Fourth bottom line

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Fourth bottom line is a concept extended from the triple bottom line; instead of simply focusing on the 3 Ps: people, planet and profit, this concept involves extending to a fourth factor which not only has motivation for a business but also transcends to a humanistic value and beyond by factoring in terms such as "spirituality", "ethics", "purpose", "culture", "compassion".

Contents

Background

In traditional business accounting and common usage, the "bottom line" refers to either the "profit" or "loss", which is usually recorded at the very bottom line on a statement of revenue and expenses. Over the last 50 years, environmentalists and "social justice" advocates have struggled to bring a broader definition of bottom line into public consciousness by introducing full cost accounting. For example, if a corporation shows a monetary profit, but their asbestos mine causes thousands of deaths from asbestosis, and their copper mine pollutes a river, and the government ends up spending taxpayer money on health care and river clean-up, how do we perform a full societal cost benefit analysis? The triple bottom line adds two more "bottom lines”: social and environmental (ecological) concerns. [1] With the ratification of the United Nations and ICLEI TBL standard for urban and community accounting in early 2007, [2] this became the dominant approach to public sector full cost accounting. Similar UN standards apply to natural capital and human capital measurement to assist in measurements required by TBL, e.g. the EcoBudget standard for reporting ecological footprint. The TBL seems to be fairly widespread in South African media, as found in a 1990-2008 study of worldwide national newspapers. [3]

Description

The Fourth bottom line is extended from the triple bottom line; instead of simply focusing on the 3 Ps: people, planet and profit, this concept involves extending to a fourth factor which not only has motivation for a business but also transcends to a humanistic value and beyond by factoring in terms such as "spirituality", [4] [5] "ethics", [6] "purpose", [6] "culture", "compassion". [7] On the whole, the multiple bottom lines are a concept that help clearly define parts in the ecosystem. In addition to the above-mentioned triple bottom line's people, planet, and profit, there is a fourth component, purpose. [6]

The term was allegedly first coined and introduced into mainstream usage by Ayman Sawaf (2014) in a bid to factor in the return to one's spiritual self as an additional, fourth bottom line. Spirituality, according to Sawaf, is defined as your own unique relationship and partnership with God or The Divine. However, an earlier reference by Sohail Inayatullah (2005) makes reference to Spirituality as the fourth bottom line in an article in Futures. [8] The sentiment remains. It is great to make money and to have a positive impact on society, people, and the environment. It is also important to have a positive impact on one's own spiritual growth. The fourth bottom line lifts business activities to a sacred form. The fourth bottom line is measured by how much more loving, understanding, happy, joyful, in touch with their destiny, deeper relationship or partnership with god or higher powers the person has become, while performing their business responsibilities. And as these qualities are acquired they are infused back into one's own business activities [4] This definition, thus, identified spirituality as the fourth bottom line by businesses that relate it with happiness of stakeholders. [9] [10] That is when the question of why one is doing business becomes relevant. The first bottom line deals with the what. "What do I get?" is usually measured by money. The second and third bottom lines deal with the how. "How will I do this?" factors in that the means of doing business now matters. The question of whether one is doing business with honesty, trust, character, integrity, without hurting people and the environment. The Fourth Bottom Line has to do with why. To ask oneself, "Why am I doing this?" involves a deeper sense of self being nurtured by such a choice. [4] With the fourth bottom line, commerce/business becomes a spiritual path. The context of spirituality as a fourth factor is further elaborated upon by Dr. Sohail Inayatullah, a professor at Tamkang University and Queensland University of Technology. [5] [11]

The fourth bottom line is also conceptualized based on the fact that improving lives can be a factor valuable enough to rival other business objectives due to being a key motivating factor for any business to continue. The concept introduces the fourth bottom line as being a way to utilize core business principles to factor in compassion, for example by being compassionate to the customers and hence developing value for the business in an altruistic way. [7]

See also

Related Research Articles

<span class="mw-page-title-main">Triple bottom line</span> Accounting framework

The triple bottom line is an accounting framework with three parts: social, environmental and economic. Some organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value. Business writer John Elkington claims to have coined the phrase in 1994.

<span class="mw-page-title-main">Corporate social responsibility</span> Form of corporate self-regulation aimed at contributing to social or charitable goals

Corporate social responsibility (CSR) or corporate social impact is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in, with, or supporting professional service volunteering through pro bono programs, community development, administering monetary grants to non-profit organizations for the public benefit, or to conduct ethically oriented business and investment practices. While once it was possible to describe CSR as an internal organizational policy or a corporate ethic strategy similar to what is now known today as Environmental, Social, Governance (ESG); that time has passed as various companies have pledged to go beyond that or have been mandated or incentivized by governments to have a better impact on the surrounding community. In addition national and international standards, laws, and business models have been developed to facilitate and incentivize this phenomenon. Various organizations have used their authority to push it beyond individual or even industry-wide initiatives. In contrast, it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels. Moreover, scholars and firms are using the term "creating shared value", an extension of corporate social responsibility, to explain ways of doing business in a socially responsible way while making profits.

