LinkedIn Dialog
Group: DuPont Sustainable Solutions

Discussion: The triple bottom line approach to measuring business success

Burgess COMMENTARY

Peter Burgess

DuPont Sustainable Solutions DuPont Sustainable Solutions

James Weigand Follow James The triple bottom line approach to measuring business success

James Weigand President-Dupont Sustainable Solutions at DuPont

At DuPont, we believe sustainability and business objectives must be interconnected and sustainability strategy must be translated into business value.

That is just one of the many topics we discussed a couple of weeks ago at the DuPont Sustainable Solutions Safety and Sustainability Forum in Dubai. The annual forum was a chance for business leaders to emphasize a renewed commitment to promoting safety and sustainability, because both of these efforts have great potential to increase our competitive advantage and positively impact the bottom line.

As business leaders, we are struggling against the current unpredictability in the global market, caught between the need to reduce costs while also ensuring safety and sustainability in the workplace. It is during times like these that we can be tempted to underestimate the value of safety and sustainability. But, right now is the most important time to focus on safety and sustainability, as it should be part of everything we do if we want to ensure our business success.

Meantime, the pursuit of sustainable growth has become more complex, with increasing pressure to measure environmental and social performance along with traditional financial results. This is the more comprehensive triple bottom line approach to measuring business success. That means protecting and developing people, protecting the environment and maximizing profitability. As you may know, DuPont is more than 200 years old. We have a very long and rich history of discoveries and innovation that have helped our company grow and improve the lives around the world. It has also led to and shaped our purpose. We are a science company, and our purpose is to work collaboratively to find sustainable, innovative, market-driven solutions to solve some of the world’s biggest challenges, making lives better, safer, and healthier for people everywhere.

By market-driven, we mean that we are committed to addressing real needs with our science and other resources. Our early offerings were not always a response to market needs; rather, we developed a product and looked for an application. That is not the case today. Our purpose commits us to sustainable growth, which means creating value for our shareholders, as well as for society at large while we reduce our environmental footprint. It’s a dual commitment—to our stakeholders and to the environment we live in.

At DuPont, we know sustainable growth can best be achieved through an integrated approach that aligns operations performance and culture with management systems that link collaboration, innovation and technology.

There are four key requirements to achieving sustainable growth. They are: leadership, people, innovation and collaboration

In the coming days I will share more with the LinkedIn DSS group on those four requirements. I encourage all of you to participate.

Share your ideas, your experiences and even any disagreements you may have. The more we talk about sustainability as leaders, the faster we will reach our destination of sustainable business.

Unlike Comment (9) Share Unfollow Reply Privately29 days ago

Comments You, Burcu Türkeş and 6 others like this 9 comments

Sidney Clouston Sidney Sidney Clouston CEO at Clouston Energy Research, LLC and Owner, Clouston Energy Research, LLC

If DuPont has sustainable solutions interest in Biochemical products then we ought to talk. I have a group here in Linked In also called Biomass, Bioenergy and Biofuels. A collaboration is possible and it would make our funding process flow better in the pipeline that exists now.

One possible result would be products made in the Middle East from resource chemicals grown in Nigeria and in the region. We are able to facilitate that and improve the economy with global trade. Perhaps we should discuss Pirate issue and criminal behavior as risk, but it would help to have a stable and good economic situation. Like Reply privately Flag as inappropriate 8 days ago

Monica Morrow Monica Monica Morrow Global eMarketing Leader at DuPont Sustainable Solutions

Sidney, thank you so much for reaching out, and for your continued participation in the DSS group! The best way for you to get in touch about working with the DuPont team is to submit your information to the DSS Knowledge Hub: http://bit.ly/YaAuVn. Notice the 'Connect With DSS' form on the right side. Be sure to add your specific request details to the 'other relevant information' section. Thanks again! Unlike Reply privately Flag as inappropriate 7 days ago Peter Burgess likes this

Peter Burgess Peter Burgess Founder/CEO at TrueValueMetrics ... formerly international business and development consultant and corporate CFO

The idea of the Triplel Bottom Line is not new, but only a few companies are making it a meaningful part of their decision making process.

I met Chad Holliday some years ago when he was CEO of DuPont and was promoting his 2002 book Walking the Talk, The Business Case for Sustainable Development. He was kind enough to introduce me to a department head in DuPont to facilitate an initiative that I was working on. We could not make it fly, because, while the CEO was committed to the sustainability agenda, the internal performance metrics were still focused on money profit performance. My product was ethical and sustainable, but not the cheapest. I had been an corporate CFO myself, and very well understood the decision process. Now, about a decade later I still see the disconnect in most corporate organizations between what the top leadership talks about and what everyone else in the organization is incentivized to do. At some point this has to change.

