The problem with the triple bottom line: Corporate Social Responsibility reporting

In the world of CSR and business ethics, "triple bottom line" is the idea that a company should measure their success not just financially, but on three axis -- financial, social and environmental.

The truth is, there is no quantitative measure -- no way to evaluate what my "triple bottom line" is. Even the concept of the "triple bottom line" is deceiving. It implies that social and environmental results can actually have a bottom line, a measure that a company can evaluate themselves and others against. I'm sure that using that term helps some executives get through the feeling that CSR activities are only warm and fuzzy, with no real end result for the corporation.

This article from Business Ethics gets to the core of the issue.

So we might reasonably ask of firms like The Body Shop, or British Telecom, or Dow Chemical – all companies that have claimed to believe in the 3BL – what their social bottom line actually was last year. But just posing this question conjures up visions of Douglas Adams’s comic tour de force, The Hitchhiker’s Guide to the Galaxy, in which the greatest of all computers is asked to come up with an answer to “the great question of Life, the Universe and Everything”. That answer, which takes seven-and-a-half million years to calculate, is “42”. At least part of the charm in this Hitchhiker shtick is that “42” seems wrong not because it arrives at the wrong number, but because it is ridiculous to think that the answer to such a question could be expressed numerically or even just with one word (especially a dangling adjective – 42 what?).

The paper further poses that if I make a promise and keep it, I am seen as ethical. But if I make ten promises and keep them, I am not seen as more ethical than when I only made and kept one promise. Flattening multidimensional ethical issues for the purpose of measuring is bound to create some errors.

But I disagree with the paper in his conclusion that there's no point in trying. Is the jargon of "triple bottom line" misleading? Absolutely! Is the current state for measuring a company's commitment and effectiveness in this area defective? Absolutely! Has the concept of Corporate Social Responsibility been hijacked by PR departments who only address CSR issues as part of a marketing portfolio? You know the answer -- Absolutely!

The idea of the triple bottom line has significant potential. It took generations for us to develop effective and thorough financial reporting rules and guidelines, and they are still being undermined by creative accountants. We've only just started incorporating social and environmental ideals into corporate performance -- it will take several years before the first rudimentary reporting standards begin to emerge. I have no doubt that our largest audit firms are energetically exploring this new market opportunity.... = )