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The Journal of Accounting and Finance July 2017 Special Issue
18
The Corporate Sustainability Solution: Triple Bottom Line
Mihriban COŞKUN ARSLAN
Harun KISACIK
ABSTRACT
Today, success of the enterprises is measured by not only their profit but also
their benefits to society and environment. Triple Bottom Line which is based on
measurement of enterprise performance through economic, social and environmental
parameters emphasizes that they must be accountable to not only stakeholders but also
the other shareholders. Triple Bottom Line is focused on three dimensions: people,
planet and profit. It supports the idea that an enterprise which operates just for profit
purposes cannot be successful by ignoring the society and environment. This study aims
at analyzing Triple Bottom Line in a theoretical infrastructure within corporate
sustainability solutions of the enterprises.
Keywords: Triple Bottom Line, Corporate Sustainability, Sustainability
Accounting.
Jel Classification: M41, Q56.
Kurumsal Sürdürülebilirlik Çözümü: Üç Boyutlu Muhasebe
ÖZET
Günümüzde işletmelerin başarısı sadece kâr elde edip etmediği ile değil, topluma
ve çevreye sağladığı faydalar ile birlikte ölçülmektedir. İşletme performansının
ekonomik, sosyal ve çevresel parametrelerle ölçülmesi anlayışına dayanan Üç Boyutlu
Muhasebe, sadece pay sahiplerine karşı değil paydaşlara karşı da sorumlu olunması
gerektiğini vurgulamaktadır. Üç Boyutlu Muhasebe; insan, evren ve kar olmak üzere üç
boyut üzerine odaklanmakta ve sadece kar amacı ile faaliyette bulunan bir işletmenin;
toplumu ve çevreyi görmezden gelerek başarı elde edemeyeceğini savunmaktadır. Bu
çalışmanın amacı; Üç Boyutlu Muhasebeyi, işletmelerin kurumsal sürdürülebilirlik
çözümleri içerisinde teorik bir alt yapıda incelemektir.
Anahtar Kelimeler: Üç Boyutlu Muhasebe, Kurumsal Sürdürülebilirlik,
Sürdürülebilirlik Muhasebesi.
JEL Sınıflandırması: M41, Q56.
This article was presented as a paper at the IV. International Symposium on Accounting and Finance in
Ohrid, Macedonia, July 3-5, 2017.
Asst. Prof. Mihriban Coşkun Aslan, Gaziosmanpaşa Üniversitesi, mihriban.arslan@gop.edu.tr
Lecturer Harun Kısacık, Hitit Üniversitesi, harunkisacik@hitit.edu.tr
Muhasebe ve Finansman Dergisi Temmuz 2017 Özel Sayı
19
1. INTRODUCTION
Today, as the global competition increases, long-term risks and opportunities
cannot be measured by enterprises as financial reports which are prepared by the
enterprises also reflect previous financial performances. Therefore; researches for
alternative sources bring out instruments measuring not only financial performance but
also environmental, social and economic performance in order to enlighten the futures
of enterprises. Being aware of the fact that these dimensions affect the future and value
of enterprises, investors now request information in these dimensions as well. So,
enterprises are directed to reporting systems which will shape not only their financial
performances but also future of the society as well as showing how environment-
friendly they are. Upon realizing that enterprises which ignore social responsibility by
having only profit purposes will have a low level of success, different concepts have
been brought out in accounting with the adoption of social responsibility. Social
responsibility is defined as acting accurately, objectively and fairly. Enterprises should
be managed without any damage to the benefits of affiliated parties (stakeholders,
employees, consumers and eventually society) in accordance with social responsibility
principles. Social responsibility becomes an obligation for long term operations of the
enterprises, in other words for sustainability.
It is emphasized that sustainability is a sum of economic activities in proportion
with ecological life support system as well as being not only an efficient but also a fair
distribution of sources among existing and next generations. (Gray and Milne, 2017).
