Development identified three core areas that contribute to sustainable
development, namely: environmental, social and economic. These fundamental
dimensions of sustainability have been brilliantly captured by (Elkington,1997)
as the ‘pillars’ of sustainability.


The idea of ‘pillar’ suggests that where
one element is weak, the society becomes ‘unstable’. Furthermore, they are
often illustrated by interlocking circles which suggests that they are co-dependent
and will generally need each other to exist (appendix 1). However, for the
purpose of this report, emphasis will be on only social and environmental



4.1 Social and Environmental


In the light of its net footprint, a
business is then required not only be work towards the achieving a positive net
footprint, but to aim at embedding measures in its practices and procedures
that will promote sustainability.

It is essentially building an
environmentally friendly business. This can be achieved by incorporating
sustainability in company’s strategy and decision making which then cascades into
practices such as paperless process, energy efficient production and lighting,
responsible waste disposal and culture of recycling.

According to The United Nations
Environmental Management Group (2012), Social and Environmental Sustainability
is “the adaption and integration of precautionary environmental and social
principles and considerations into decision making processes. This is to
eliminate or mitigate any undue harm to the society and environment at the
early stage of planning.



5 Environmental


The traditional belief is that businesses
need only report upon those things that can be measured and that are required
under laws, accounting standards or listing rules. However, in recent years,
there has also been an increase in the belief that organisations are corporate
citizens that use the resources of the society and therefore owe a duty to the
it to report on the impact of their economic activities on the environment.


Environmental reporting essentially
presents environmental footprint of an organisation in form in numerical and narrative
form for a given accounting period.


There are two methods of accounting for
sustainability as presented below:


5.1 Full cost


The full cost accounting methods includes
the costs of environmental, economic and social activities as part of
companies’ total cost. It seeks to capture both financial and non-financial
costs of all actions, decisions and manufacture of product in the cost system.
Lastly, full cost internalises all external costs and make them visible and
chargeable to the profit or loss account.


5.2 Triple Bottom Line (TBL)


TBL accounting expands the traditional
company reporting framework to take into account environmental and social
performance in addition to economic performance. The objective of the triple
bottom line is to incorporate the financial impact of social and environmental
activities in organisational reporting (Elkington, 1999).


This method is further illustrated by the
triple ‘P’ of People, Planet and Profit. ‘People’ referring to the need to
report to the wider stakeholders and not just shareholders. ‘Planet’
underscores the that organisation’s attempt to reduce it ecological footprint
while ‘Profit’ is the basic bottom line measured by every company.

6 Guidelines for Environmental


In most countries, environmental reporting
is entirely voluntary. However, it is being embraced by most large companies
partly because of the growing public awareness, but more importantly because it
is considered best practice.


To help organisations with environmental
reporting, a number of voluntary reporting frameworks have been established:


6.1 Global Reporting
Initiative (GRI)


The Global Reporting Initiative (GRI) was
conceived in 1999 as a non-profit organisation to promotes economic,
environmental and social sustainability reporting by providing organisations
with comprehensive reporting framework. The mission of the organisation is to
ensure that sustainability reporting is embedded as standard procedure in
organisation to enable them report their economic, environmental, social and
governance performances. GRI has been generally successful as it has seen a
widespread adoption of its framework (GRI, 2017).


6.2 International Integrated
Reporting Council (IIRC)


The IIRC was established in 2010 to assist
businesses with the adoption of Integrated Reporting. The organisation is a
global coalition of regulators, investors, companies, standard setters, the
accounting profession and NGOs. The objective of the organisation is to promote
integrated thinking and reporting to align capital allocation and corporate behaviour
to wider goals of financial stability and sustainable development (IIRC,


6.3 Integrated Report (IR)


produce a range of individual reports, such as financial report,

reports, corporate responsibility report and even environmental, social

governance (ESG). Integrated reporting however, requires that these different

reports should be pulled one concise report called the integrated


purpose of integrated report as set by The Integrated Report(IR) Framework is
as follows:

–       To
explain to providers of financial capital how an entity creates value over time

–       To
improve the quality of information available to providers of financial capital

–       To
provide a more cohesive and efficient approach to corporate reporting

–       To
enhance accountability for the broad base of capitals

Integrated Reporting essentially highlights
the connectivity between a company’s reports and demonstrates how each area
impacts the organisation’s objectives in the immediate and long term (Lueg et
al, 2016).


