Wayne Norman and Chris MacDonald
Abstract: In this paper, we examine critically the notion of "Triple Bottom Line" accounting. We begin by asking just what it is that supporters of the Triple Bottom Line idea advocate, and attempt to distil specific, assessable claims from the vague, diverse, and sometimes contradictory uses of the Triple Bottom Line rhetoric. We then use these claims as a basis upon which to argue (a) that what is sound about the idea of a Triple Bottom Line is not novel, and (b) that what is novel about the idea is not sound. We argue on both conceptual and practical grounds that the Triple Bottom Line is an unhelpful addition to current discussions of corporate social responsibility. Finally, we argue that the Triple Bottom Line paradigm cannot be rescued simply by attenuating its claims: the rhetoric is badly misleading, and may in fact provide a smokescreen behind which firms can avoid truly effective social and environmental reporting and performance.
he notion of "Triple Bottom Line" (3BL) accounting has become increasingly fashionable in management, consulting, investing, and NGO circles over the last few years. The idea behind the 3BL paradigm is that a corporation's ultimate success or health can and should be measured not just by the traditional financial bottom line, but also by its social/ethical and environmental performance. Of course, it has long been accepted by most people in and out of the corporate world that firms have a variety of obligations to stakeholders to behave responsibly. It is also almost a truism that firms cannot be successful in the long run if they consistently disregard the interests of key stakeholders. The apparent novelty of 3BL lies in its supporters' contention that the overall fulfilment of obligations to communities, employees, customers, and suppliers (to name but four stakeholders) should be measured, calculated, audited and reported—^just as the financial performance of public companies has been for more than a century. This is an exciting promise. One of the more enduring cliches of modern management is that "if you can't measure it, you can't manage it." If we believe that ethical business practices and social responsibility are
© 2004. Business Ethics Quarterly, Volume 14, tssue 2. ISSN 1052-150X.
BUSINESS ETHICS QUARTERLY
important functions of corporate governance and management, then we should welcome attempts to develop tools that make more transparent to managers, shareholders, and other stakeholders just how well a firm is doing in this regard. In this article we will assume without argument both the desirability of many socially responsible business practices, on the one hand, and the potential usefulness of tools that allow us to measure and report on performance along these dimensions, on the other. These are not terribly controversial assumptions these days.' Almost all major corporations at least pay lip service to social responsibility—even Enron had an exhaustive code of ethics and principles—and a substantial percentage of the major corporations are now issuing annual reports on social and/or environmental performance.^ We find controversy not in these assumptions, but in the promises suggested by the 3BL rhetoric. The term "Triple Bottom Line" dates back to the mid 1990s, when management think-tank AccountAbility coined and began using the term in its work."* The term found public currency with the 1997 publication of the British edition of John Elkington's Cannibals With Forks: The Triple Bottom Line ofUst Century Business.'^ There are in fact very few references to the term before this date, and many (including the man himself) claim that Elkington coined it. In the last three or four years the term has spread like wildfire. The Internet search engine, Google, returns roughly 52,400 web pages that mention the term.'' The phrase "triple...