Even though the concept of sustainability emerges in relation with environmental
production, it is currently used to include economic, environmental and social
dimensions. In accordance with the concept of sustainability; enterprises which aim at
having a good reputation in the market by gaining trust of the stakeholders determine,
monitor and report social, environmental and economic impacts of their operations.
Requirement of reports which include environmental, social and economic dimensions
brings out the concept of triple bottom line (TBL) while this concept brings out
sustainability accounting which is the complementary part of financial accounting.
Sustainability accounting is a new accounting and reporting approach which is
used for facilitating economic, social and environmental development of the companies
(Milne, 1996:152). Upon requesting preparation of social and environmental reports as
well as financial reports by the enterprises and stakeholders, TBL came into prominence
and enterprises started to present their economic, social and environmental executers
jointly. Since this study aims at analyzing TBL in a theoretical infrastructure within
corporate sustainability solutions of the enterprises, firstly the concept of corporate
sustainability was explained. Then, the concept of sustainability accounting was
summarized and TBL concept was detailed in theoretical infrastructure. Study is
important to make contributions to literature with an integrated point of view by
gathering three dimensions under one roof.
2. CORPORATE SUSTAINABILITY
Enterprises increasingly suffered oppression from the society to shoulder social
responsibility and enterprises which only have profit purposes instead of purposes of
service to the society had a lower level of success (Eren and Eker, 2012:453). Social
The Journal of Accounting and Finance July 2017 Special Issue
20
responsibility which is required to be shouldered by the enterprises in order to sustain
their vitality can be defined as protection of general benefits of the society by the
enterprises as well as their own benefits (Halıcı, 2001:12). Social responsibility can also
be defined as the utilization of sources by the enterprises in a way that it will be
beneficial for the society (İlic, 2010:305). Enterprises lacking the awareness of social
responsibility cannot make a good communication with the society and accordingly
cannot achieve sustainability.
The concept of sustainability is defined in Brundtland Report prepared by United
Nations in 1987 as follows: "development which meets the needs of the present without
compromising the ability of future generations to meet their own needs” (Gabrusewicz,
2013:39). It provides important opportunities in developing the relationship between the
strategies of enterprises and their stakeholders as well as minimizing the risks of
enterprises (Altınay, 2016:59). Moreover, following enterprise operations closely by the
stakeholders requires giving importance to the issues of responsibility and sustainability
by the enterprises (Tüm, 2014:60).
Corporate sustainability can be defined as adapting economic, environmental
and social factors into enterprise operations as well as corporate management principles
and managing potential risks in order to create value in enterprises in long term (Senal
and Ateş, 2012:85). Corporate sustainability can also be defined as operational
strategies which enable fulfillment of current needs of enterprise and stakeholders and
protection of natural and human resources which will be required by the enterprise in
the future (Tüm, 2014:61).
Corporate sustainability is explained within stakeholder and legitimacy theory.
In accordance with stakeholder theory, everyone who is affiliated with enterprise who
derives benefit or suffers damage from enterprise, whose rights are taken into
consideration or ignored are defined as stakeholders. This theory requires a clear
definition of enterprise operations on the stakeholders. In other words, it is required to
consider the interests of all stakeholders, not only the interests of enterprise proprietor
and shareholders (Hillman and Keim, 2001: 128). Legitimacy theory emphasizes that
value system of any unit composing the society must be in conformity with the value
system of the society. Accordingly, enterprise operations are legitimated when they are
related to the society and accepted by the society (Suchman, 1995: 571).
Corporate sustainability shaped consumer expectations and other market
dynamics requiring investments of enterprises in this area. So, sustainability became an
integral part of enterprise strategies and operations with the help of all these
developments (Tuna and Besler, 2015:175).