Ayman Sawaf is a social commentator, film producer, entrepreneur, musician and author.

<span class="mw-page-title-main">Progressive utilization theory</span> Socioeconomic and political philosophy

The Progressive utilization theory (PROUT) is a socioeconomic and political philosophy created by the Indian philosopher and spiritual leader Prabhat Ranjan Sarkar. He first conceived of PROUT in 1959. Its proponents (Proutists) claim that it exposes and overcomes the limitations of capitalism, communism and mixed economy. Since its genesis, PROUT has had an economically progressive approach, aiming to improve social development in the world. It is in line with Sarkar's Neohumanist values which aim to provide "proper care" to every being on the planet, including humans, animals and plants.

Spiritual ecology is an emerging field in religion, conservation, and academia that proposes that there is a spiritual facet to all issues related to conservation, environmentalism, and earth stewardship. Proponents of spiritual ecology assert a need for contemporary nature conservation work to include spiritual elements and for contemporary religion and spirituality to include awareness of and engagement in ecological issues.

Futurists are people whose specialty or interest is futurology or the attempt to systematically explore predictions and possibilities about the future and how they can emerge from the present, whether that of human society in particular or of life on Earth in general.

Double bottom line seeks to extend the conventional bottom line, which measures fiscal performance—financial profit or loss—by adding a second bottom line to measure a for-profit business's performance in terms of positive social impact. There is controversy about how to measure the double bottom line, especially since the use of the term "bottom line" implies some form of quantification. A 2004 report by the Center for Responsible Business noted that while there are "generally accepted principles of accounting" for financial returns, "A comparable standard for social impact accounting does not yet exist." Social return on investment has been suggested as a way to quantify the second bottom line, though defining and measuring social impact can prove elusive.

A sustainable business, or a green business, is an enterprise that has a minimal negative impact or potentially a positive effect on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line. They cluster under different groupings and the whole is sometimes referred to as "green capitalism." Often, sustainable businesses have progressive environmental and human rights policies. In general, a business is described as green if it matches the following four criteria:

  1. It incorporates principles of sustainability into each of its business decisions.
  2. It supplies environmentally friendly products or services that replace demand for nongreen products and/or services.
  3. It is greener than traditional competition.
  4. It has made an enduring commitment to environmental principles in its business operations.
<span class="mw-page-title-main">Ethical banking</span> Bank concerned with the social and environmental impacts of its investments and loans

An ethical bank, also known as a social, alternative, civic, or sustainable bank, is a bank concerned with the social and environmental impacts of its investments and loans. The ethical banking movement includes: ethical investment, impact investment, socially responsible investment, corporate social responsibility, and is also related to such movements as the fair trade movement, ethical consumerism, and social enterprise.

Workplace spirituality or spirituality in the workplace is a movement that began in the early 1920s. It emerged as a grassroots movement with individuals seeking to live their faith and/or spiritual values in the workplace. Spiritual or spirit-centered leadership is a topic of inquiry frequently associated with the workplace spirituality movement.

<span class="mw-page-title-main">Corporate sustainability</span> Business strategy that focuses on sustainability as a core aspect of the business

Corporate sustainability is an approach aiming to create long-term stakeholder value through the implementation of a business strategy that focuses on the ethical, social, environmental, cultural, and economic dimensions of doing business. The strategies created are intended to foster longevity, transparency, and proper employee development within business organizations. Firms will often express their commitment to corporate sustainability through a statement of Corporate Sustainability Standards (CSS), which are usually policies and measures that aim to meet, or exceed, minimum regulatory requirements.

<span class="mw-page-title-main">John Elkington (business author)</span> British author, advisor and serial entrepreneur

John Elkington is an author, advisor and serial entrepreneur. He is an authority on corporate responsibility and sustainable development. He has written and co-authored 20 books, including the Green Consumer Guide, Cannibals with Forks: The Triple Bottom Line of 21st Century Business, The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World, and The Breakthrough Challenge: 10 Ways to Connect Tomorrow's Profits with Tomorrow's Bottom Line.

<span class="mw-page-title-main">Sustainability accounting</span>

Sustainability accounting was originated about 20 years ago and is considered a subcategory of financial accounting that focuses on the disclosure of non-financial information about a firm's performance to external stakeholders, such as capital holders, creditors, and other authorities. Sustainability accounting represents the activities that have a direct impact on society, environment, and economic performance of an organisation. Sustainability accounting in managerial accounting contrasts with financial accounting in that managerial accounting is used for internal decision making and the creation of new policies that will have an effect on the organisation's performance at economic, ecological, and social level. Sustainability accounting is often used to generate value creation within an organisation.

