The tenet behind the triple-bottom-line is that
Question 19 ?options:
A) ?
a firm should solely focus on increasing the economic value created to/for its customers.
B) ?
a firm's primary objective should be increasing the total returns to its shareholders.
C) ?
a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.
D) ?
a firm's return on revenue can be broken down into three ratios: COGS/Revenue, ?R&D/Revenue, ?and SG&A/Revenue.The correct answer and explanation is:
The correct answer is: C) A firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.
Explanation:
The triple-bottom-line (TBL) is a sustainability framework that expands the traditional focus on financial performance to include social and environmental considerations. It posits that a firm should not solely focus on economic profits but should also ensure that its activities contribute positively to society and the environment. The three dimensions of the TBL are often referred to as the “three Ps”: Profit, People, and Planet.
Economic Dimension:
This refers to the financial performance of the firm. A company must be profitable to remain operational and provide value to its stakeholders. However, under the TBL, economic success is pursued in a way that doesn’t compromise societal or environmental well-being.
Social Dimension:
The social aspect emphasizes the importance of contributing to the well-being of the community and ensuring fair treatment of employees, customers, and other stakeholders. This includes initiatives like fair wages, community outreach programs, diversity, equity, and inclusion practices, and providing safe and healthy working conditions.
Environmental Dimension:
The ecological component focuses on minimizing the negative impact of the firm’s operations on the environment. This could include reducing carbon emissions, waste management, conservation of resources, and developing sustainable products and processes.
By addressing all three dimensions, businesses can create long-term value and resilience, fostering trust and loyalty among stakeholders. Companies that adopt the TBL approach align themselves with global sustainability goals, such as the United Nations’ Sustainable Development Goals (SDGs), and position themselves as responsible corporate citizens.
The TBL approach not only contributes to global well-being but also provides competitive advantages, including better risk management, enhanced reputation, and stronger stakeholder relationships. It encourages firms to adopt a holistic view of success and sustainability.