The Triple Bottom Line

Click here to view a video about Dr. Karl-Henrik Robèrt explaining sustainability, The Triple Bottom Line.

King II recommends that organisations report on a triple bottom line and not on financial performance only. The triple bottom line refers to social, economic and environmental aspects.

The environmental aspects include the effect that the product or services produced by the company have on the environment. Social aspects involve values, ethics and the reciprocal relationship with stakeholders other than the shareowners of the company. Economic aspects refer to the financial performance of the company. The way in which a company should report on the triple bottom line is recorded in the Global Reporting Initiative (Appendix XI of the King II Report).

Non-financial issues such as human rights, ethics and Aids are becoming part of the responsibility of organisations, and thus part of the triple bottom line reporting requirement.

To summarise in the words of King II: "...successful governance in the world of the 21st century requires companies to adopt an inclusive approach that takes the community, its customers, its employees and its suppliers into consideration when developing the company strategy. This inclusive approach requires that the purpose of the company is defined and that the values by which it will operate are identified and communicated to all stakeholders. The relationship between the company and its stakeholders must be mutually beneficial. The company must be open to institutional activism and there must be greater emphasis on the non-financial aspects of its performance. Boards must apply the test of fairness, accountability, responsibility and transparency in all acts or omissions and be accountable to the company but responsive and responsible towards the company's identified stakeholders. The correct balance between conformance and performance must be struck."