Considering the variety of stakeholders, responsibility of enterprises to inform
their stakeholders diversify the issues of information. Now, stakeholders evaluate not
only financial performance but also social and environmental performance. In this
regard, corporate performance is defined as the joint evaluation of economic, social and
environmental performances. Impacts of these three dimensions on each other should be
evaluated by the enterprises bilaterally in order to enable sustainability and targets
should be set for corporate sustainability by taking these dimensions into consideration.
Muhasebe ve Finansman Dergisi Temmuz 2017 Özel Sayı
21
Approach of joint evaluation of economic, social and environmental
performances which are important for corporate sustainability is defined as “Triple
Bottom Line - TBL”. In accordance with TBL, an enterprise can maintain its corporate
sustainability and increase its corporate performance as long as it efficiently uses its
economic, social and environmental sources by considering their relations with each
other (Elkington, 1997: 72). Sub-branch of accounting which deals with operations,
methods and systems of the enterprise in order to record, analyze and report the
interactions and relations among social, environmental and economic dimensions which
are three dimensions of TBL are defined as “Sustainability Accounting”.
3. SUSTAINABILITY ACCOUNTING
Information which is produced by accounting plays an important role in obtaining
and developing information regarding social and environmental operations of the
enterprises. In corporate sustainability, the most important information which
constitutes a basis for sustainability strategy of the enterprise can be derived from
sustainability accounting (Hernádi, 2012:27).
Sustainability accounting expands the borders of traditional accounting by
considering environmental, social and economic costs which affect all the stakeholders.
Sustainability accounting is the production, analysis and usage of monetized
environmental and social information with the aim of improving environmental, social
and economic performance of the company (Gabrusewicz, 2013:40-41). Sustainability
accounting can be defined as accounting method which can transfer qualified
information to the enterprises and protect their sustainability (Altınay, 2016:60).
Sustainability accounting aims at creating a sustainable structure in economic,
social and environmental term. Sustainability accounting strengthens communication
with the stakeholders by using reliable data and also helps the enterprises to develop
policies regarding sustainability issues as well as applying and supervising these
policies. (Tüm, 2014:70).
Traditional accounting knowledge is used in order to measure financial
information regarding economic operations of an enterprise and report this information
to various users. Inadequacy of traditional accounting structure to provide information
to corporate sustainability enables sustainable accounting mentality, which has recently
considered social and environmental factors as well, to come into prominence.
Sustainable accounting structure has the same components with financial accounting
and it can be considered that sustainability accounting complements financial
accounting. However; they have some differences in terms of their aims, principles,
techniques, report types and qualifications. Traditional accounting aims at producing
information which explains the formation of sources of an organization, utilization
method of these sources as well as increases and decreases in these sources at the end of
the organization’s operations and also financial status of the organization while
sustainable accounting aims at (in addition to the foregoing) measuring sustainability
performance of the organization, enabling accountability against shareholders and
producing information which will contribute to decision making process of the
executive management (Hernádi, 2012:25). Fundamentals of two different accounting
systems are summarized in the table below.
The Journal of Accounting and Finance July 2017 Special Issue
22
Table 1. Comparison of The Characteristics of Traditional and Sustainability
Accounting Systems
Aspects for Comparison
Traditional Accounting
System
Sustainability Accounting System
Dimension
-Economic (Financial) Situation
-Integrating Economy (Company),
Society and Environment
Target
-Presenting General Economic
Situation
-Cost Management
-Presenting Sustainability Performance
(Including Economic, Social and
Environmental Performances)
Field of Application
-Financial Accounting
-Management Accounting
-Sustainability Financial Accounting
-Sustainability Management
Accounting
Method
-Evaluation Processes
-Cost Accounting
-Evaluating Sustainability Performance
by Applying the Methods of Other
Disciplines (Biology, Sociology)
-Sustainability Balanced Scorecard
Unit of Measurement
-Money (Inventories Excluded)
-Money and Natural Units
Forms of Accounts
-Financial and Accounting
Reports
-Internal Reports
-Sustainability Reports and Accounts
-Global Reporting Initiative
Regulation Strictness
-Compulsory Due to Legal
Regulations (Financial
Accounting)
-Voluntary (Management
Accounting)
-Not Regulated, Voluntary
Source: Fülöp and Hernádi, 2013
Sustainability reporting can be defined as a report which is published on
economic, environmental and social impacts of the operations of an enterprise (Aracı
and Yüksel, 2016:109). It provides reliable and accessible information regarding
economic, environmental and social components of the enterprise. Published reports
add value to the enterprise and positively affect the stakeholders (Ergüden and
Çatlıoğlu, 2016:206).
