The Triple Bottom Line

Sustainable development can be defined as an organizing principle geared toward the realization of goals. It brings into perspective an aspect of sustaining the process of resource provision by natural systems. It does not advocate for interference with the stability and form of the natural systems from which resources are obtained. This paper brings into perspective a summarized analysis of various approaches that are geared towards sustainable development. These approaches include the triple bottom line, the five capitals, natural capitalism, cradle to cradle, the circular economy, and the balanced scorecard. The study goes ahead to illustrate a practical application of two approaches that is the triple bottom line and the circular economy approach to sustainable development to a given organization. In this case, the subject organization being Alra Foods. Under the triple bottom line approach calculation of the triple bottom line is brought into perspective with a consideration on the indexing approach where three measures are brought into perspective. The three measures include the economic measures, the environmental measures, and social measures. The paper goes further to discuss the application of the circular economy approach which brings an aspect of waste reduction. Here the challenges and opportunities that are likely to emanate from the adoption of the circular economy approach are brought into perspective. Finally, the study brings into perspective a comparison between the two approaches adopted.

The Triple Bottom Line.

The triple bottom line is an accounting framework that brings into perspective the three dimensions of performance (University of Wisconsin, 2018). These dimensions include the social, environmental, and financial. The triple bottom line differs from traditional reporting due to the fact that it incorporates the environment that is environmental and social measures that prove difficult to assign means of measurement that are appropriate. The three dimensions, in a nutshell, can be defined as people, planet, and profits. Organizations adopt the triple bottom line to analyze and evaluate performance on the basis of creating greater business value. The concept brings into perspective the fact that the stakeholders are the bearers of company responsibility and not the shareholders.

The Five Capitals.

The five capitals model refers to a model that brings into perspective the conceptualization of economic sustainability. It focuses on asset valuation apart from financial asset valuation (Barclay, 2017). The key assets considered here include capital on an economic perspective, the capital on a human perspective, natural capital, built capital, and capital on a social perspective. This model facilitates the integration of management systems taking into consideration the sector or industry. It can also be used as an analytical tool for sustainability evaluation. This model is essential in providing for sustainability with a focus on wealth creation economic concepts.   

The Five Capitals

Natural Capitalism.

Natural capitalism is a concept that brings into perspective the interdependence of the global economy and the natural resources. The concept critiques traditional industrial capitalism.  Natural capitalism believes that interdependence between the production of human-made capital and its use (Hawken et al., 2013, p. 168). It also brings into perspective the natural capital supply and maintenance. Natural capitalism is based on three key principles which include using resources at 10 to 100 times more productively, redesigning production on biological lines, and a shift from selling goods to leasing a continuous flow of services that meet the dynamic needs of customers and clients.

Cradle To Cradle.

Cradle to cradle refers to a product design approach that takes into consideration a human perspective of nature’s processes. It takes into consideration materials as an equivalent to nutrients revolving in a health and safe metabolism (Haggar, 2010, p. 98). The model brings into perspective sustainability and the consideration of the life of future generations. The model suggests that protection must be offered to the environment and its ecosystem. The framework can be described as economic and social. It seeks to produce systems that are effective and efficient and are geared towards the production of minimal waste.

The concept of the circular economy gives a response to sustainable growth. It focuses on the growing pressure of production and consumption on the resources available in the world (Charter, 2018, p. 125). The concept offers a solution to the take-make-dispose model where every product has an expiration period or end life. The model can be understood better by taking into consideration natural living systems that function effectively because each of its components operates with others as one.  

The Balanced Scorecard.

A balanced scorecard refers to a tool that is used by organizations to effect strategic planning and management (Balanced Scorecard Institute, 2018). It is essential in communicating what organizations intend to achieve, alignment of day to day operations and activities in an organization, project, products and service prioritization. It is also essential I the measurement and monitoring strategic target achievement progress. The concept acts as a link between organizational goal s and objectives and operational objectives. The tool brings into perspective four elements which include the financial, customer or client, internal organizational processes, and organizational capacity.

Practical Application

Subject Organization.

The subject organization in this study will be Arla foods, an international organization located in Viby in Denmark. The company has been identified as the largest producer of products related to dairy. The company arose as a result of a merger between two companies that is Arla and MD foods in the year 2000. The company produces products such as Lurpak and Castello cheese which both have attracted the international market and are sold all over the world. The company qualifies to be both a corporative brand and one that stretches across all product categories. The company prides itself in understating corporate social responsibility and sustainability. In achieving the sustainability objective, the company may employ the use of the triple bottom line approach to sustainable development and the circular economy approach to sustainable development.

Natural Capitalism

Sustainability has been a fundamental goal of organizational performance, yet measuring the degree of organizational sustainability has been quite difficult. The triple bottom line approach is an accounting framework that brings into perspective three dimensions of performance. These dimensions revolve around social factors, environmental factors, and financial factors. When evaluating the level of sustainable development in Arla Foods, the company, needs to take into consideration this three dimensions brought into perspective by the triple bottom line approach. The framework brings in perspective ecological and social measures which are quite difficult to assign performance measurement metrics (Henriques, 2013, p. 24).  In a nutshell, the three dimensions that are critical in this framework include the people, profits, and the planet.

Figure 1the dimensions of the triple bottom line.

Calculating the triple bottom line can be a hectic undertaking for the company this is due to the fact that the units of measurement are not uniform. The unit for measuring profits is definite since it takes the country’s currency unit. However measuring social capital and environmental and ecological health do not have definite units of measurement (Szekely et al., 2017, p. 56). Therefore, in establishing the right metrics for evaluating the performance of the company Arla Foods should ensure that they use an approach that will raise minimum questions but yield maximum results. For the company to effectively calculate the triple bottom line, it should ensure that an index approach is adopted. Indexing eliminates incompatibility and allows for comparison between two aspects. The company may also opt to measure the three dimensions as stand-alone aspects. However, this approach is quite cumbersome and hectic.

