TRIPLE BOTTOM LINE
For All Businesses Great and Small

In the past, it has been very easy to get caught up purely in a business's profitability and financial performance. This influence has been brought on by people and shareholders as they expect ever increasing returns on their hard earned investment dollars.

Having recently attended the Australian Institute of Company Directors CDC Course, we were given examples of companies who desire to achieve more than profit. Interestingly, these included businesses that dealt with products such as petroleum and fast food.

This additional desire is based on the theory that by being good corporate citizens, companies will be more attractive to deal with and profitability could be even more enhanced which would ultimately lead to an improvement in their share prices.

Traditionally, the notion of the "triple bottom line" approach is a way of assessing and comparing large public companies only.

But initially, let's ask ourselves, what is Triple Bottom Line?

Well, the first "bottom" line is usually looking at how a company's finances are going.

The second "bottom line" is the company's environmental record.

The third "bottom line" is the company's social record.

Whilst many small businesses quite rightly need to ensure they are profitable, isn't it possible that it would be good to adopt the “triple bottom line” approach to our own businesses and reap the benefits accordingly particularly in regional communities?

In fact, it is quite ironic that many small regional businesses do this (perhaps without realising it) and the large public companies are finally registering that this is a good thing and hence following suit.

Many of us should have as part of our culture and values, honesty and integrity. This cannot be faked and eventually, those businesses that try to fake it are caught out.

How can the second and third bottom lines be measured?

This can be quite difficult when assessing your business your desire to achieve measurable standards other than profitability.

However, this is a challenge worth persisting with. Many communities and the public are looking for higher standards from business before they will deal with them.

For example, people will buy products from businesses they trust in and in which they have confidence. They will feel good in doing so. Also, employees work better when associated with businesses in which they feel pride.

They have less interest in their work if they are working for businesses they are embarrassed to admit to their relatives and friends that they work for. An ethical business has high morale.

As part of your overall business strategy, you may wish to consider how your business contributes to your community. You might set participation rates in charity/community events each year involving principals and staff or set aside sponsorship dollars per annum and allocate them across a broad section of the community.

It may be to have a policy to deal with local business wherever possible (subject to reasonable parameters involving competitiveness, service etc). You may also wish to have a culture that is environmentally responsible within your workplace and promote this to your staff and clients.

By sitting down and quantifying not just your annual profit and budget targets but also, how you would like your business to make the world a better place, you may find you receive additional benefits and profitability you hadn't expected in the first place.

Big business is finally realising this - small business should never underestimate it.

Acknowledgement:
Dr Keith Suter, Chairperson of the Sustainability Committee, (AICD)”The Triple Bottom Line”

Need More Information?
Peter Scolari CA, GAICD, is principal with Scolari Comerford Chartered Accountants and a graduate of the Australian Institute of Company Directors' CDC Course.

Disclaimer: The contents of this Bulletin are general in nature. We therefore accept no responsibility to persons acting on the information herein without first consulting us.