Muhasebe ve Finansman Dergisi Temmuz 2017 Özel Sayı
23
Financial reporting is a vital instrument to determine value of the enterprise,
direct its operations and inform the stakeholders about the enterprise. However;
financial reporting is inadequate because it just gives information about financial status
of the enterprise. Sustainability reporting which is also called as non-financial reporting
is an important instrument which is used for enabling corporate transparency against
stakeholders, strengthening reputation of the enterprise, developing management
systems in environmental, social and economic areas, increasing employees’
motivation, providing financing in appropriate conditions, increasing financial value by
increasing the value of shareholders and enabling sustainability of the enterprise
including all these foregoing (Akarçay, 2014:2-3).
Study which was carried out by Hernádi and Fülöp in 2014 explains how to
manage sustainability accounting system in The Tiszai Vegyi Kombinát Public Limited
(TVK) which is one of the biggest chemical companies in Hungary. By the time of
study, TVK had 1097 employees and annual sales income of 374.584 million Hungarian
Forints (HUF). Major activity of the enterprise is to produce ethylene and propylene by
processing naphtha and gasoline as raw material. TVK supplies raw material to not
only domestic market but also plastic production companies in Central, Eastern and
Western Europe. Plastic products which are made of raw material supplied by TVK are
required for both industrial users and a larger part of the society.
Table 2 shows the balance sheet of the company TVK. The table highlights the
lines associated with environmental protection and sustainability.
Table 2. The Balance Sheet of TVK Company (Million HUF)
Assets
2012
Resources
2012
A.
INVESTED ASSETS
111.324
D.
TOTAL EQUITY
123.424
I.
INTANGIBLE ASSETS
2.240
I.
SUBSCRIBED CAPITAL
24.534
II.
NON-CURRENT ASSETS
106.048
II.
SUBSCRIBED CAPITAL UNPAID
0
Assets with Environmental
Purposes
1.028
III.
CAPITAL RESERVE
4.624
Land and Buildings
268
IV.
ACCUMULATED PROFIT RESERVE
103.585
Plant and Machinery
234
V.
TIED-UP RESERVE
0
Other Machinery
92
VI.
REVALUATION RESERVE
0
Investment
434
VII.
PROFIT OR LOSS FOR THE YEAR
-9.319
III.
INVESTED FINANCIAL
ASSETS
3.036
E.
PROVISION
4.960
B
CURRENT ASSETS
85.071
Provision for Environmental Liabilities
2.314
I.
RESERVES
15.637
Provision for CO2 Emission Quota Payments
2.179
CO2 Emission Quota
1.238
F.
LIABILITIES
65.276
The Journal of Accounting and Finance July 2017 Special Issue
24
II.
ACCOUNTS RECEIVABLE
65.587
I.
SUBORDINATED LIABILITIES
0
III.
SECURITIES
0
II.
LONG-TERM LIABILITIES
5.518
IV.
FINANCIAL ASSETS
3.847
III.
SHORT-TERM LIABILITIES
59.758
C.
ACCRUED ASSETS
352
Loans Granted by MOL for Securing CO2
Emission Quotas
2.996
G.
