Triple Bottom Line

My heart goes out to the 800 employees and families of John Deere who are surely still reeling given the recent news of the pending plant closure. While I suppose on some level we shouldn’t be surprised, I still find myself questioning the corporate decision-making process.

I suppose if the only measuring stick being used is money, the decision to move manufacturing to Mexico and Wisconsin makes sense. Call me Pollyanna, but I think a company has a responsibility to do more than just make money especially when they’ve been successful in a community for almost one hundred years.

Like author John Elkington, who coined the phrase “triple bottom line”, I think a company has responsibility to a variety of stakeholders, not just shareholders. By stakeholders I mean anyone who is influenced, either directly or indirectly, by the actions of the company.

If John Deere was embracing a triple bottom line approach, they would have seen their company as a vehicle for coordinating stakeholder interests, instead of just maximizing shareholder or owner profits.

The Triple Bottom Line consists of measurements related to social, economic and environmental sustainability or as some now refer to it - People, Planet, Profit.

While John Deere is paying attention to Profit and maybe Planet, it definitely seems to have steamrolled right over the People part of that equation.

The People measurement typically refers to fair and beneficial business practices toward labour, and the community and region in which a corporation conducts its business.  A company paying attention to people measurement understands the reciprocal nature of its stakeholders and their interdependence and will seek to ensure benefits for all. A triple bottom line company seeks to give back by contributing to the strength and growth of its community by investing in its health care, education, and social infrastructure.

The corporate leader who explained that to me several years ago in a compelling way was Mary Turner, Vice President of Canadian Tire Finances. As she put it, “It’s really not all that complicated, if the corporation takes care of the community, the community will take care of the corporation”. 

The Planet measurement refers to sustainable environmental practices that benefit the natural order or at least do no harm. I can’t honestly judge John Deere’s performance in that area.

The Profit measurement is the bottom line shared by all businesses and the one where typically there is the greatest emphasis. Even here John Deere seems to have come up short having chosen to make their decisions based only on one aspect of this measure. If they were committed to sustainability, they would have been considering profit as it relates to the environment, not just their internal profit.

So why is Triple Bottom Line important to John Deere, to Welland and ultimately all communities?

First of all, John Deere just isn’t practicing it. And, while it may make sense as a short term strategy to make decisions based only on profit, I personally believe there will ultimately be negative repercussions. At minimum, it’s surely tarnishing the value of their brand in Canada.

As for Welland residents, attracting companies to the area who do understand triple bottom line accounting will be essential as ultimately it reflects important values.

Companies and communities need to be very clear about what they value. It is those values and a triple bottom line approach that will be essential when it comes time to make tough decisions that work for all stakeholders. 

 

Posted on 10-04-08


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