In this assignment, the notion of “Triple Bottom Line” (TBL) reporting is being analysed critically. The term created by John Elkington is being defined with its concept and general principles (social, environment, and economic lines) discussed in this report. Representations of TBL in the Business and Government Organisations sectors is further explored with its five different interpretations – ‘Wait and see’, ‘Packaging information for ‘community right to know’, stakeholder alignment, endorsing core principles, and holistic cultural perspective. The relationship between sustainable development and TBL is discussed in the report by considering the environmental sustainability, economic sustainability and social sustainability, with a backing example of the TBL Toolkit and the ‘The Capital Works Sustainability Statement’ practiced in the city of Melbourne. Lastly, the application of TBL in sustainable construction and its indicators of social and environmental, and economic performance used in the construction sector are discussed in the report. Lastly, a case study has been done on ‘Enviro-Cottage’ constructed in Spring Hill, Brishbane. The project has addressed TBL reporting considering the sustainable development and construction.
INTRODUCTION
Triple bottom line (TBL) reporting is becoming more common across many sectors of society. Although the concept was born out of the corporate and business world to report corporate social responsibility conveniently, it has been embraced by many organisations to give social and environmental agendas more prominence in the face of corporatist globalisation (Price, R n.d.).
The term “Triple Bottom Line” was formed by John Elkington in 1997. Based in UK as a consultant to companies like BO, DuPont and the World Bank, John Elkington has been described by Business Week as “a dean of the corporate responsibility movement for three decades” (‘John Elkington’ 2010). Instead of the usual financial bottom line, Elkington define and the expanded baseline for measuring performance using social, environmental and economic bottom lines (Centre for ISA Information Sheet 7 n.d.). Elkington stated on his book, Cannibals with Forks that:
The triple bottom line focuses corporations not just on the economic value they add, but also on the environmental and social value they add – and destroy. At its narrowest, the term ‘triple bottom line’ is used as a framework for measuring and reporting corporate performance against economic, social and environmental parameters (Elkington,, J 1998).
Generally, Triple bottom line is an integrated management approach that consists of managing, measuring and publicly reporting performance in business and government sectors (Potts, T 2004). TBL also acts as a medium to discuss issues regarding the organisation and the community. According to A tool for measuring, communicating, and facilitating change in local governments by Tavis Potts, TBL is a correspondence and process for reporting on sustainability and using the results to engage communities in an ongoing discussion. For sustainable organisations this means balancing the needs of the organisation against the environmental, economic and social factors as depicted in Figure 1 to enhance the quality of life.
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Figure . “Triple Bottom Line” Model (Source: Triple bottom line: a ticket to the game or the emperor’s new clothes? 2005).
Representations of tbl
Business Sector
In the business sector, the growing tension between increasing social values and conventional forms of value creation has forced consideration of sustainability (including TBL reporting). Pressure has been applied on organisations to be more socially and environmentally responsible in their pursuit of profit (Beilin, R Paine, M, Pryor R 2007). As an example, BP Australia reported that a TBL approach to business provides them with ‘a sustainable competitive advantage’ and it is also a good business sense. It demonstrates to stakeholders the integrity of a business or industry, thus improving its reputation, increases investor confidence and enhances marketing and profit opportunities.
Governments Sector
Similar to businesses, local governments have adopted the TBL in response to community concern about issues of environmental sustainability. In the Governments sector, the field of organisational accountability has broadened. Government organisations must now consider the wider impacts of their practices on other local, regional, national and even global stakeholders (Beilin, R Paine, M, Pryor R 2007).
Growing government interest in corporate social and environmental responsibility is expressed in policy at local, State and federal levels. TBL reporting has changed the appearance of the role of government in regulating private businesses and industries. TBL has come to demonstrate good public relations in government organisations with its integrated focus on social, environmental and economic outcomes of practice.
Principles of Triple Bottom Line
The three vital aspects of corporate and government performance are based on Triple Bottom Line are the economic, social and environmental line. TBL is also interpreted in 5 ways in business and governments sectors.
The Economic Bottom Line
The economic bottom line is the organisation’s record of economic performance (revenue and profit) and integrity. Even though the companies are still making profits in the business, profit is viewed as the economic benefit enjoyed by the employees and community as a whole within a sustainability framework.
The Social or People Bottom Line
The social bottom line is the organisation’s record of social or people performance as it affects employees, consumers, and communities. This also refers to fair, ethical, and beneficial business practices toward employees, community, and country in which a corporation conducts its business.