ACCRUED LIABILITIES
3.087
Performance Incentive Payments
398
CO2 Emission Quotas Received Free of Charge
221
TOTAL ASSETS
196.747
TOTAL EQUITY AND LIABILITIES
196.747
Source: Fülöp and Hernádi, 2014
In the study carried out by Hernádi and Fülöp (2014), items about
environment protection and social activities in TVK’s consolidated income table are
emphasized in the level of operation profit or loss indicated in Table 3. Comparison of
income and expense which are gathered from sustainability operations of the enterprise
enables determining sustainability achievements. Moreover; income statements may be
misleading as they cannot indicate such factors as increase in sales as a result of cost
savings and “green image” arising out of the application of environment-friendly
technologies. It is also difficult to digitize cost savings because of data complexity.
Table 3. The Consolidated Income Statement of TVK Company (Million
HUF)
Number of Items
Item
2012
I.
Net Sales (Revenue)
416.308
CO2 Emission Quota Sales
681
II.
Own Performance Capitalized
4.146
III.
Other Income
3.340
Provision Secured for CO2 Emission Quotas
2.130
Provision Secured for Environmental Protection
92
IV.
Material Costs
405.320
Environmental Protection Costs
107
Waste Disposal, Recycling Costs
135
COGS-CO2 Emission Quotas
681
Muhasebe ve Finansman Dergisi Temmuz 2017 Özel Sayı
25
Training Costs
66
Health Care Costs
46
V.
Staff Costs
8.605
VI.
Depreciation
11.452
Depreciation of Tangible Assets with Environmental Purposes
91
VII.
Other Expenses
14.470
Expenses Related to CO2 Emission Quotas (Impairment)
1.540
Providing GHG Emission Units
4.560
Provision Secured for Environmental Protection
376
Grants and Benefits
66
A.
Operating Profit or Loss for the Year (I+II+III-IV-V-VI-VII)
-16.053
Source: Fülöp and Hernádi, 2014
As the society start requesting the production of social and environmental
reports as well as financial reports, sustainability reporting found meaning in “Triple
Bottom Line Reporting” and enterprises started providing their economic, social and
environmental performances jointly. TBL Model was brought in literature in 1994 by
John Elkington and is currently accepted as the reference sustainability reporting
approach today.
4. TRIPLE BOTTOM LINE
John Elkington, one of the leading sustainability experts in the world and founder
of SustainAbility agency, tried to measure sustainability in mid-1990s within a new
framework of measuring corporate American performance. This system which he called
as Triple Bottom Line (TBL) was designed to cover environmental and social
dimensions by going beyond the calculations of classical profit, investment income and
shareholder value.
TBL deals with the concept of sustainability in three dimensions as economic,
social and environmental dimensions. In this regard, TBL is defined as the joint
evaluation of economic, social and environmental sustainability which are the basis of
sustainability as well as efficient use of the sources (Elkington, 1997:71). Dimensions
which compose TBL were named by Elkington as 3P when he worked for
SustainAbility in 1995: People, Planet and Profit. (Elkington, 2004:2). Concepts of
"People, Planet and Profit" were accepted as the title of sustainability report of Shell, an
Anglo-Dutch petroleum company, in 1997. In conclusion, Holland is the country where
the concept of 3P has started and has still a wide range of use.
The Journal of Accounting and Finance July 2017 Special Issue
26
Moreover, Elkington (2006) suggests that company managements are required to
answer the following questions again in order to revise the execution of their
management systems:
Why does an enterprise exist?
Who should have right to speak about operation of the enterprises?
What is the most appropriate balance between shareholders and other
stakeholders?
What should be the balance within the scope of trilateral responsibility?
Answers to be given for all these questions are under the responsibility of
executive management of the enterprise and should be included in the agenda of board
of directors.