Measures Applicable To the Indexing Approach.

The triple bottom line does not have a standard approach to calculation. Therefore the company is at liberty to use an approach that it deems suitable. Taking into consideration the fact that the approach does not have a universal measure of standards, it provides room for application in any organization. Arla Foods is one such organization. The approach provides room for customization, that is, an organization may able to tweak the generic framework in order to fit its needs. Therefore in adopting this approach, Arla foods will be able to customize it so as to fit its needs and requirements. In establishing what measures to be included in the calculation of the triple bottom line, the stakeholders of the company have to chip in in order to exercise their responsibilities. The measures that Arla Foods might use include economic measures, environmental measures, and social measures (Boubaker et al., 2018, p. 108).

Cradle to Cradle

Economic measures.

In relation to the triple bottom line, economic measures are those dealing with the flow of money. Taking into consideration the Arla Foods Company, these measures may include income expenditures, company taxes, climatic factors with a financial implication on operations, and business diversity factors with implication on the flow of money in the company. To be specific, they may include aspects such as the cost of the company having few employees than is required, the size of the company, the revenues in the sector that contribute to company revenues.

These are factors that represent the measurement of natural resources and their implications on the viability of the triple bottom line approach (Savitz, 2013, p. 213). In this area, the measures may include aspects such as air and the quality of water available to the company, energy that the company consumes, solid and toxic waste, and land use cover. It is ideal for the company to have long-range trends available to monitor each environmental trend so as to be able to gauge the impact that the company will have on that given area. To be specific, in this area the company will consider aspects such as consumption of electricity, solid waste management, Change on land use cover, and excessive nutrients.

Social measures.

These aspects refer to issues relating to the community within which Arla Foods is situated. Measures here may include measurement of education, the equity, and access to social resources, health and well-being, quality of life and social capital (Savitz, 2012, p. 201). In this area, corporate social responsibility will be greatly considered. Questions such as what has the company done for the community will be raised here. To be specific, the company will consider aspects such as the rate of unemployment in the society, the rate of female labor participation in company affairs, company involvement in matters education in the community, company involvement in matters relating water in the community and the number of people employed in the company from its environs.

The Circular Economy.

The circular economy provides solutions to the aspiration of sustainable growth. It concentrates on the ever-increasing pressure of production and consumption of the world’s resources (Lacy & Rutqvist, 2016, p. 64). Arla Foods uses various materials in its quest to produce food substances. When the product they use is finally worn out or are of no value to them, the products are discarded as waste material. That is it is no longer required by the company. A continuous cycle of this approach may lead to resource depletion. Adaption of the circular economy approach shifts the focus of the company from disposal as waste to aspects such as reusing, repairing, refurbishing, and recycling existing materials and products. What the company regarded as waste in the recent past is now be referred to as a resource.

The Circular Economy

By adopting the circular economy approach, the company will be able to take into consideration natural and living systems that operate as a whole. This is because all components are effectively and efficiently synchronized with each other. Therefore the company’s products will be effectively designed to suit the various material cycles in a way that advocates for value addition for the longest time possible (Brears, 2018, p. 98).

Design for a Circular Economy.

The company business is the key to transition and success of a circular economy. Therefore, through the adoption of the circular economy, Alra Foods will be able to grasp new opportunities and extend the lifetime of their products in an effort to create long-lasting competitive products (Charter, 2018, p. 108).

Sustainable Consumer Choices.

By adopting the Circular economy approach, the company should be able to make sustainable choices. The choices are characterized by ease, attractiveness, and affordability.

Adoption of the approach by Arla Foods requires that the company puts in place various policies that are geared towards enduring for its success. The company should consider establishing integrated global supply chain networks.

Challenges Likely To Be Encountered By the Company

The transition and adoption of the circular economy bring into perspective new challenges that Arla Foods is more likely to encounter. They revolve around factors such as political factors, social factors, economic factors and technological factors (Webster, 2017, p. 126). To be specific Arla Foods is likely to face problems such as lack of employee awareness, knowledge, and capacity to pursue the solutions that circular economy adoption provides. The systems that the company operates on currently might lock the company in the old linear model. The company may incorporate insufficient investment to facilitate measures geared towards the improvement of efficiency and innovative business models. Finally, the demand for sustainable products may remain low.

Opportunities That Are Likely To Come Up.

By adopting and implementing circular economy measures such better eco-design and waste prevention can help the company increase their net savings and reduce costs likely to be encountered. Resource productivity is also likely to be boosted a great deal while the number of jobs created by the company will so increase (Benton et al., 2015, p. 58).  

Comparison between Approaches Used.

Regardless of the fact that the approaches discussed are all geared to sustainable development, they depict various differences. The triple bottom line approach focuses on an accounting framework that focuses on three dimensions of performance which include the social environmental and financial aspects. The aspects are further divided into three aspects which include the people, profits and the planet. The approach does not have a standard unit for measurement. Therefore, various approaches can be adopted including the indexing approach which brings into perspective three measures which include the environmental measures, the economic measures, and the social measures.

On the other hand, the circular economy brings into perspective the aspect on disposition approaches. The approaches are geared towards waste minimization. It brings into perspective an aspect of value addition. What was once considered useless is transformed into something that can be referred to as a resource. Regardless of the fact that the two approaches differ in both approach and concept, they are interrelated.  This is because both approaches are geared towards ensuring for sustainable development of an organization. Finally, they both have financial implications for an organization.

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