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Measurement of Sustainability |
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Written by wujinon
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Wednesday, 30 January 2008 |
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Page 1 of 2
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The Triple Bottom Line concept is proposed by sustainability guru John Elkington. Elkington argues that businesses need to measure their success not only by the traditional bottom line of financial performance such as profits, revenue and ROI, but also by their impact on the broader economy, the environment, and on the society in which they operate [1].
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In the production process, companies use not only financial resources (such as investment money and sales revenues) but also environmental resources including non-renewable and renewable resources such as raw material, petrol, electricity and water, etc and social capital (such as human resources). A sustainable business should be measured on ROI on all three bottom lines—economic, environmental, and social—as well as the benefits that stakeholders receive along the same three dimensions.
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The Triple Bottom Line captures the essence of sustainability by measuring the impact of an organization’s activities on the world. A positive Triple Bottom Line reflects an increase in the company’s value, including both its profitability and shareholder value and its social, human, and environmental capital (see below) [2].
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Currently the Triple Bottom Line exists as a kind of balanced scorecard to measure the company’s performance on sustainability. While the practice of sustainability is still an art, the measurement of sustainability is becoming a science, including specific goals and parameters by which businesses can measure and judge their own progress. At the moment, thousands of companies around the world have been measuring and reporting their performance in the environmental, economic, and social spheres. And growing numbers of institutional and individual investors, consumers, and workers are beginning to evaluate companies according to the Triple Bottom Line [2].
- [1] Elkington, J. 1998, Cannibals with Forks: The Triple Bottom Line of 21st Century Business, (Philadelphia: New Society, 1998),
- [2] Savitz, A. W., and Weber, K., 2006, The Triple Bottom Line: How Today’s Best-Run Companies Are Achieving Economic, Social, and Environmental Success--and How You Can Too, Jossey-Bass © 2006
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