TBL is accepted as a social and ecological agreement between the enterprises
and society. TBL which is the essence of sustainability enables the measurement of
impact of enterprise operations on the world, including profitability and stakeholder
values as well as its social, human and environmental capital. Since TBL is an
accounting framework which combines enterprise performances in economic, social and
environmental dimensions, it differs from traditional reporting system. Since there is
less and less trust in financial reports today, major enterprises come face to face with
their stakeholders’ request of getting reliable information about their operations and
performances. TBL approach provides more transparency and a larger framework to its
stakeholders for their decision making process. Since everybody can participate in TBL
processes such as workers or external stakeholders, they have a chance to increase their
knowledge about the enterprise and develop their relations with the other stakeholders
in the company (Roy and Mitra, 2015:33-34). So, enterprises become more transparent
and more reliable. It’s of high importance for enterprises to gain trust of their
stakeholders.
TBL is used for achieving all values, matters and processes which the companies
are required to underline in order to minimize damages which may arise out of the
operations of enterprise and create an economic, social and environmental value (Ho
and Taylor, 2007:124). However; there is no common unit of measurement in 3P system
of TBL. Profit can monetarily be measured while environmental and social capital
cannot be measured with a common unit of measurement which leads to an important
problem. In some views, it is suggested that all TBL dimensions can monetarily be
measured including damages of the enterprises in social and environmental level.
Another solution emphasizes that TBL can be calculated based on an index. So, non-
conformity of units which may arise out of measurement can be overcome and there can
be a comparison between the assets.
Today, many enterprises are aware of the fact that economic achievement
depends on social and environmental performance (Sarıkaya and Kara, 2007:227).
Enterprises publish TBL reports in order to show their loyalty to sustainability
applications. TBL reporting indicates increasing transparency and accountability.
Stakeholders can be informed about impacts of the enterprises on the world as well as
their financial information through TBL reports (Öztürk and Özçelik, 2014:131).
Muhasebe ve Finansman Dergisi Temmuz 2017 Özel Sayı
27
TBL approach suggests that decision making criteria should also include social
and environmental factors instead of just being focused on profit maximization.
(Winkler et al, 2015:484). TBL concept, as an indicator of success, accepts that profit is
still important but it also emphasizes that environment which enables profit and people
who live in that environment should not be damaged. Enterprises are required to report
environmental and social outcomes in addition to financial outcomes (Tokgöz and
Önce, 2009:264). In other words, general performance of a company should be
measured by taking total contribution of economic welfare (profit), environmental
quality (planet) and social capital (people) as a basis (Żak, 2015:252). Three dimensions
of TBL which are shaped to report economic, social and environmental operations of
the enterprise are indicated in Figure 1.
Figure 1. Triple Bottom Line 3P Formulation
4.1. Economic Bottom Line (Profit)
Economic dimension of TBL framework represents the impact of
organization’s operation application on economic system (Alhaddi, 2015:8). Economic
dimension is focused on economic value and associates growth of the enterprise with
the growth of its economy (Arowoshegbe and Emmanuel, 2016:104).
Economic dimension is related to capital of the enterprise and emphasizes that
capital should efficiently be managed. Enterprises should both provide high level of
earnings to their stakeholders and avoid suffering financial problems in order to enable
its economic sustainability (Tüm, 2014:63-64).
Profit is used not only for enabling a strong and sustainable enterprise but also
for providing benefit to the society (Schroeder and DeNoble, 2014:55). A profitable
enterprise contributes much benefit to the society by providing cheaper goods and
services of higher quality.
4.2. Social Bottom Line (People)
Social dimension of TBL framework represents the execution requirement of
applications which are beneficial and fair to labor, human capital and society. Such
applications as fair wage system and health insurance add value to society (Alhaddi,
The Journal of Accounting and Finance July 2017 Special Issue
28
2015:8). Ignorance of social responsibility by the enterprise negatively affects
sustainability and performance of that enterprise. Recent studies indicate that execution
of social responsibility increase costs of the enterprise. In short, social performance is
focused on the interaction between community and enterprise and deals with social
participation, relationship among employees and fair wages (Arowoshegbe and
Emmanuel, 2016:105).