The Environmental Bottom Line
This is the organisation’s record of performance as it considers all the issues related with environmental concerns. The goal of 21stâ€century companies is to not only help protect the environment by producing Green or environmentally responsible products but also to have their own sustainable, environmentally sound business operating practices. This means organisations are to function in an environmentally responsible approach, such as taking steps to reduce their own environmental footprint, consuming less energy and little or no non-renewable resources, and producing less waste.
Five interpretation of TBL
Five broad categories capture the current diverse state of TBL performance measurement and reporting in Australia according to Triple Bottom Line Measurement and Reporting In Australia. The five categories are more to show the diverse business rationales and analysis of community expectations for triple bottom line measuring and reporting (Suggett, D, Goodsir, B 2002).
‘Wait and see’
‘Wait and see’ is the category where organisations are satisfied with their present approaches to communication and accountability. Examples of such companies are Fosters and Woolworths. This may due to the reason that a change is not necessary in their business priority, and there is a sense of potential benefit as it is still early in their business to use the TBL approach without understanding the directions of the business.
‘Packaging information for ‘community right to know’
By observing ‘the community right to know’ attitude and supporting the notion of greater responsibility to the community for their business performance, other organisation make an obligation to their stakeholders to be open and transparent. To meet this commitment, they collect and ‘package’ internal information or report for external audience. This report shows the values they seek to meet, their performance against those standards and a description of their activities.
Examples of companies practising this approach of TBL in environmental reporting are Wesfarmers and Orica. As they keep on collecting data, reporting and verifying approaches, those organisations do not see that a change in approach is required to embrace social or economic scopes.
Stakeholder Alignment
This approach analytically seeks the relationship between stakeholders’ expectations and corporate strategy. In order for TBL reporting to drive maximum value, it is necessary that the information reported aligns with business strategy and objectives and accurately reflects the focus of the company activity. This serves to strengthen the significance of companies developing indicators in a structured way that reflects their objectives and the requirements of key stakeholder groups. As the stakeholders could be the shareholders, investors, employees, customers, suppliers, the community and government, organisations practicing this approach will be required to set up new management systems and in a long run is intensive on the business resource. One example is the WMC. WMC continues to expand in this direction and a number of other companies have embarked on the first steps, such as Westpac and ANZ.
Endorsing Core Principles
A few organisations outline their response to stakeholder expectations into values that guide their business activity: sustainability principles. Examples of organisations are Rio Tinto and Shell. This approach is directed at integrating these core principles into management practices.
Holistic Cultural Perspective
Organisations in private ownership define their business purpose and their commitment to sustainability values and accountability as a whole. Their business success depends on this cultural perspective. The Body Shop is the often-quoted example and the Co-operative Bank in the United Kingdom.
Sustainable development
Sustainability is a pattern of resource use that aims to meet human needs while at the same time preserving the environment so that these needs can be met not only for the present generations, but also for future generations. Sustainable development ties together the concern for the carrying capacity of natural systems with the social challenges (Sustainable construction gives a competitive edge n.d). Conceptually, sustainable development can be broken down into three constituent parts:
Environmental sustainability
Economic sustainability
Social sustainability
Sustainable development is often portrayed as the act of balancing economic, ecological and social concerns, and the triple bottom line is commonly used internationally to prove corporate performance on sustainability and its approach to sustainable development in the corporate world. However, in sustainable development, triple bottom line also concentrates on the external structure of development and excludes the internal structure of development. In other words, TBL also focuses on technological, economic and institutional development while excluding cultural and personal development (Riedy, C 2003).
As an example, the City of Melbourne is using TBL approach to accomplish the goal of sustainable development. The city has developed a TBL Toolkit which includes checklists, guidelines, templates and case studies for the application of TBL decision-making and reporting (Triple-Bottom-Line Evaluation Approach Shows Promise for Local Government 2004). Part of this tool is the ‘The Capital Works Sustainability Statement’ and it is a rating system that recognizes the degree to which a project contributes to the Council’s sustainability objectives. The Capital Works tool is being applied to different ways, such as the bidding of capital works, budget approval process, and evaluating criteria against of capital works.
Through this TBL approach, councils are able to demonstrate responsibility and transparency in decision making and administration. Moreover, TBL approach in the public sector including local government has helped to develop global standards and procedures in reporting decisions at all levels (Triple-Bottom-Line Evaluation Approach Shows Promise for Local Government 2004).
