The Triple Bottom Line and Stakeholders

The Triple Bottom Line: People, Planet, Profit

• $triple bottom line:$ measures an organizations social, environmental, and financial performance
  • represents people, planet, and profit
• success can be measured through a social audit
  • $social audit:$ a systematic assessment of a company’s performance in implementing socially responsible programs
  • ex:a firm may support a foundation or make donations to non-profit organizations or allocate staff time to pro-bono work
• very important because it affects everyone
  • focuses not only on businesses, but also social communities and the business’s impact on the planet
  • this framework provides a more sustainable future that considers both social and environmental sustainability

Internal Stakeholders

• $internal stakeholders:$ consist of employees, owners, and the board of directors
• $owners:$ consist of all of those who can claim the organization as their legal property
• $board of directors:$ members elected by the stockholders to see that the company is being run according to their interests

External Stakeholders

• $external stakeholders:$ people or groups in the organization’s external environment that are affected by it
  • important because by monitoring business activities, buying products or services, and creating basic expectations, they help ensure a safe and fair market,
• $the task environment:$ consist of 11 groups that present an organization with daily tasks to handle
  • includes customers, suppliers, competitors, labor force, special interest groups and government regulation
• $the general environment:$ refers to the macro-environment such as economic, technological, and sociocultural

The Sarbanes-Oxley Reform Act

• white collar crime
  • illegal trading, ponzi schemes, and other white-collar crimes dominated the headlines in early 21st century
• sarbanes-oxley act of 2002:
  • established requirements for proper financial record keeping for public companies
  • CEO and CFO must personally certify the organization’s financial reports
  • senior executives prohibited from taking personal loans/lines of credit
  • penalties of as much as 25 years in prison for noncompliance