Article Top Ad

Report Finds Companies Lag on Triple Bottom Line

Companies need to take a stronger leadership role to integrate the triple bottom line of social, environmental and economic considerations, or else suffer as BP, Cadbury and the pharmaceutical industry here have recently, according to a new report. Read More

Companies need to take a stronger leadership role to integrate the triple bottom line of social, environmental and economic considerations, or else suffer as BP, Cadbury and the pharmaceutical industry here have recently, according to a new report.

At its annual meeting in April, BP faced criticism from its shareholders over environmental and human rights; Cadbury is being forced to consider the issue of slavery on its cocoa plantations; and 39 pharmaceutical companies were forced into a climb-down following a legal battle in South Africa over the price of AIDS drugs.

Such loss of reputation need not have happened had the companies concerned been paying greater attention to the triple bottom line, according to The Power to Change: Mobilizing board leadership to deliver sustainable value to markets and society, published by the international think-tank SustainAbility and the Price of Wales International Business Leaders Forum.

Based on analysis of corporate practices around the world, the report highlights how firms’ boards can take a leadership role in addressing today’s commercial and societal challenges, but without necessitating them to take on additional functions. In particular, the report lays down six “LEADER” principles:

  • Leadership. CEOs and chairs must prosecute their companies’ triple bottom line agenda;
  • Engagement. Decision-makers must engage with outside perspectives;
  • Alignment. They must also meet the challenge internally and externally, achieving coherence between policy and practice;
  • Diversity. A diverse board fosters creativity and independent thought;
  • Evaluation. Take stock of how the board and the company tracks and rewards triple bottom line performance; and
  • Responsibility. The board must be accountable for the activities of its company.

According to Peter Zollinger, co-author of the report and executive director of SustainAbility, to call for board leadership, for many who prefer a low-maintenance, low-profile board, is a provocation in itself.

“As the high profile cases of the last weeks illustrate, board directors – both executive and non-executive – need to understand and respond to changing societal expectations about the role of business. They need to communicate what they consider to be realistic expectations of what business can and cannot achieve, and what they consider to be responsibilities of others. To achieve this, boards need to be fully engaged and transparent,” Zollinger said.

Nevertheless, responsible behavior is occurring within even some of the largest multinationals. According to Jane Nelson, report co-author and IBLF’s director for business leadership and strategy, the practices of a diverse range of companies, including South African Breweries, Ford, The Novo Group, Dow Chemical, Shell, Rio Tinto and DuPont, all explored in the report, show that leading boards are taking up societal challenges.

“But, the report also shows that there is still a long way to go for the vast majority of boards,” Nelson said.

© Faversham House Group Ltd 2001. This article may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent. Edie is a GreenBiz News Affiliate.

—————-

RELATED LINKS:

Bookstore: Cannibals With Forks: The Triple Bottom Line of 21st Century Business

Bookstore: Technology, Humans, and Society: Toward a Sustainable World

Event: Triple Bottom Line Investing 2001

Trellis Briefing

Subscribe to Trellis Briefing

Get real case studies, expert action steps and the latest sustainability trends in a concise morning email.
Article Sidebar 1 Ad
Article Sidebar 2 Ad