Application of tbl in sustainable construction
Construction activities worldwide consume 40 per cent of all raw material exploited globally (Sustainable construction gives a competitive edge n.d.). For this reason, the use of sustainable building materials can help improve the global environment significantly. The public demand for sustainable solutions is growing, and in the years to come contractors who are able to document that they build sustainably will have a strong presence in the market. In order to make construction sustainable, one has to practise TBL in order to consider the environmental impacts of extraction, transportation, processing, fabrication, installation, reuse, recycling, and disposal of these materials.
It is easy to understand why TBL has received acceptance in sustainable construction. Indicators of social and environmental performance are used to diversify work and practices of construction sector. TBL allows organisations to assess quantitatively and qualitatively how they are achieving their key performance indicators (Triple bottom line: a ticket to the game or the emperor’s new clothes? 2005).
TBL has been applied to the construction sector in the UK where the phrase ‘Sustainable Construction’ has been coined. The UK Government is seeking to apply sustainable development practices to the construction industry. Leading construction companies in the UK, USA and Europe now report annually on social and environmental performance as well as financial performance. Jim Lammie, director of Parsons Brinckerhoff in a speech on sustainability of 8 September 2004 said that over 77% of construction companies in the UK had a sustainable development policy to deal with regulation, competitive edge, client policy, enhanced reputation, legal risks and future investments as well as addressing ethical obligations. Lessons from the construction industry overseas have a place for Australian construction companies who want to outperform their counter-parts in an increasingly aware society. Implementing daily practices to elicit performance under TBL can be as simple as adopting recycling programs, giving to the workforce through university sponsorship programs and adopting ‘best practice’ voluntary standards. When a full assessment of practices are made construction players may find that they are already carrying out sustainable practices but are not reaping the reward through reporting their practices to stakeholders. Truly sustainable construction practices may mean assessing projects and work practices with TBL in mind (Triple bottom line: a ticket to the game or the emperor’s new clothes? 2005). The triple bottom line concept of sustainable construction could be achieved through the application of sustainable design principles at early stages of planning and construction. By making these decisions beforehand, it creates a home that is safer, more secure, flexible, comfortable, environmentally-friendly and cost-efficient in a long-run. A sustainable construction project is designed and constructed to include the principles of sustainable design which attempts to balance social, environmental and economic considerations (Sustainable Homes Triple bottom line 2008).
The ‘triple bottom line’ approach to sustainable construction is a balanced integration of social, environmental and economic design factors.
Social
Sustainable buildings are ‘designed for the people’ considering access, safety, security and design that consider the clients future needs throughout the different stages of lives – young families, older users or users with varying abilities. Sustainable constructed building is safe, easily adaptable to suit a diverse range of needs and comfortable for people with varying abilities and at different stages of their lives, especially the elderly with our ageing population (Sustainable Homes Triple bottom line 2008). Socially sustainable construction can also strengthen social networks and allow people of every age and ability to participate in their community throughout their life. An aesthetically pleasing and stimulating built environment will reinforce the sense of well being of residents and people in the local community of the building. The local community and streetscape should also be considered, ensuring sympathetic development, enhancing the streetscape and community function (Triple bottom line in housing n.d.).
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Environmental
Sustainable construction are resource efficient by incorporating sustainable management of water, energy and waste efficiencies, as well as other features such as passive solar design by considering the orientation, ventilation, insulation, shading and building materials (Sustainable Homes Triple bottom line 2008). Resource efficiency is also related to water efficiency in the building, waste efficiency of materials used during construction, and energy efficiency through good passive design and high star-rated green technology appliances and lights. It is also associated to the reduction of greenhouse gas emissions from energy consumption. Local market for materials should be considered as well (Triple bottom line in housing n.d.). Besides that, resource efficiency equates to lifestyle benefits for residents of the buildings in terms of improved thermal comfort (social sustainability) and reduced running costs for the home (economic sustainability).
Economic
Economic sustainability means designing and construction to make a house more cost-efficient in a long-run, considering the selection of low maintenance materials. Extra expense during construction should be provided for longer term operating cost savings as it is important to obtain the choices of design and material right the first time and removes the need to make additional costly changes later. Installation of solar panels or water tanks will also add instant value to a property (Triple bottom line in housing n.d.). The consideration of the local market in the selection of building material suppliers can optimise costs through reduced transportation expenses to the site. Other economic savings can also be done with the amplified focus on the embodied energy that building materials may represent in their journey from the source, through refinement, product manufacture and transport to eventual use on-site in the construction of the home (Sustainable Homes Triple bottom line 2008).
