Home' Trinidad and Tobago Guardian : October 3rd 2013 Contents OCTOBER 2013• WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
NEWS | BG7
The "triple bottom line approach"
of businesses focusing on envi-
ronment, economic and social
issues is the new way for busi-
nesses to survive and do well in
the 21st century, said American consultant,
creative business leader and author Andrew
In traditional business accounting, the bot-
tom line refers to the sum of revenue minus
expenses, which is either "loss" if negative,
or "profit" if positive. The term originated
because profit is always shown as the very
"bottom line" on a statement of revenue and
"Companies must pay far more attention
to environmental and social performance as
well as to financial. That is the triple bottom
line. We can continue to focus on the creation
of financial wealth or we can move towards
the creation of common wealth, which means
we grow our social and natural capital right
alongside our financial capital," he said.
Savitz spoke last on September 25 at the
opening ceremony of American Chamber of
Commerce of T&T (Amcham) 17th annual
health, safety, security and environment (HSSE)
conference and exhibition at the Hyatt Regency
Trinidad hotel, Port-of-Spain.
Savitz is author of The Triple Bottom Line,
a groundbreaking book that charts the rise of
sustainability within the business world and
shows how and why financial success increas-
ingly goes hand in hand with social and envi-
Savitz said this is important for businesses
to find the right balance between their interests
and those of society to create a stable socio-
"I believe this is possible and necessary and
I personally believe it is imperative that we
take the second road. I was talking to a group
of manufacturers, some of whom are my
clients, who said in the future we must be
more world-serving and less self-serving. I
believe you can be both as all you have to do
is find the balance between your business
interests and those of society," he said.
Savitz said companies which find this bal-
ance are profitable.
"They are finding ways to cut cost, reduce
risk grow revenues, they are strengthening
their brands, improving their relationships and
attracting and retaining the best talent," Savitz
said. "They also need to become more inno-
vative and all this leads to profitability."
Savitz said business have come a long way
since the early 20th century and today much
more is expected of their contribution to soci-
"When I was born 60 years ago, not much
was expected out of businesses other than
they make money and philanthropy. By the
1970s, the list of expectations had started to
grow to protecting workers, protecting the
environment and safeguarding products in
commerce," he said.
The list of responsibilities for businesses
has continued to grow in the 21st century and
has been "growing daily", Savitz said.
He gave the example of Google, which up
until earlier this year was in a huge fight with
China over censorship. Savitz said people
expected Google to stand up to the Chinese
government on human rights.
"Now businesses are supposed to stop child
labour, foster health care, ensure human rights,
promote gender equality. It seems that respon-
sibilities that once seemed primarily those of
the government have now sort of shifted over
to the private sector. These expectations are
He spoke about the growing wage gap
between high level management and work-
"The US Securities and Exchange (Com-
mission) just released the gap between the
highest paid CEOs and the average worker.
From a historical perspective, that gap is grow-
ing. The highest paid CEO used to make 40
times more than a worker, but today it is 780
times. Companies are finding more efficient
ways to do things and jobs are being eliminated,
so we have a jobless economy."
Savitz said there is a call now for "fair trade"
that will not only benefit bigger companies
from developed countries, but also smaller
"Only one per cent of profits are getting to
small producers, so Starbucks and other big
companies have begun to address this, the
idea of sharing the profits more equitably with
the small landowners where the coffee comes
from," Savitz said.
Despite his emphasis on social equity, he
said he is not advocating giving away money.
"The triple bottom line has nothing to do
with philanthropy. I worship Bill Gates and
Warren Buffet and what they do in emergencies
to help people, but sustainability is not about
giving away money, but about how to make
money by doing the right thing. The idea is
to build in financial and economic responsi-
Savitz said companies must now submit
regular corporate social responsibility reports
along with financial reports.
"The idea is not for companies to say they
are great, but it is for shareholders along with
other stakeholders. When a company present
these reports, they give an idea into their risks
He gave the example of child labour, that
companies in the 1990s gave contract work
to other companies in Asia that used child
labour, adding that Nike has since cleaned up
Savitz said people must start looking at
economic development in a new way.
"This is actually a profound change in the
way people are starting to think of economic
development. It used to be simple: you created
wealth and the wealthier you got, the better
it became. But now we must ask ourselves:
How do we grow that would allow other gen-
erations to grow?
He said one CEO who has taken these issues
seriously is Jeff Immelt when he took charge
of General Electric (GE).
GE placed eighth in Fortune 500's 2013
"Already, GE has a family of clean tech-
nologies, their wind power business has grown
by a factor of ten that they acquired in 2002.
Seventy-five per cent of the new MBAs that
come to GE want to work in the ecomagination
company, which is GE's initiative to position
itself as a green company. All the younger
people coming out of business schools want
to be involved in these efforts that create
profits, but create something bigger than that."
Savitz worked seven years with PepsiCo as
its sustainability consultant. Prior to starting
there, he said Pepsico saw the "writing on the
wall" regarding obesity just before everyone
else did and got into nutritious products.
"They bought an orange juice company and
oatmeal company, Tropicana and Quaker Oats,
and now their income is growing four times
faster in North America than the traditional
portfolio of sugar-based drinks and salty
snacks," he said.
In December 2005, PepsiCo surpassed The
Coca-Cola Company in market value for the
first time in 112 years since both companies
He said there must be sustainable growth
and development for there to be stability in
the 21st century.
"The world is using too many resources. A
lot of anthropologists and scientists have said
we are using resources 50 per cent more than
the earth can replenish. This is going to get
a lot worse that it can get better. By 2050, two
things are almost certain to happen: one is
that there will be two billion more people and,
secondly, many will be wealthier. If everyone
in the world starts consuming the same as
the average American, it will take six or seven
planet earths to support this."
He said the solution is to release the powers
of the free market and for businesses to under-
stand their responsibility to society.
"If we do not find ways to encourage and
support businesses to address these problems
as part of what they do, then we are toast.
The government is not going to fix this alone,
neither are the NGOs. It will take a partnership.
No matter what size of your business or the
industry you are in, everyone is starting to
feel the pressures," Savitz said.
US consultant tells businesses:
Adopt a 'triple bottom line' approach
PHOTO: ANDY HYPOLITE
There must be
and development for
there to be stability in
the 21st century.
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