Environmentally Inclusive Accounting

The term “triple bottom line” dates from the 1990s. The idea is that the goal of the business should be more than just profit but that a broader, humanistic approach be taken. The three bottom lines are financial, social, and environmental. Organizations that take this approach focus on the three P’s: profit, people, and the planet.

Employing this philosophy can potentially make the firm take into account the total costs that it imposes on the world. In practice this can be difficult because it is hard to tell the social and environmental costs. Financial costs and profit can be calculated with accounting tools and market prices, but social and environmental costs are more difficult to measure.

Disposal costs are part of the environmental costs and they do show up on conventional accounting statements. So do costs for permits and fines imposed for failure to meet environmental standards. But these costs are often incomplete and may not reflect true cost to the planet. Even more difficult to account for is the burden imposed by purchase of materials and services that themselves have unaccounted for costs to the environment. Some have proposed using an artificial index to measure these costs, although an index is probably better for measuring changes in impacts to social and ecological systems than absolute value in monetary terms.

The benefits of environmental responsibility can include an enhanced reputation if the wider public knows your organization is pursuing this goal.

We at Malsparo endorse the idea of the Triple Bottom Line even as we acknowledge it is difficult to measure. Here is an explanatory video: https://www.youtube.com/watch?v=2f5m-jBf81Q