Triple Bottom Line and Corporate Entities - Essay Example

? Triple Bottom Line and Corporate Entities of Your Introduction The Triple Bottom Line is a system through which acorporate entity attains sustainable economic development and environmental protection whilst encouraging socially responsible business values (Azapagic, 2012). This research will undertake an in-depth research into the concept of Triple Bottom Line and describe and discuss how it is practiced. The study will include a critical evaluation of two companies listed on the Australian Stock Exchange. It will commence by examining corporate social responsibility and its inclusion in business affairs and reporting structures. Triple Bottom Line Triple bottom line is a system that operates to ensure that corporate social responsibility is seen as a formal and an essential aspect of business entities. This is because it formalises the process of corporate social responsibilities and ensures that social responsibilities is included in an organisation at the strategic level. Triple bottom line is “... the necessity for a corporation to disclose information about its social and environmental performance in growing” (Sridhar and Jones, 2013 p92). This is because triple bottom line creates a situation where the environmental and social aspects of a business is carried out in a way that is appropriate and leads to the best interest for all entities. And more importantly, environmental and social matters are audited and accounted for through the triple bottom line system. This is because it integrates these two aspects into the business and the firm will not have to only care about profitability and making money for the shareholders but also, other stakeholders and provide valid evidence of how they are seeking and working towards the attainment of stakeholder interests. Triple bottom line involves the identification of sustainable corporate performance by integrating systems to attain and account for three aspects of a business: 1. Financial 2. Social and 3. Environmental (Fauzi et al, 2010). This is because triple bottom line provides a system to get an organisation to look beyond just financial reporting and financial targets. This is because it integrates the elements of sustainability into corporate reporting. In order to attain the standards of triple bottom line, a firm would have to set up a system for corporate financial, social and environmental strategy and reports (Jamali, 2006). This will ensure that an organisation will be able to integrate other important pointers of corporate social responsibility and report it and monitor it for a year-on-year improvement. Carol and Buchholtz (2012) identify that triple bottom line is a requirement for corporate control and corporate governance that focuses on stakeholders and other entities. This is because it involves setting goals in areas and aspects that affects other stakeholders and make it imperative for corporate entities to work towards the attainment of results over a broader scope than the traditional method. In the opening discussions of Carol and Buchholtz, they spell out that from the period of modern business after the Industrial Revolution in the early 1800s, firms and businesses focused excessively on the profit motive and sought to provide the best interests of the owners of the business only (2012). However, the growth of the Post-Second World War global order has sought to preserve the rights of individuals and other third parties and prevent the attainment of profits at the expense of other people who are connected to or affected by the business. Hence, the triple bottom line approach integrates the needs of stakeholders by ensuring that the needs of the society and the wider environment is integrated into the organisation and the organisation must demonstrate a strong tendency to protect the wider environment through sustainable practices and targets and also protect the environment. This is meant to promote the needs and expectations of other stakeholders, not just shareholders. Jackson et al (2011) identify that triple bottom line has aspects that are still evolving and are not clearly defined. Technology and subjective approaches are used to assist in attaining results in the triple bottom line. National laws are being developed to ensure that they cover triple bottom line matters and systems (Jackson et al, 2011). Entities like stock exchanges have reporting requirements for the two less common elements of triple bottom line. This gets members to become more responsible and accountable for their social and environmental activities and this provide a more solid background for corporate social responsibility. Case Analysis of Corporate Entities on the Australian Stock Exchange This section will examine how the triple bottom line is applied in two entities listed on the Australian Stock Exchange; ANZ Bank and BHP Billiton. This will examine the reporting systems and how they attain the results for the other two less common components of the TBL. ANZ Bank The bank has values that relate to the core pointers and guidelines that leads the organisation in its question namely Integrity, Collaboration, Accountability, Respect and Excellence. These form the strategic visions defined in the charter of the entity and form the basis of the bank's social and environmental strategy. The objectives of ANZ Bank's financial and sustainable reporting framework include: 1. Attain the maximum level of profitability in a framework of observing all stakeholder