I am working on something I call Multi Dimension Impact Accounting (MDIA) that has an architecture to make the accounting for impact on people and planet as rigorous as the accounting for money profit, not only inside the business organization but more broadly in society. Among other things this architecture ends the convenient ability of regular money profit accounting and economic analysis to ignore externalities, and brings everything about the product life cycle into account at every step of the product life. While this is more complicated than existing money profit accounting, the tools to handle this are available. We did pretty sophisticated cost accounting 50 years ago before accounting was computerized. We should be able to do this level of analysis on top of modern computer technology without batting an eyelid!

What is possible is very exciting ... and in my view (an accounting perspective) the right metrics will change everything.

Peter Burgess - TrueValueMetrics Multi Dimension Impact Accounting Delete 6 days ago

Sidney Clouston Sidney Sidney Clouston CEO at Clouston Energy Research, LLC and Owner, Clouston Energy Research, LLC

Hello Monica, I visited the site and filled out the form and made a comment as you suggested.

Peter you are right, a double bottom line was promoted at university contests quite a few years ago and the Triple Bottom Line has a short history. The Gross National Happiness metric of the King of Buthan is where I first was introduced to the monitoring of the indices. These three are what I like to use to focus our attention on impacts of our actions to the Planet (ecology), the People (social) and a Profit (economics). I am an apologist for the profit motive. The earnings above cost can result in a sustainable project. The margin of profit should be not a gouging that a cartel or monopoly can do. The profit provides a means for growth of a good product or service. This is needed for an expandable development beyond just a sustainable development of a business. Unlike Reply privately Flag as inappropriate 5 days ago Peter Burgess likes this

William P Fisher Jr William P William P Fisher Jr Information Quality Visionary, LivingCapitalMetrics.com Yes, Peter, the right metrics will change everything, and yes, Sidney, with the right metrics we can make profits contingent on growing authentic wealth, and not just increasing the GDP. But I agree with Harvard's Michael Jensen that balanced scorecards and multiple bottom lines function only to cloud the issue as they give managers options for choosing which stakeholders' interests to serve. Balancing mission and margin requires financial viability. If you give it all away, you're out of business. The issues are too important to leave to individual skills and willpower. We need a system accountable for human, social, and natural capital, which is why I'm working for a scientific Intangible Assets Metric System. We often assume markets are created simply by exchange activities, but they are shaped by institutions and the roles and rules that make exchange efficient and meaningful, or inefficient and pointless. What we need is an Intangible Assets Metric System. I am promoting this on a number of fronts, via publications in scientific journals, via a third place paper in the 2011 World Standards Day paper competition, white papers published by NIST and NSF, and repeated presentations at the meetings of the International Measurement Confederation (IMEKO) and other groups. The issues are complex and technical, but once we have formulated them, I feel confident we will rise to meet the challenges. For more information, see my blog posts and papers, such as http://livingcapitalmetrics.wordpress.com/2013/04/05/innovation-infrastructure-as-a-basis-for-a-new-political-framework/ or http://ssrn.com/abstract=1925817. Unlike Reply privately Flag as inappropriate 5 days ago Peter Burgess likes this

Peter Burgess Peter Burgess Founder/CEO at TrueValueMetrics ... formerly international business and development consultant and corporate CFO

Sidney, William ... thank you for the encouragement.

I have been of the view for quite a long time that there are many ideas and initiatives to improve the framework of metrics being used for social and business decisions, but for a variety of reasons they are not getting much attention and traction. I am therefore very happy when I find people doing things very similar to what I am trying to do.

I am particularly attracted to the idea of the Intangible Assets Metrics System ... though perhaps not as excited about trying to make it 'scientific' ... we should talk about this at another time. In the framework of metrics that I have been working on there is a need for quantification, but in order to work, it will have to avoid a lot of the scientific rigor that will get in the way. On the other hand the rigor that will come in is the rigor that is intrinsic in the double entry accounting framework.

I keep reminding myself that a system that is going to be used is one that is very simple, appears to be sensible and gives answers when and where they are needed. When I was a corporate CFO I seemed to spend my life giving the CEO answers to questions that were required for meetings that were going to take place in a couple of hours. I did a fairly good job of this because our business data were well organized and (for me) accessible.

We also used organized data to get everyone in the company making decisions that were good for the company's performance. There was little of no use of rigorous analysis, but a huge amount of pragmatic oversight and review. We wanted to get cause and effect right, and did not worry much about high end correlation, replicability and so on.

The use on metrics inside the corporate organization about corporate profit performance is deep. I want to see a complementary data and analytical framework that is not constrained by company boundaries, and has quantified measures of everything that goes into quality of life and the sustainability of the planet. I am trying to stay thinking like a corporate accountant whose boss wants the answers later today!

A 2 page PDF about the Multi Dimension Impact Accounting (MDIA) idea can be accessed at this URL: http://www.truevaluemetrics.org/DBpdfs/BMABusiness/TVM-MDIA/TVM-MDIA-Brief-131107b.pdf

Some more resource material can be located through this URL: http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=txt20080001

I am afraid my work is pretty disorganized ... but it seems to be progressing in a useful direction.

