what measures go into thjaje indexamkmnf

7/28/2019 What Measures Go Into thjaje Indexamkmnf

1/5

What Measures Go into the Index?

There is no universal standard method for calculating the TBL. Neither is there a universallyaccepted standard for the measures that comprise each of the three TBL categories. This can be

viewed as a strength because it allows a user to adapt the general framework to the needs ofdifferent entities (businesses or nonprofits), different projects or policies (infrastructureinvestment or educational programs), or different geographic boundaries (a city, region orcountry).

Both a business and local government agency may gauge environmental sustainability in thesame terms, say reducing the amount of solid waste that goes into landfills, but a local masstransit might measure success in terms of passenger miles, while a for-profit bus company wouldmeasure success in terms of earnings per share. The TBL can accommodate these differences.

Additionally, the TBL is able to be case (or project) specific or allow a broad scopemeasuring

impacts across large geographic boundaries

or a narrow geographic scope like a small town. Acase (or project) specific TBL would measure the effects of a particular project in a specificlocation, such as a community building a park. The TBL can also apply to infrastructure projectsat the state level or energy policy at the national level.

The level of the entity, type of project and the geographic scope will drive many of the decisionsabout what measures to include. That said, the set of measures will ultimately be determined bystakeholders and subject matter experts and the ability to collect the necessary data. While thereis significant literature on the appropriate measures to use for sustainability at the state ornational levels, in the end, data availability will drive the TBL calculations. Many of thetraditional sustainability measures, measures vetted through academic discourse, are presented

below.

Economic Measures

Economic variables ought to be variables that deal with the bottom line and the flow of money. Itcould look at income or expenditures, taxes, business climate factors, employment, and businessdiversity factors. Specific examples include:

Personal income Cost of underemployment Establishment churn

Establishment sizes Job growth Employment distribution by sector Percentage of firms in each sector Revenue by sector contributing to gross state product

Environmental Measures


2/5

Environmental variables should represent measurements of natural resources and reflect potentialinfluences to its viability. It could incorporate air and water quality, energy consumption, naturalresources, solid and toxic waste, and land use/land cover. Ideally, having long-range trendsavailable for each of the environmental variables would help organizations identify the impacts aproject or policy would have on the area. Specific examples include:

Sulfur dioxide concentration Concentration of nitrogen oxides Selected priority pollutants Excessive nutrients Electricity consumption Fossil fuel consumption Solid waste management Hazardous waste management Change in land use/land cover

Social Measures

Social variables refer to social dimensions of a community or region and could includemeasurements of education, equity and access to social resources, health and well-being, qualityof life, and social capital. The examples listed below are a small snippet of potential variables:

Unemployment rate Female labor force participation rate Median household income Relative poverty Percentage of population with a post-secondary degree or certificate

Average commute time Violent crimes per capita Health-adjusted life expectancy

Data for many of these measures are collected at the state and national levels, but are alsoavailable at the local or community level. Many are appropriate for a community to use whenconstructing a TBL. However, as the geographic scope and the nature of the project narrow, theset of appropriate measures can change. For local or community-based projects, the TBLmeasures of success are best determined locally.

There are several similar approaches to secure stakeholder participation and input in designing

the TBL framework: developing a decision matrix to incorporate public preferences into projectplanning and decision-making,3using a "narrative format" to solicit shareholder participation andcomprehensive project evaluation,4and having stakeholders rank and weigh components of asustainability framework according to community priorities.5For example, a community mayconsider an important measure of success for an entrepreneurial development program to be thenumber of woman-owned companies formed over a five-year time period. Ultimately, it will bethe organization's responsibility to produce a final set of measures applicable to the task at hand.
http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn3http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn3http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn3http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn4http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn4http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn4http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn5http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn5http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn5http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn5http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn4http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn3


3/5

Variations of the Triple Bottom Line Measurement

The application of the TBL by businesses, nonprofits and governments are motivated by theprinciples of economic, environmental and social sustainability, but differ with regard to the waythey measure the three categories of outcomes. Proponents who have developed and applied

sustainability assessment frameworks like the TBL encountered many challenges, chief amongthem, how to make an index that is both comprehensive and meaningful and how to identifysuitable data for the variables that compose the index.

The Genuine Progress Indicator (GPI), for example, consists of 25 variables that encompasseconomic, social and environmental factors. Those variables are converted into monetary unitsand summed into a single, dollar-denominated measure.6 Minnesota developed its own progressindicator comprised of 42 variables that focused on the goals of a healthy economy and gaugedprogress in achieving these goals.7

There is a large body of literature on integrated assessment8and sustainability measures that

grew out of the disciplines that measure environmental impact. These are not constrained bystrict economic theory for measuring changes in social welfare.9Researchers in environmentalpolicy argue that the three categorieseconomic, social and environmentalneed to beintegrated in order to see the complete picture of the consequences that a regulation, policy oreconomic development project may have and to assess policy options and tradeoffs.

Who Uses the Triple Bottom Line?

Businesses, nonprofits and government entities alike can all use the TBL.

