Business Sustainability: The triple income statement
Posted on July 07, 2020 | Darys Estrella
The concept of the triple income statement, or in other words, the creation of economic, social and environmental value, is a concept that is almost twenty years old and ...
The concept of the triple income statement, or in other words, the creation of economic, social and environmental value, is a concept that is almost twenty years old and was developed by John Elkington in his work Cannibals with Forks (1997).
It indicates that companies can only survive in the long term if they are economically viable, environmentally sustainable and socially responsible.
We must not underestimate the important role that companies have, as engines of change and progress, contributing to the reduction of poverty when they increase their productivity, at the same time that they generate employment opportunities, in addition to producing essential goods and services for people. . But the responsibility of the company goes further.
Under this scheme, to be sustainable is to achieve that fine balance between the economic, social and environmental axes in the long term, but in a comprehensive, ethical and responsible way. That is the real challenge.
Companies today face stricter environmental, legal, and labor regulations and requirements, increased oversight by civil society, established and potential markets that are increasingly demanding, and more demanding customers. That is why it is necessary to rethink a new business business model, where social and environmental benefits are part of corporate success, and give it the social and ethical legitimacy that ensures the company its long-term stability. Visualizing the new challenges of the changing economic and commercial landscape and transforming them into opportunities that can be integrated into the company's strategy for its execution and materialization is the determining factor for achieving a triple successful result.
Economic axis: it is more than evident that a company must be profitable and generate profits for its shareholders. Without profit there is no company.
Social axis: we can make a brief focus on three main groups (there are others not less important):
- Employees: the company must act as a good employer, with an adequate work environment. This contributes to increasing levels of satisfaction, belonging, commitment and loyalty, to greater productivity, less turnover and talent retention.
- Suppliers: the company must ensure the strengthening of the value chain in economic, social and environmental terms.
- Community: The company must generate good relationships that allow improving the common environment and increase the company's influence in the community, thus reinforcing its social license.
Environmental axis: the company must be responsible for managing and mitigating the environmental impacts associated with its operation and be an agent of change. Initiatives such as recycling, eco-efficiency, use of renewable energy, eco-friendly products and services, reduction of the water footprint or carbon footprint, are always well regarded by the markets and society in general, also being an added value and a competitive advantage for the company that adopts them.
In addition to the importance of achieving a balance between these three axes: economic, environmental and social, the issue of transparency plays a leading role, since it manages to generate and maintain the necessary trust, incorporating improvements related to good corporate governance and good management practices.
Transparency is an issue that interests all stakeholders. It allows companies to be better prepared to meet the current demands for information from society, based on higher levels of demand and to report on the materiality of their business activity. In this way, the policies and programs developed to face the challenges and opportunities of the company can respond to the opinions and concerns of interest groups, creating an alliance that facilitates the achievement of common objectives, which are reflected in the triple income statement.