Peter Burgess - TrueValueMetrics Multi Dimension Impact Accounting Delete 2 days ago William P Fisher Jr likes this

William P Fisher Jr William P William P Fisher Jr Information Quality Visionary, LivingCapitalMetrics.com Wow, I guess we have some different ideas about the value of science and rigor in measurement, eh, Peter? It seems to me that nothing is more elegant, simple, or practical than science's predictive theory and precision instruments. In every area from microprocessors to nanofabrication to genomics to the auto and electrical industries, scientific metrics are absolutely essential. If it not for mathematically rigorous measurement, there in fact would be no electrical industry, as we never would have figured out how to overcome resistance over long distance transmission lines. Why, in principle, should human, social, and natural capital be treated any differently than manufactured capital?

The new instruments, equating methods, and traceability to standards for human, social, and natural capital measurement are poised to profoundly transform the efficiency of these markets. I'm not talking about statistics, and I'm not talking about meaningless or confusing numbers that distract from the primary business questions.

But there is no reason you should know anything about all of this. The fact is, of course, the measurement models and calibrated instruments my colleagues and I work with are pretty much completely unknown in business. The math is complex, the software is hard to use, and few have yet done the work needed to translate the results into practical applications (though see http://www.lexile.com for one good example of what I'm talking about).

My goal is only to inform others about possibilities they are unaware of, possibilities involving enhanced meaningfulness, data volume reduction, and comparability. The bottom line takeaway here is only that you can get a lot more from your data, but not without asking new questions. Like Reply privately Flag as inappropriate 1 day ago

Peter Burgess Peter Burgess Founder/CEO at TrueValueMetrics ... formerly international business and development consultant and corporate CFO

William ... I don't think we are that far apart on measurement. All the examples you gave are totally appropriate for rigorous measurement, and you are right, scientific method and measurement produced amazing results. I argue that society, the environment and the economy are considerably more complex and too big to get a proven scientifically rigorous comprehensive answer. I absolutely want to measure as best one can, but the data that I want I would characterize as 'management' data rather than scientifically rigorous data. I have defined management data in the past as being the 'least amount of data that ensures that the best possible decision gets made.' A corollary of this is that management data are low cost relative to the value of the decisions ... something that goes missing when scientific methods is applied to activities like development projects (see for example Jeffrey Sachs and the Millennial Villages Projects).

I am very curious about the methods you refer to in your second paragraph above. You leave me hanging, and very interested. You should know that my academic history/experience has been maths and physics --> engineering --> economics --> corporate business --> international development planning ... so I am a little familiar with what is going on outside the business arena, but certainly not up to full speed with cutting edge innovation.

The Lexile example is good ... though it raises the question about the performance of education as a whole. Is education functioning at 20% of where it needs to be or at 60% of where it needs to be, and more important, if we change some things in education will we be able to make substantial improvements in educational performance. What measures are going to be useful in getting investment in education to where it needs to be ... and when we have investment, are we getting value for money. How do we address the fact that perhaps a billion children are not getting much of an education? I am reminded of the Carpenter's Kids program in Tanzania supported by a couple of Episcopal dioceses in the USA where an annual sum of $80 gets an AIDS orphan into a primary school and fed for the year, and for this modest amount a young person has a chance at life that would otherwise not exist. The impact of this $80 has a value. The question is what number to attribute to this. This simple example is also insufficient in that it does not address the effectiveness of the school and the teachers, and big constraints like the lack of text books and other educational materials.

OOPS too long ... to be continued! Delete 1 day ago

Peter Burgess Peter Burgess Founder/CEO at TrueValueMetrics ... formerly international business and development consultant and corporate CFO

Continued ... sorry

I agree with your warning about meaningless and confusing numbers. There is a proliferation of numbers, many derived from methodologies that do not have much going for them. Business accounting has always been a very simplified metric of business performance, but one that has worked very well. Everything in accounting is reduced to a money number. I am building a bit on this idea by arguing that everything that matters in society, the environment and the economy needs to have a value unit. Again, using accounting as the launching pad, in cost accounting, a simplification technique is something referred to as standard costs, in for me the equivalent in the impact space is going to be standard values.

I like your goal of getting more bang for the buck from existing data. The potential in this space is substantial. I would argue, however, that there are some answers that we need that are going to be difficult to deduce from the data that we have chosen to compile up to now ... for example, where do we get decent financial information about any government activity when they have chosen to account on a cash basis rather than an accrual basis, and the huge costs of future pensions are ignored in current government accounting. We know the problem exists, but the prevailing methodology of reporting allows it to be officially ignored. To some extent, this is also allowed in the corporate accounting space as well.

You are light years ahead of me in sophistication. To the extent possible I very much want what I am doing to be compatible with what you are doing so that it all 'adds up' to something that is amazing and works practically to change decision making behavior.

Peter Burgess - TrueValueMetrics Multi Dimension Impact Accounting Delete 1 day ago