Triple bottom line
CSR demonstrates that with business success comes responsibility, which includes compliance with legislation. Indeed, Zadek and co-authors recognised three levels of Corporate Social Responsibility, which include corporate governance:
Firstly, it includes compliance with legal responsibilities (tax, health and safety, workers’ rights, consumer rights and environmental regulations, for example) and industry standards.
Secondly, it concerns minimizing or eliminating the negative effects of business on society and managing risk (for example, risk of human rights abuses and environmental pollution).
Thirdly, it involves increasing the positive effects of business and creating value through innovation, investment and partnership aligned towards social and environmental good (for example, job creation, social and economic development and conflict resolution).
At each of these levels different tools and processes have been developed to enable Corporate Social Responsibility to be measured, rewarded and replicated.
With so many interpretations of CSR, it is not surprising that some sceptics are of the view that CSR is no more than traditional practices with new labels, rather than a uniquely new initiative. However, if one applies the Triple Bottom Line (TBL) approach to business, as coined by John Elkington in 1997, then the sceptics would be proved wrong, as this illustrates that there are new elements within CSR.
In advocating TBL accounting for businesses, Elkington says that a business should consider Social (people), Environmental (planet) and, of course, Economic (profits); in other words, the 3Ps – people, planet and profit.
In practical terms, triple bottom line accounting means expanding the traditional reporting framework to take into account ecological and social performance in addition to financial performance.
‘It’s a question of discipline,’ the little prince told me later on. ‘When you’ve finished washing and dressing each morning, you must tend your planet.’
With TBL, businesses are encouraged to go beyond ‘profits at any cost’ and consider social and environmental issues. Table 1 outlines some key differences between issues considered by businesses pre-CSR and the present.
Table 1: Differences in business issues, pre-CSR and present
|Traditional approach to business||Contemporary – CSR considerations|