ForeThought: People, planet, profits—and purpose
April 4, 2011 | Galynn Nordstrom
As I was assigning the article “Strong businesses, strong communities,” it brought me back to past discussions on the topics of economic and environmental sustainability, corporate social responsibility and business ethics; I wondered if a poor economy would cause erosion in these areas. As it turns out, it was probably the converse that was true: an unrestrained economy finally needed years of recession to hit the reset button, and now many businesses are focusing on redefining and redesigning their core practices and putting more emphasis on stakeholders rather than shareholders.
“I don’t think that profitability is incompatible with shared values and shared responsibilities and shared capabilities,” says A & R Tarpaulins’ Bud Weisbart. “I think that’s really an unfortunate limitation we put on ourselves.” For those interviewed for the story, community (and industry) involvement is an investment, not an expense. But at present there are still few ways for a company to objectively evaluate its return on that investment.
The phrase “the triple bottom line” is usually attributed to John Elkington, founder of the British consultancy SustainAbility, and encompasses three different measures: people, planet and profits (not always in that order). Another popular term is “full cost accounting”: the process of collecting and presenting information that recognizes economic, environmental, social cost, health and other factors in making financial decisions. The goal is to measure the financial, social and environmental performance of a company over a period of time. The International Organization for Standardization (ISO) has several accredited standards that could be useful in full cost accounting, but there are few comprehensive models.
It’s clear that we do need to stop doing the same things and expecting different results. Apparently that was clear even in 1933—the editorial from the November 1933 issue of The National Canvas Goods Manufacturers Review says: “This country has recovered from hard times in the past without any program at all. But what did we recover? A false brand of prosperity containing within itself the seeds of another more disastrous depression. The remarkable feature of the New Deal is that it does not stop with having put out the fire. We are now going to make the house fireproof.”
The New Deal did not make the house fireproof. Our economic systems, some of them essentially unchanged in 78 years, have incredible inertia. But when I read about businesses that are trying to operate within the framework of that triple bottom line, I feel like that “idealist at heart” mentioned in a response to my August 24 blog: “When theories collide.” (Of course, the next response to that blog congratulated me on being somewhat excessively liberal, a characterization with which I must take issue; does that really apply to someone who feels that this country needs a Queen, not a Congress?)
My next assignment is an article on cost accounting for our June issue. We’ll focus on the real economic models and practices that our readers are using every day to do business. But if it turns out that there’s actually a software program for full cost accounting, there’s going to be at least one more blog on this subject.