Published: July 30, 2015
The ‘bottom line’ is the essential element of any endeavour or theory: it is the crucial condition by which success or validity is evaluated. In the business world, the term relates to a company’s profit and loss, because net earnings are traditionally the sole motivation for most ventures. However, a cultural shift towards corporate social responsibility has led to the growing popularity of what has become known as the double bottom line.
The ‘double bottom line’, sometimes referred to as social investing, is a calculation of profit and loss alongside analysis of the positive social impact an organisation has created for the wider community. In short, a firm operating the double bottom line principle is stating its intent that financial return is not the only priority of the business. Ethics and integrity aside, the double bottom line is also proving to be an aid to sustainability as well as a highly marketable move for the companies that fully embrace the concept.
The biggest short-term benefit of the double bottom line is the positive response it receives from the general public; people who have grown tired of corporate greed are unsurprisingly keen to give their support to a business that gives back. The policy can serve as a way of appealing to new customers as well as encouraging existing customers to remain loyal, even in the face of strong market competition.
It could be argued that if an organisation’s charitable or socially responsible activities are carefully planned and assessed, it will not waste funding or resources on projects that do not give adequate social returns for the efforts made.
It’s important to recognise that the double bottom line concept is not a buzzword to make up for the lower financial return that is sometimes the case from socially beneficial projects but instead is a means of accounting for such positive benefit. In this modern era of unprecedented access to information, individuals and organisations are more conscious about the world around them and decision-making goes much further than purely financial calculations.