8 Corporate Social
Responsibility (CSR)


Corporate social responsibility refers to
the belief that businesses have responsibilities to the larger society beyond
their obligations to the shareholders (Visser et al., 2010) Cannon (2012) further
explains that “CSR is a way firms integrate social, environmental concerns into
their strategy, values, culture, decision-making, and operations to create
wealth and improve society. It is also important to note that even though CSR
policies are determined at strategic level, its implementation is carried out at
the corporate, business and functional levels of the organisation (Aguinis and
Glavas, 2012).


8.1 Ethics and Corporate
Social Responsibility


It has been argued that since business
ethics creates the necessary foundation for good governance and good governance
results in excellent organisational performance which then enhance business
sustainability, there is therefore a relationship between ethics and corporate
responsibility (Cooper, 2017)


To further buttress the relationship
between business ethics and CSR, (Silveira et al., 2016) suggest three

Moralistic Perspective: This
is the view that a ‘social player’ is convince to act in accordance with
certain principles which are considered ethically correct by shared values of group.

Perspective: This perspective is concerned with analysing the entrepreneurial
approach informed by ethical aspects which satisfies social interests.

Administrative Perspective: This
is when a company engages in social responsibility with a view to gain a competitive
advantage. Such a company seeks to create a value in the perception of
consumers by projecting its ethics and being socially responsible as additional
characteristics of goods and services.


8.2 Benefits of Corporate
Social Responsibility


This section is important in this report
as it highlights the business case for sustainability as demonstrated in
corporate social responsibility. (Epstein-Reeves, 2012) capture the benefits of
CSR in six concise points as follows:

1.    Long-term
thinking: CSR considers how present business decisions will impact the
company’s future growth.

2.    Innovation:
The commitment to creating a more sustainable world results in the    creation
of new and environment-friendly products

3.    Cost
savings: Organisations can save cost from using less energy, responsible
recycling borne out of consideration for the environment. Also, the trust it
generates reduces the cost of compliance.

4.    Brand
Differentiation: It builds brand and reputation which in turn results in
revenue growth. This is the dominant driver for CEOs as research has shown
(appendix 2).

5.    Customer
Engagement: It encourages better customers’ engagement and can therefore be
used as a tool for company communication.

6.    Employee
engagement: Following from the point before, its provides an opportunity to
involve employee’s company’s CSR initiatives.


8.3 Criticism of Corporate
Social Responsibility


Bendell (2010) in his World Review
questions the progress made by CSR by suggesting that there are weaknesses in
the processes of assessing the environment. Ilies (2012) added that “all
positive aspects of CSR are counterbalanced by several counterarguments.

The detail criticism of CSR advanced by
these authors have been summarised as follows:

The benefits of CSR are often
exaggerated as its effects differ between organisations and jurisdictions. For
example, the benefits of CSR in a developing country will differ from that in a
developed country.

There is overdependence by
analyst on information provided directly by companies rather than those from
independent sources.

CSR may be able to address some
social and environmental problems but certainly cannot solve all societal ills.

There is focus on policies and
processes rather than contributions

Companies can only invest in
CSR to the extent that it does not affect the company’s economic bottom line.


9 Conclusion


It is evident from the foregoing that
building a sustainable business by ensuring that every single economic activity
is done in a sustainable way is not negotiable. This is because the negative
effects of the irresponsible economic activities engaged in by virtually all
organisations in our world; the extreme weather, the earthquakes, the
hurricanes and several health issues caused by polluted air, even the shortage
of oxygen production due to deforestation are visible for all to see.


Consequently, we are in an era where it is
no longer business as usual. There is increased awareness on the need for
social and environmental sustainability. Moreover, it is also evident that
despite the various criticisms levelled against CSR, it   presents many benefits to all stakeholders;
the public, government and companies. So while efforts are being made to
resolve the setbacks by all concerned, we must certainly not jettison the
benefits and opportunities it presents.


Furthermore, it is ethically consistent
for companies to give back to the society and protect it since they use its
resources in the creation of value. 
Alongside their obligation as corporate citizens, companies should also
be accountable to the wider stakeholders in terms of their social and
environmental sustainability efforts by taking advantage of the integrated
reporting framework.


Lastly, it is important for organisation
not to approach sustainability merely as a box- ticking exercise or from an
instrumental perspective, but ensure it is embedded in their culture and















Appendix 1