An enterprise which has an aim of following TBL method should consider the
impact of its actions on all stakeholders. Enterprise should be developed in an
organization which is accessible by the society. Communication between enterprise
managers, employees and society should be clear and honest (Schroeder and DeNoble,
2014:55).
4.3. Environmental Bottom Line (Planet)
Environmental dimension of TBL framework is to direct next generations to
applications which will not endanger environmental sources. Efficient use of energy
sources is about decreasing greenhouse gas emissions and protecting ecological balance
etc. (Arowoshegbe and Emmanuel, 2016:105). Operations of the enterprise which don’t
give any damage to environment should protect natural resources for the next
generations (Gençoğlu and Aytaç, 2016: 52).
Protection of human health, life quality of animals and plants, protection of air,
water and soil quality as well as biological variety are within the scope of
environmental sustainability (Ergüden and Çatlıoğlu, 2016:205). An environmentally-
sustainable enterprise should pay attention to having such sustainable applications as
using renewable energy sources, minimizing energy use, using recyclable materials,
disposing any poisonous waste securely (Schroeder and DeNoble, 2014:55).
5. REVIEW OF LITERATURE
Savitz and Weber (2006) suggest in their book that enterprises face with
economic, environmental and social changes in the world and sustainability applications
have been increasing in business world. They also mention real problems which
enterprises face with and innovative solutions arising out of sustainability.
Ho and Taylor (2007) suggest in their study that enterprises in the USA and
Japan have researched the scope of TBL reports. They conclude that the scope of TBL
reports of Japanese large-scaled enterprises operating in production industry having low
level of profit and low level of liquidity is at a higher level.
In their study, Wang and Lin (2007) have developed “Sustainability
optimization” which supports sustainable development in social, environmental and
economic areas where TBL is applied and includes environmental and social costs and
values into economic activities in order to support management decisions by using
quantitative models.
Fauzi et al (2010) suggest in their study that TBL should be measured by
financial, social and environmental elements as a sustainable corporate performance.
Muhasebe ve Finansman Dergisi Temmuz 2017 Özel Sayı
29
They also put forward that content of measurement elements should constantly be
measured in order to adapt them to changes occurring in the market and society over
time.
In his study, Hernádi (2012) aims at suggesting how accounting can fulfill
sustainability criteria as a business world language and information source. He also
suggests interpretation of the principle of “going concern”, which is the most important
principle of accounting, by analyzing different approaches for corporate sustainability.
In their study, Hollos et al (2012) test the impacts of sustainable supplier
cooperation based on TBL. They apply surveys on the companies in Western Europe
and conclude that sustainable supplier cooperation companies generally have positive
impacts on their social, environmental and economic performances.
Merriman and Sen (2012) suggest in their study that there are studies regarding
high level managers and research attitudes of medium level managers against TBL.
They conclude that medium level managers have a higher interest on environmental
initiatives if they are supported with incentive premiums.
In their book, Henriques and Richardson (2013) mention about the inclusion of
TBL concept developed by John Elkington in 1994 into literature. They explain TBL as
an excellent and comprehensive metaphor. They also address that TBL encourages
many corporate activities by talking about environmental, social and economic
dimensions of TBL.
In their study, Glavas and Mish (2014) research market mentality of the
companies applying TB Land as well as execution of their missions and achievement of
their goals. They conclude that companies applying TBL are transparent in their
process, focus on cooperation advantage instead of being focused on competitive
advantage and deliberately create new markets which other companies can also benefit
from.
In their study, Ralston et al (2015) research TBL of corporate responsibilities in
economic, social and environmental terms taking BRIC (Brazil, Russia, India and
China) countries as a basis. They determine that the best predictor of corporate
responsibility attitudes is socio-cultural values in macro level while the next generation
gives much more importance to economic corporate responsibility compared to social or
environmental responsibility in generational level.
