Accounting Business Reporting for Decision Making

CHAPTER 2 Accounting in society 59

The Specific Standard Disclosure includes:

1. management approach


2. indicators — economic, environmental and social (labour practices and decent work, human rights,

society, product responsibility).

The framework also includes criteria to be applied by an entity to prepare its sustainability report ‘in

accordance’ with the guidelines, based on two options. The options include the ‘core’ option and the

‘comprehensive’ option. Regardless of the option chosen by the entity, the focus of preparing the report

is on the process of identifying any material economic, environmental and social aspects that would sub-

stantially influence the assessment of decisions of stakeholders.

Triple bottom line

The GRI reporting guidelines include performance indicators from the economic, environmental and

social dimensions. These three dimensions are commonly accepted as the three ‘pillars’ of sustainability

and are known as the triple bottom line. They are also frequently depicted in interlocking cycles as

shown in figure 2.2. Sometimes referred to as ‘people, planet and profit’, 3BL, or TBL, the three con-

cepts have been used widely to discuss and disseminate information regarding business sustainability.

Traditionally, business entities report their financial performance. Depending on the entity structure,

this is required by law to help with capital funding applications, to lodge tax returns and to generally

assess the financial performance of the entity. Chapter 3 will discuss the different business entities and

their reporting requirements. However, the triple bottom line approach advocates expanding the reporting

of an entity’s performance to include social and environmental performance. The underlying concept is

in line with stakeholder theory discussed earlier. That is, the entity exists to bring about interactions and

transactions with various stakeholders on an economic, environmental and social level.

Economic performance is the traditional profit and return on capital performance. More recently,

economic performance has been defined as the economic value created by the entity over a particular

period of time. This is the profit minus the cost of the capital employed. All entities must turn a profit

and deliver an adequate return on the capital employed to remain sustainable. It is this bottom line that

captures the conventional concept of performance and the focus of the owners of the entity.

Social

Environment Viable Economic

Bearable Equitable

Sustainable

FIGURE 2.2 Triple bottom line reporting framework

Source: Adams, WM 2006, The future of sustainability: re-thinking environment and development in the twenty-first century, Report of
the IUCN Renowned Thinkers Meeting, 29–31 January, The International Union for Conservation of Nature, http://www.iucn.org.