Pages

August 22, 2012

Ethical Conscience

At its most basic, triple bottom line (TBL) is about ethics. Whether we call it sustainability, corporate social responsibility, or responsible business, the essence of TBL provides financial, social and environmental factors to promote an ethical conscience within business and society.

When I look at the transport trucks that pass by on the highway and local roads and read their signs, I have a general idea of what they do, but I'm clueless about who they are. There is little neighborliness in branding. Its objective is to convey a single message of value to its potential customers. The stakeholders that invest in the company benefit financially from the value customers receive from the company's products and services. In this sense, maximizing stakeholder value is in fact equivalent to maximizing customer value.

This starts to fall apart when you consider the negative outcomes or externalities of production. It's easy to pick at oil mining and cigarette companies, but consider the organizations you're involved with on a daily basis like laundromats, coffee shops, electronics manufacturers, book publishers, furniture producers, real estate developers, waste management companies, fashion designers, and utility suppliers, to name a few.

The world around us works through large, complex supply chains that, at their most efficient, deliver products right to our door. This kind of convenience is simply amazing, but it comes at a price to the workers who are required to meet large quotas and the increased use of transportation to deliver goods on time. Customer convenience rarely equals responsible supplier behavior. Just look around you and think about the potential social and environmental waste that is produced.

If, with our convenience, we added a few other requirements, such as smaller quotas, more humane working hours, and a limit on CO2 emissions, we may not get what we want when we want it, but it's difficult to say whether we'd be less happy or satisfied. Knowing others are being treated fairly has ethical value, a soft metric that may be impossible to measure but as a belief in the minds of consumers.

The belief in ethics, though, can also change how we measure stakeholder value. The opportunity cost of delivering less to less people is made up by ethical responsibility a company develops for workers and the environment. As a whole, it is a net positive for society; satisfied customers (profit), happier employees (people), and a cleaner environment (planet).

The case against TBL often comes from the perspective of defining value by our current, single bottom line framework. A better question is, "what would happen if we defined value differently?" Would customers be less satisfied if their perspective on value shifted from single bottom line to triple bottom line? Would companies truly produce less stakeholder value if stakeholders had a similar shift in ethical belief systems?

TBL is a conceptual framework with ethics as its backbone. We make decisions based on price and judgments based on quality every day. Applying the same analytical mindset to companies we buy from and asking about their social and environmental policies will be the true enabler of change.