Part 2: DECIDE
Let’s take a small air pollution control company that wants to improve its triple bottom line. After the board of directors outlines their TBL policy guides, they have their company assessed for sustainability. From the assessment, the following initiatives are suggested. Each initiative is suggested to improve one specific aspect of their triple bottom line.
• Install low-flow water taps to reduce water use
• Install more doors and windows to improve air quality
• Non-paid intern contracts to reduce overhead
• Invest in automated conveyer belts in the plant to increase production
• Get a company-wide health benefit plan for happy employees
• Sponsor an environmentally friendly charity.
Implementing all of these could be wonderful, but the company can’t afford to do them all.
Step 1: Assess
With a scarcity of resources, prioritization of goals is necessary. Since this company wants to maintain a TBL with all policies and initiatives, it should implement those initiatives that serve all three legs of the triple bottom line over those that do not. Each initiative that’s chosen needs to have an environmental benefit, a social benefit and an economic benefit. Generally, the economic benefit can be assumed by increased profit margins, ROI, or positive net present value calculations. Using the IFMA Sustainability Committee scoring system, let’s assess each initiation.
|Install low-flow water taps||Decrease water use||+ (decrease water use)||+ (pay less in bills)||+ (doesn’t violate social responsibility policy)|
|Install more doors and windows||Improve air quality||+ (improve air quality)||– (negative NPV)||+(social benefit to workers)|
|Non-paid intern contracts||Reduce overhead||+ (doesn’t violate environmental policy)||+ (reduces overhead)||– (violates social responsibility policy to pay fair wages)|
|Invest in automated machinery||Increase production||+ (cleaner clean up less mess)||+ (more production and +NPV)||+ (less heavy lifting risk for shop)|
|Companywide health benefit program||Happy employees||+ (doesn’t violate environmental policy)||+ (employee retention, no lose on human capital)||+ good for employees|
|Donate to environmental charity||Give back to community||+( Charity is green)||+ (Will count for tax credit)||+(gives back to community)|
Score a (+) if the initiative is in line with the TBL guide that the company outlined. Score a (– ) if the initiative does not adhere to TBL guideline and score a (+/-) if the initiative is moot or could go either way depending on its geographical location. An initiative that scores a (+/-) does not improve the company’s TBL, but still adheres to policy. So, the only initiatives the company should implement from the assessment are the initiatives that have a positive score ( +) for all three levels of TBL.
– Low flow taps
– Investing in automation
– Company health benefit plan
– Donation to environmental charity
Step 2: Prioritize
Now that we know which projects we are going to implement, we can prioritize based on economic need and working capital.
Company Sustainability Priorities
Investing in automation
Company health benefit plan
Low Flow taps
Donation to Charity
Though the low-flow taps and charity are the easier and more affordable initiatives, they have a lower net present value/ROI and therefore provide less economic value to the company than the other two initiatives. Low flow taps and charitable donation are of lower priority for working capital to ensure sustainability of the company.
Step 3: Implement what you can
The CFO to assess if priority projects are doable given cash flow and working capital constraints.
Assessing TBL initiatives this way is not an exact science. Each company is entirely different and there may be a lot of conflicting priorities. The goal, is to work through to this level and narrow down the initiatives that satisfy all three branches of the triple bottom line and implement in order of importance.
Shannon Lee Simmons is a financial consultant, speaker, media personality, financial journalist and social change advocate. She founded Primary Financial and The New School Of Finance.