Businesses

The TBL and its core value of sustainability have become compelling in the business world dueto accumulating anecdotal evidence of greater long-term profitability. For example, reducingwaste from packaging can also reduce costs. Among the firms that have been exemplars of theseapproaches are General Electric, Unilever, Proctor and Gamble, 3M andCascade Engineering.10Although these companies do not have an index-based TBL, one can see how they measuresustainability using the TBL concept. Cascade Engineering, for example, a private firm that doesnot need to file the detailed financial paperwork of public companies, has identified thefollowing variables for their TBL scorecard:

Economico Amount of taxes paid

Socialo Average hours of training/employeeo From welfare to career retentiono Charitable contributions

Environmental/Safetyo Safety incident rateo Lost/restricted workday rate
http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn6http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn6http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn7http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn7http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn7http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn8http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn8http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn8http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn9http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn9http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn9http://www.cascadeng.com/sus/triple.htmhttp://www.cascadeng.com/sus/triple.htmhttp://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn10http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn10http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn10http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn10http://www.cascadeng.com/sus/triple.htmhttp://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn9http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn8http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn7http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn6


4/5

o Sales dollars per kilowatt hourso Greenhouse gas emissionso Use of post-consumer and industrial recycled materialo Water consumptiono Amount of waste to landfill

Nonprofits

Many nonprofit organizations have adopted the TBL and some have partnered with private firmsto address broad sustainability issues that affect mutual stakeholders. Companies recognize thataligning with nonprofit organizations makes good business sense, particularly those nonprofitswith goals of economic prosperity, social well-being and environmental protection.11

The Ford Foundation has funded studies that used variations of the TBL to measure the effects ofprograms to increase wealth in dozens of rural regions across the United States.12Anotherexample isRSF Social Finance,13a nonprofit organization that uniquely focuses on how their

investments improve all three categories of the TBL. While RSF takes an original approach tothe TBL concept, one can see how the TBL can be tailored to nearly any organization. Theirapproach includes the following:

Food and Agriculture (economic): Explore new economic models that support sustainable foodand agriculture while raising public awareness of the value of organic and biodynamic farming.

Ecological Stewardship (environmental): Provide funding to organizations and projects devotedto sustaining, regenerating and preserving the earth's ecosystems, especially integrated,

systems-based and culturally relevant approaches.

Education and the Arts (social): Fund education and arts projects that are holistic andtherapeutic.

Government

State, regional and local governments are increasingly adopting the TBL and analogoussustainability assessment frameworks as decision-making and performance-monitoring tools.Maryland, Minnesota, Vermont, Utah, the San Francisco Bay Area and Northeast Ohio area haveconducted analyses using the TBL or a similar sustainability framework.

Policy-makers use these sustainability assessment frameworks to decide which actions theyshould or should not take to make society more sustainable. Policy-makers want to know thecause and effect relationship between actionsprojects or policiesand whether the resultsmove society toward or away from sustainability. The State of Maryland, for example, uses ablended GPI-TBL frameworkto compare initiatives

for example, investing in clean energy

against the baseline of "doing nothing" or against other policy options.14

Internationally, the European Union uses integrated assessment to identify the "likely positiveand negative impacts of proposed policy actions, enabling informed political judgments to bemade about the proposal and identify trade-offs in achieving competing objectives."15The EUguidelines have themselves been the subject of critique and have undergone several rounds of
http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn11http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn11http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn11http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn12http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn12http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn12http://rsfsocialfinance.org/values/focus/http://rsfsocialfinance.org/values/focus/http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn13http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn13http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn13http://www.green.maryland.gov/mdgpi/http://www.green.maryland.gov/mdgpi/http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn14http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn14http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn14http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn15http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn15http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn15http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn15http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn14http://www.green.maryland.gov/mdgpi/http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn13http://rsfsocialfinance.org/values/focus/http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn12http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn11


5/5

improvement.16The process of refining the guidelines shows both the transparency of theprocess and the EU commitment to integrated assessment.

Example of TBL

A prominent case in point is BP (British Petroleum), whose newspaper ad campaign suggeststhat BP now stands forbeyond petroleum. The firm proudly tells us that "in 1997 we were thefirst in our industry to recognize the risks of global climate change and set a target to reduce ourown greenhouse gas emissions." BP set out to reduce its greenhouse gas emissions by 10 percentfrom 1990 levels by the year 2010 but achieved its goal this year. Although BP's output ofpetroleum products is increasing, the company intends to reduce its CO2 emissions profilethrough the simple expedient of leaving the petroleum business and becoming a natural gascompany.

Royal Dutch Shell has emulated BP's course in reducing its greenhouse gas emissions. Thecompany has pledged $1 billion for the development of alternative energy and envisions the daywhen it too will no longer be in the oil business.[3] (In its latest corporate report on socialresponsibility, Shell not only presented fifty-year scenarios for the phaseout of fossil fuels; it alsofeatured reader feedback: "An oil company cannot contribute to sustainable development unlessit gets out of oil! When do you plan to take the IPCC's warnings seriously, stop all new oilexploration and become a renewable energy company?")[4] Those corporate good deeds haveearned BP and Shell the plaudits of many environmentalists, who--for now--politely overlookthat fact that motorists keep using more and more of BP's and Shell's CO2-producing products inthe equivalent of the antismoking movement praising tobacco companies for using recycledpaper in their cigarette rolling plants.

The tacit premise of those cutbacks of corporate greenhouse gas is that meeting the KyotoProtocol target of a 7 percent reduction in such emissions from 1990 levels is no big deal for theUnited States: See--even an oil company can do it. But no one ever mentions that the reductionsrepresent a tiny portion of the greenhouse gas reductions contemplated under the Kyotoframework. With the rise of emissions in the 1990s because of the booming U.S. economy,meeting the Kyoto target will require a 20 percent reduction in emissions from current levels--adegree of cuts that not even BP or Shell believes feasible, let alone profitable. The United Statesis emitting about 6 billion metric tons of greenhouse gases a year. Industry accounts for roughly30 percent of total U.S. greenhouse emissions. Even if every industry in America could reduceits greenhouse emissions by 10 percent below 1990 levels, we would be only about one-fifth ofthe way to the Kyoto target for the United States. Most companies that attempt to meet thethreshold of reduction by 2010 (the Kyoto target year) will find its results measured on a doublebottom line, as profitability will disappear.
http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn16http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn16http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn16http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html#ftn16

what measures go into thjaje indexamkmnf

Documents