In their study, Roy and Mitra (2015) analyze annual corporate reports of social
responsibility and sustainability of 15 energy companies which are included in BSE 500
index in Bombay Stock Exchange within the scope of TBL. They conclude that
corporate TBL values of exemplary companies are gathered based on performance in
terms of 3 main indicators as environmental, social and economic aspects.
In their study, Ozanne et al (2016) research difficulties for the enterprises which
are tried to be managed by TBL concept and the roles of public policies. Authors carry
out more than one case study which they choose regarding whether three dimensions of
sustainability are managed or not. They conclude that enterprises which are managed
The Journal of Accounting and Finance July 2017 Special Issue
30
by TBL concept are more sustainable than the enterprises which are not managed by
this concept. Moreover; they suggest that public policy plays an important role in
making paradoxical tensions clear for the organizations following TBL.
6. CONCLUSION
Sustainability is defined as fulfilling the needs of today without removing the
possibility of fulfilling the needs of next generations. Enterprises which are regarded as
the source and one of the parties of technological, social and environmental risks start
meeting with pressures in the issue of requirement of directing to new values and
concepts as a solution seeking. Named as corporate sustainability, this approach tries to
maintain the existence of enterprises in current market conditions and rearranges ideas,
approaches and practices in the issue of management for welfare of the next generations
within the scope of sustainable development.
Corporate sustainability is the consideration of economic, environmental and
social factors together with the corporate management principles in the company
operations and decision making mechanisms in order to create long term value in
enterprises and an efficient management of risks which are related to these factors.
Enterprises can achieve real success if they consider sustainability applications as a
combination of sources, expertise, opportunities and innovations from which all the
stakeholders derive benefit, instead of considering them as a burden. Sustainability has
environmental and social dimensions as well as economic dimension and all of these
dimensions should jointly be taken into consideration and integrated into decision
making mechanisms for an accurate sustainability strategy.
Sustainability accounting, a sub branch of accounting, is used in enterprises for
supporting the application of sustainability processes and reporting to executive
management as well as producing information incredible information regarding
corporate sustainability. Sustainability is an interdisciplinary area and joint evaluation
of enterprise operations is only possible through accounting system. Since enterprise
operations, processes, stakeholders and expectations of stakeholders from enterprises
differ from each other, report contents of these foregoing will also differ depending on
the enterprise. It is the mission of sustainability accounting system to provide
environmental, social and economic indicators and information without losing any
integrity, transparency and credibility.
It is not possible for enterprises which make future investments by ignoring the
expectations of their stakeholders and focus only on economic sustainability by ignoring
environmental, social and corporate management risks to protect or increase their
competition under current conditions. Today, stakeholders expect the companies to act
as a responsible legal entity and request much more information and transparency about
the company’s methods of making added value. Triple Bottom Line (TBL) aims at
indicating social and environmental impacts arising out of enterprise operations on
economic performance to fulfill this request as well as making progress and
concretizing these impacts. In accordance with the idea behind TBL, enterprises which
have long-term targets of achievement are required to fulfill needs of the society
Muhasebe ve Finansman Dergisi Temmuz 2017 Özel Sayı
31
without damaging environmental and social capital because investment of an enterprise
in economic, environmental and social factors will bring it success.
Corporate sustainability adopts TBL approach. Accordingly, enterprises
maintain their sustainability and increase their sustainability performance as long as
they efficiently use economic, social and environmental sources without ignoring the
relationship among them. It is required not only to manage the impacts of economic,
social and environmental impacts of corporate operations, but also to share them with
the stakeholders in order to maintain corporate sustainability performance. However;
since there is no common unit of measurement in 3P system, it may lead to some
problems. It is recommended to calculate TBL based on the index in order to overcome
these problems so that comparisons can be made by using a widely-accepted calculation
method. Sustainability index is defined as a common language in this measurement. It is
of high importance for an enterprise to comprehend TBL fully in order to become a
sustainable enterprise. This study contributes to literature for the enterprises to
comprehend TBL mentality and apply TBL in their operations.
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