The Bottom Line Of The Triple Bottom Line

Does virtue pay? The impact of corporate social responsibility on the bottom line is examined in Forbes. As it says, the concept is poorly understood and ill-defined but it has clear profit implications, particularly when it comes to human resources strategy and customer relations.

Having covered this issue for more years than I care to remember, it seem to me that most corporations don't have a clue what CSR means, or indeed if it's relevant. Try sifting through annual reports and listen to business leaders talking about it and you're reminded me of that Hindu parable about six blind men trying to describe an elephant – it depends which part you grab.

For some, it's about compliance and philanthropy; for others it's sustainability. Some talk about the company's impact on society and its relationships with the community; others put it in a broader strategic framework and then there are those that focus on the environment and climate change.

And who can blame business leaders and managers for being confused: most investors couldn't give a toss about CSR. Talk to most executives and they'll tell you that the only times they are asked about corporate citizenship is when there is a crisis related to the industry or business. No one cares unless there is a financial risk or short-term exposure.

Still, there's no doubt that CSR is now one of the trends confronting business strategy. Just in the area of environmental management, the impact is quite profound with a recent Harvard Business Review piece focusing on the greening of the balance sheet given the growing market for carbon credits as a result of the Kyoto Protocol. If you want to read the piece for free, click here.

Westpac bank chief David Morgan makes the point that a company's value should be measured by more than just profits and by focusing on such intangibles as culture, values, links to the community, work to help the environment and customer service.

Still, the problem with the triple bottom line is that it's hard to measure with the same sort of rigor that's applied to numbers. Hence my piece on triple bottom line spin.


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