Sustainable construction could cost efficiently over time by improving the design and construction features and the use of low-maintenance materials Usage of appliances with high energy-star ratings that reduce the ongoing costs of running your home should be encouraged. By practicing sustainable construction, energy and water bills are lower and potential future modification costs are greatly reduced, thus making the home more adaptable over its life cycle.
Case study: Enviro-Cottage
‘Enviro-Cottage’ is constructed in Spring Hill, Brisbane. It was built as a worker’s cottage in the late 1800’s. During 2008, the houses were transformed from a traditional Brisbane cottage into a sustainable development for inner-city living.
Figure . Conceptual drawing of Enviro-Cottage. (Source: http://www.envirocottage.com.au)
“Enviro-Cottage” as shown in Figure 2 isn’t a new, purpose-built house unlike other display homes. It is a renovation project that highlights the simple, technological and the necessary construction methods to help make a home more efficient by using less electricity, water and other resources, while improving how people live in the available space. Some of the ideas are very simple and easy to apply in any home renovation or construction projects to reduce its environmental footprint. Examples of sustainable construction methods used are ‘passive design’, ‘thermal mass’ and ‘solar orientation’ (Enviro-Cottage n.d.). Other revolutionary sustainable ideas are the installation of solar cell technology, water tank and grey water systems, glass technology, kitchen and laundry appliances, taps and showers, insulation, flooring, paints and other finishes, heating and cooling systems, and energy efficient lighting.
The Spring Hill “Enviro-Cottage” Project has addressed the TBL reporting (Triple bottom line in housing n.d). Examples of the “Enviro-Cottage” TBL report considerations included in the sustainable development and construction according to Our Brisbane are:
Social sustainability
“Enviro-Cottage” is constructed to be multi-purpose. Its multi-use design is suitable for people from different background, such as families, professional couples, or people with disabilities, young couples to families with older/independent children
The cottage is constructed using the local “Tuff” stone to tie to Spring Hill’s heritage and preservation of the heritage streetscape
Open front aspect to connect with local street life
Open design to aid easy internal and external surveillance
High security features to all doors and windows with simple and consistent locking systems
The set back garage is designed and constructed to de-emphasise the role of the car
Addition of two off-street parking options takes two cars off the crowded local street
Preservation of the heritage streetscape
Environmental sustainability
Maximum use of passive solar design aspects, taking advantage of natural energy flows, and minimising the scale of overlaid systems – lighting, cooling etc
No air conditioning required or other mechanical heating or cooling systems
Capture, use, recycle and re-use of as much rainwater as possible, inclusion of grey water processing system
Generation of required energy needs through onsite photovoltaic system and where possible provision of clean renewable energy back to the community
Use of environmentally preferred materials eg. no use of rainforest or old growth forest products
Re-use of the existing 1800’s building to reduce consumption of new materials
Use of materials with a lifespan equivalent to the projected life of the building
Source local products and materials where possible, minimising energy used to transport materials
Economic sustainability
Use of passive solar design and selected enviro-products will drive future operating costs down to a minimum
Modular design, flexible usage model, and choice of long lifespan materials, minimising any requirements for future renovations, minimising ongoing construction costs
The “Enviro-Cottage” project has demonstrate sustainable development through TBL reporting and the project signified sustainable living ideas, solution and options which can be in most construction even when it is challenged with the many constraints facing such renovations such as council building codes, existing dwelling condition and design, and smaller block sizes.
Conclusion
In conclusion, the TBL concept demonstrates responsibility to stakeholders in terms of economic, social and environmental impact. The idea behind TBL reporting is sustainable success which will benefit the organisations. Benefits include better reputation and increased confidence, benchmarked performance, increased operational efficiency, stakeholder satisfaction, and improved risk management of the business. TBL reports may have different representations in the business and government sectors, and each of the sectors has different interpretation of TBL. TBL reporting is one way organisations can add value to their daily practices of their business.
In terms of sustainable development and construction, TBL is the union of the three constituent parts – social, environment, and economic. TBL is commonly used to prove corporate performance on sustainability as it covers accountability in an economic, social and environmental sense.
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