The main KPI to measure the success of a company has always been profit. The bottom line. The shareholder value so to speak. Profit was the only measure and the only goal. We have seen, and unfortunately are still seeing, the effects of this approach with massive lay-offs and reorganizations, all aimed at achieving the highest profit.
Of course, we believe that a company must be sustainable with a healthy result, but we are also seeing that profit is no longer the only measure that counts. The so-called triple bottom line (TBL or 3BL) is gaining more and more ground. The TBL covers three parts: social, environmental and financial results. It enables companies to evaluate their performance in a broader perspective. It includes, for example, their footprint in the supply chain. After all, what does a large profit mean when it has caused havoc in the supply chain with, for example, pollution, deforestation and human rights infringements such as forced labour or child labour? Besides the TBL, also the quadruple bottom line (QBL) is used, which is an extended version of the TBL. The QBL also takes into account the effects for future generations whereas the TBL only takes into account the current impact.
The Triple Bottom Line
Challenges in triple bottom line accounting
The biggest challenges when evaluating the TBL or QBL are measuring the social and environmental impacts. For most companies, these impacts are mainly concentrated in their supply chain. In some cases more than 80% of the impact lies beyond their tier 1 suppliers, therefore beyond their direct control. This poses a number of challenges, including, for example, how to find out which suppliers your tier 1 suppliers use, or the suppliers of their suppliers. This daunting task may put companies off even attempting to map out their supply chain, but luckily we are seeing more and more companies recognizing their responsibility and working on improving their entire supply chain. The traditional one up, one down view of the supply chain is being replaced by full visibility from source to final product. Questions such as: “Where did the ingredients come from and under which circumstances have they been produced?” can only be answered by using supply chain mapping, traceability and by collecting data at all relevant stakeholders in the supply chain.
How to collect social and environmental data in the supply chain
Companies with a limited supply chain can probably use Excel to collect all data, but as soon as supply chains become complex with multiple commodity streams and information present in multiple existing data silos, specialized software such as ChainPoint is the best choice to collect data. A platform such as ChainPoint acts as an umbrella system which can connect to existing data sources. All data is collected and synchronized in ChainPoint’s central database. Web-based forms, mobile apps and data upload facilities enable data that is not yet digitally stored to be collected at any point in the supply chain. Once all data is collected, advanced analytics can slice and dice the data into clear reports and charts which can easily be used for your reporting requirements towards stakeholders and shareholders.
Would you like to see how our technology can help you streamline your supply chain, both in efficiency and sustainability?