needs and expectations; 2. Identify opportunities to minimise our environmental and social impact through better selection of products and services; 3. Identify opportunities to minimise our environmental and social impact through improved usage of procured products and services; 4. Enhance our relationships with our suppliers by engaging them on how we can work together to achieve this; and, 5. Where appropriate, provide feedback to our key strategic suppliers about their own environmental and social performance and assist them to make improvements. (ANZ Corporate Responsibility, 2013). The model for ANZ Bank's social and environmental structure is defined by setting goals for sustainable growth by the top level management. This is done by examining future and past performance and setting targets which are monitored and carried out in a critical and thorough manner to ensure that the bank attains results. In the 2012 annual reports (see Appendix 1), ANZ bank's fundamental TBL targets were sought through the following objectives: 1. Responsible growth 2. Diversity and inclusion and 3. Financial inclusion and growth of businesses This provided the framework for setting metrics and standards for the attainment of results. Financial statements were also presented in the annual reports and they relied on relatively more conventional and widely known standards. BHP Billiton BHP Billiton has a charter with its core values which include: Sustainability, Integrity, Respect, Performance, Simplicity and Accountability. The company requires accounting for operations and seeking safety and high environmental targets not only in Australia but around the world. The company also integrates and monitors its sustainability targets and metrics. The objectives of BHP Billiton's financial, social and environmental reporting system states that: “Our purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market.” (BHP Billiton, 2013). BHP Billiton presents a sustainability plan on each project. There are documents that cover the company's activities. This include the identification of stakeholder interests and dealing with them in all situations and circumstances. The main areas of examination include: 1. Safety 2. Health 3. Environment 4. Community The operation of all projects are done through the identification of risks and analysing them in order to mitigate them in environmental matters. Conclusion Triple bottom line is a process that requires businesses to set targets and present regular reports on financial, social and environmental activities in the organisation. This is done to ensure that a firm maintains strong corporate social responsibility structures and report on previous periods and also set targets and implement them for future days. The research's examination of processes used in Australian companies indicate that businesses define their targets for economic, social and environmental activities each year and implement it. The implementation and results are recorded and presented as annual corporate reports. References ANZ Corporate Responsibility (2013) Interim Report – 2013 [Online] Available at : http://www.anz.com.au/resources/2/8/287acb004f90e250a33cff5fd4649a8e/ANZ_CRInterim_2013.pdf?MOD=AJPERES Retrieved: 31st October, 2013. Azapagic, A. (2012) “Systems Approach to Corporate Sustainability: A General Management Framework” Sustainable Development Technology 81(5) 303 – 316 BHP Billiton (2013) Sustainability Report [Online] Available at: http://www.bhpbilliton.com/home/aboutus/sustainability/reports/Documents/2013/BHPBillitonSustainabilityReport2013_Interactive.pdf Retrieved: 31st October, 2013. Carroll, A. B and Buchholtz, A. K. (2012) Business and Society - Ethics and Stakeholder Management, Mason, OH: South-Western Cengage Fauzi, H., Svensson, G. and Rahman, A. A. (2010) “'Triple Bottom Line' as a “Sustainable Corporate Performance” A Propotion for the Future” Sustainability Vol 2 pp1345 – 1360 Griseri, P. and Seppala, N. (2010) Business Ethics and Corporate Social Responsibility New York: South-Western Cengage Jackson, A., Boswell, K and Davis, D. (2011) “Sustainability and Triple Bottom Line Reporting – What is it All About?” International Journal of Business, Humanities and Technology Vol 1(3) pp55 – 59 Jamali, D., (2006) "Insights into triple bottom line integration from a learning organisation perspective", Business Process Management Journal, Vol. 12 Iss: 6, pp.809 - 821 Sridhar, K. and Jones G. (2013) “The Three Discussions of the Triple Bottom Line Approach: An Emirical Study to Link Sustainability Reports in Companies Based in the Asia-Pacific Region and TBL Shortcomings” Asian Journal of Business Ethics Vol 2 pp911 – 111 Appendix 1 Highlights of ANZ Bank Sustainable Systems Core Values: Integrity Collaboration Accountability Respect and Excellence Procedure for Attaining Sustainability Set Goals for Sustainable goals by examining the past and future Execute Plans by meeting Targets Report and Take Remedial Action Where Necessary Current Goals Responsible Growth Diversity and Inclusion Financial Inclusion of Client Businesses Appendix 2 BHP Corporate Social Responsibility System Charter Values Sustainability Integrity Respect Performance Simplicity Accountability Procedures Accounting on operations Apply safety standards globally Integration and monitoring Sustainability plan for each project Group level documents and high standards Stakeholder interests Scope of CSR systems Safety Health Environment Community Activities - Risk Analysis and Mitigation Read More