Return on investment (ROI) or return on costs (ROC) is a ratio between net income and investment. A high ROI means the investment's gains compare favourably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments. In economic terms, it is one way of relating profits to capital invested.

<span class="mw-page-title-main">Blended value</span> Conceptual framework

Blended Value refers to an emerging conceptual framework in which non-profit organizations, businesses, and investments are evaluated based on their ability to generate a blend of financial, social, and environmental value. The term is usually attributed to Jed Emerson, and sometimes used interchangeably with triple bottom line. Blended value propositions are founded on the notion that value cannot be bifurcated, and is inherently made up of more than one measurement of performance. For example, under a blended value proposition, a for-profit business would consider their social and environmental impact on society alongside their financial performance measurement. Within the same context, non-profits would consider their financial efficiency and sustainability in tandem with their social and environmental performance. Blended value suggests the true measure of any organization is in its ability to holistically perform in all 3 areas.

A sustainability organization is (1) an organized group of people that aims to advance sustainability and/or (2) those actions of organizing something sustainably. Unlike many business organizations, sustainability organizations are not limited to implementing sustainability strategies which provide them with economic and cultural benefits attained through environmental responsibility. For sustainability organizations, sustainability can also be an end in itself without further justifications.

<i>After Capitalism</i>

After Capitalism: Economic Democracy in Action is a 2012 book by United States author Dada Maheshvarananda, an activist, yoga monk and writer. The book argues that global capitalism is terminally ill because it suffers from four fatal flaws: growing inequity and concentration of wealth, addiction to speculation instead of production, rising unsustainable debt and its tendency to exploit the natural environment.

Conscious business enterprises and people are those that choose to follow a business strategy, in which they seek to benefit both human beings and the environment.

Causal layered analysis (CLA) is a technique used in strategic planning, futures studies and foresight to more effectively shape the future. The technique was pioneered by Sohail Inayatullah, a Pakistani-Australian futures studies researcher.

Triple bottom line cost-benefit analysis (TBL-CBA) is an evidence-based economic method that combines cost–benefit analysis (CBA) and life-cycle cost analysis (LCCA) across the triple bottom line (TBL) to weigh costs and benefits to project stakeholders. The TBL-CBA process quantifies total net present value, return on investment, and project payback. TBL-CBA uses location-specific data to give asset owners and design professionals the flexibility and capability to provide a rigorous analysis of investment alternatives through all stages of planning and design.

References

  1. ↑ "Sustainability – From Principle To Practice". Goethe-Institut. March 2008. Archived from the original on 2014-10-20.
  2. ↑ "Enhancing the role of industry through for example, private-public partnerships" (PDF). United Nations Environment Programme. May 2011. Archived from the original (PDF) on 2012-11-12.
  3. ↑ Barkemeyer, Ralf; Figge, Frank; Holt, Diane; Hahn, Tobias (2009). "What the Papers Say: Trends in Sustainability: A Comparative Analysis of 115 Leading National Newspapers Worldwide". The Journal of Corporate Citizenship (33): 69–86. JSTOR   jcorpciti.33.69. SSRN   2375569.
  4. 1 2 3 Sawaf, Ayman; Gabrielle, Rowan (2014). Sacred Commerce: A Blueprint for a New Humanity (2nd ed.). EQ Enterprises. pp. 24–28. ISBN   978-0-9906987-0-8.
  5. 1 2 "Spirituality as the fourth bottom line? | USC Research Bank - University of the Sunshine Coast". research.usc.edu.au. Archived from the original on 2016-03-04. Retrieved 2015-09-21.
  6. 1 2 3 Taback, Hal; Ramanan, Ram (2013-07-29). Environmental Ethics and Sustainability: A Casebook for Environmental Professionals. CRC Press. ISBN   9781466584211.
  7. 1 2 "Compassion as the fourth bottom line?". The Values-Based Business. 10 August 2014. Archived from the original on 2015-09-04. Retrieved 2015-09-21.
  8. ↑ Inayatullah, Sohail (1 August 2005). "Spirituality as the fourth bottom line?". Futures. 37 (6): 573–579. doi:10.1016/j.futures.2004.10.015.
  9. ↑ "Happiness-Spirituality as The Fourth Bottom Line | Triple Bottom Line Magazine". www.tbl.com.pk. 18 July 2008. Archived from the original on 2016-03-04. Retrieved 2015-09-21.
  10. ↑ "T02-Fourth Bottom Line". 25 January 2010. Archived from the original on 2015-06-12. Retrieved 2015-09-21.
  11. ↑ "SPIRITUALITY AS THE FOURTH BOTTOM LINE". www.metafuture.org. Archived from the original on 2015-09-23. Retrieved 2015-09-21.

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