In response to yesterday’s post someone on Twitter, @dmanww, raised the very sensible issue of the triple bottom line, or as some might call it, corporate social responsibility (CSR).
However, having worked in a number of organizations that took the triple bottom line and corporate social responsibility very seriously, I know that it is not pervasive within the organization in the same way as the maximization of shareholder value.
To put it bluntly my bonus often had a small component of CSR involved, but the major KPI was always contribution to revenue (a.k.a. shareholder return). Very rarely were major issues discussed in terms of CSR impact, but issues were often talked of in terms of impact on shareholder return.
Measurement of the triple bottom line is not the problem. It is only a problem in an environment where the only things that matter are those that are monetized and which are realizable within a short term timeframe. In that context it is impossible to measure other things that matter – like quality of life, social impact, or common good.
Corporations focus on what provides revenue. That is the nature of the beast. It is not evil to pursue revenue. However, the pure pursuit of revenue is an amoral activity. This is especially true if executed in an environment where things – people, environment, society – are objectified and monetized.
I got interested in the idea of implementing a triple bottom line back in the 1990s. From my perspective it has not made much progress. CSR is still largely the responsibility one department within most companies. It has not become a pervasive filter for everyday business decisions. And I do not think it ever will become one with the current way corporations are structured, rewarded, and assessed.
Even if a corporation wanted to change their approach on CSR and implement it more fully, the market analysts would most likely punish them. This is because CSR necessarily impacts upon returns to shareholders. Since most public companies focus on analyst reports to ensure share prices are maintained this is a problem. And the problem is related to executive rewards, since often these are tied to stock performance.
For modern corporations the complex nexus between corporate structure, executive reward, and market assessment means that truly implementing the triple bottom line is fraught with risk.