In the wake of the high profile scandals of Enron, Tyco, World Com, and Martha Stewart, as well as a growing awareness that the health of the global community suffers from unethical and irresponsible corporate practices, both government and society now question corporate America’s fixation on the bottom line. This is evident with legislation, such as the Sarbanes-Oxley Act, as well as the successful prosecution of corrupt executives from the aforementioned companies. Central to the evolution of corporate America is the question “Should profit be the sole arbiter of success in business?” In addition to analyzing all-important net dollars, organizations are faced with evaluating their environmental stewardship as well as their level of commitment to the communities in which they conduct business.
Increasingly, boardrooms address ethical behavior based on the concept of the triple bottom line. The triple bottom line refers to the triad of profit, social responsibility, and stewardship of the environment, which are now part of the expanded scope of corporate concerns. Sustainability is the core philosophy from which the triple bottom line is derived. It is defined in Our Common Future, commonly referred to as the Brundtland Report, as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”* Sustainable practices are those that seek to minimize environmental impact.
The good news for business is that behaving ethically in a sustainability sense has enormous benefits. Investments in reorienting a company onto a path of sustainability will almost certainly produce significant win-win scenarios. Among the benefits of adopting sustainability listed by the advocacy group Business for Social Responsibility are:
- Improved financial performance. Companies listed on the Dow Jones Sustainability Index and those on the 2001 Business Ethics Best Citizen list performed significantly better than their peers.
- Reduced operating costs. Corporations that pollute less, use less energy, and use resources more efficiently will significantly reduce both resource costs and liability exposure. Increasing recycling and reducing emissions can lower operating costs and can even generate income.
- Enhanced brand image and reputation. Businesses are finding that customers, banks, and insurers are more favorably disposed to companies with an image of responsible behavior. This enhanced image produces more sales, increases access to capital, and lowers risk. Surveys indicate that social responsibility ranks above brand reputation and business fundamentals when customers are seeking a product or service.
- Increased sales and customer loyalty. Companies perceived as socially and environmentally responsible are more likely to experience increased sales and profitability compared to their peers. Surveys indicate that as many as 80% of Americans take corporate citizenship into account when making purchases.
- Increased productivity and quality. Better working conditions and lower environmental impacts translate to increased productivity and a lower error rate in the workplace. The result is far fewer defective products and greatly reduced costs in handling customer complaints.
- Increased ability to attract and retain employees. Prospective employees are likely to evaluate a company’s behavior toward the environment and the company’s values prior to signing on for a career. A recent survey by the Aspen Institute Initiative for Social Innovation through Business confirmed this. It found that over 50% of MBA students would seek another job if there was a conflict between their values and those of the business where they worked.
- Reduced regulatory oversight. Government agencies are likely to reward organizations that have a record of proactive efforts that carry beyond mere compliance. The result is that companies that are considered more responsible are subject to fewer inspections and less paperwork.
- Access to capital. Investments in socially responsible companies are growing at a rate well beyond that being experienced by their peers. For example, investing in companies screened for social concerns grew from $1.49 trillion in 1999 to $2.03 trillion in 2001, accounting for about 12% of all investments under professional management in the U.S.
Putting the Triple Bottom Line into Practice
A growing number of companies exercise social responsibility. Tierra Pacifica Corporation of Irvine, California, is one of those companies. President and founder Debbie Aguirre combines her business expertise with her concern for the community and the environment. She started the design, engineering, and construction firm several years ago and is determined to be socially responsible as well as successful. Her philosophy was one she found lacking in the large corporations where she worked previously.
Tierra Pacifica specializes in public building projects, such as low-income housing, schools, libraries, and the renovation of historic buildings. As part of her commitment to her clients, Aguirre monitors the cost of these projects by reducing waste on construction sites. Instead of throwing away unused lumber, for example, she saves it for another project or turns it into mulch for landscaping. Controlling waste not only helps the environment, but also eliminates the cost of hauling it away, thereby saving the client money.
Aguirre also tries to give something back to each community where her company works. While restoring a historical office building in Pasadena, for example, her company donated time and materials to renovate a shelter for battered women, construct a reading corner for seniors in the library, and organize a food drive for the needy.
Body Shop International is another business that attributes much of its success to its socially responsible practices. A retailer of natural cosmetics, the Body Shop promotes environmental causes in its stores through posters and literature. In addition, salespeople are given time off for volunteer work. The company also builds plants in depressed areas to stimulate local economies. Founded in 1976 in England by Anita and T. Gordon Roddick, the Body Shop now has stores worldwide, including 196 in the United States.
The Role of Facility and Property Managers
Increasingly, it is the role of the facility or property manager to develop, deliver, and record innovative solutions that address an organization’s needs in relation to the triple bottom line. Beyond being aware of the importance of net profits, facility and property managers must increasingly evaluate their roles in their organizations’ stewardship-striving to reduce the “footprint” of buildings on the environment as well as increasing the level of commitment to the communities and people where the organization conducts business. This triple bottom line approach must include a growing awareness and application of sustainability principles to areas such as water usage, energy consumption, waste management and materials selection. Today, managers who put the ethics of a triple bottom line into practice are discovering rewards that include:
- Greater client satisfaction resulting from mutual trust
- A more positive public image for the organization
- Savings from less waste and more effective management of resources Developing sustainable practices combined with the active engagement of clients, tenants, and the community will allow facility and property managers to engage in ethical and productive practices from within their organizations.
*From: The World Report on Environment and Development, “Our Common Future.” (Oxford University Press, 1987)
This article is excerpted from BOMI International’s Ethics Is Good Business. The guide can be purchased by calling 1-800-235-2664, or by visiting www.bomi.org.