We will be looking at a framework in a couple weeks that explores the idea that accounting systems need to change to measure environmental impacts/costs.  I happened to come across an article that predicts that the movement in this direction will expand and will take on an increasingly external-focus as opposed to Corporate Social Responsibility efforts that have been more internally focused.

The days of purely measuring business performance by financial result may well be numbered. In its place, I believe that discerning investors will look for something broader to measure an entity’s real contribution and performance.

That something could be in the shape of the “triple bottom line”; an amalgam of financial results and an assessment of the social and environmental impacts of a business. Or, put another way: People, Planet and Profits.

As we discuss in class, one of the biggest hurdles companies need to overcome is that their existing accounting systems are built to report numbers according to financial rules and pulling data out of the accounts to track environmental costs can we quite difficult.

Regardless of whether or not you agree with the direction this takes us in, you do then have to ask the question of just how many businesses are in a position to report on such non-financial performance aspects. Bearing in mind that recent research2 has highlighted businesses’ and their finance functions’ shortcomings when it came to dealing with the financial result alone (and not forgetting that they’ve just endured two years of being battered by recession-busting cost reduction initiatives), it’s hard to imagine how many could easily transition into this new mindset.


Read more at: The Emergence of the Triple Bottom Line.