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IMPLEMENTING TRIPLE BOTTOM LINE
         

ACHIEVEMENT: The City Of Melbourne has inculcated triple bottom line considerations into all decisions it makes. This will extend to requiring suppliers to satisfy triple bottom line criteria when requested to do so.

TARGET DATE: November 2000 PROGRESS: Achieved.

DESCRIPTION: I wrote and moved a motion in November 1999 requiring the City of Melbourne to adopt Triple Bottom Line accounting. This motion was passed by Council. This motion was put in a trance of motions including a motion I wrote and moved to require 'environmental attachments' on the environmental implications of decisions put before Council.

Triple bottom line is an extension of the modern tradition of the economic bottom line to include social and environmental bottom lines.

This report presented by Geoff Lawler, Director City Strategy & Development, to the 14 November 2000 Melbourne City Council Finance, Corporate Services and Governance Committee describes the progress to date on my motion requiring Melbourne City Council to implement the triple bottom line.

Purpose

1. To recommend the adoption of a plan to implement triple bottom line reporting and principles by the City of Melbourne.

Background
2. In November 1999, the Finance, Corporate Services and Governance Committee called for a report on the concept of triple bottom line accounting. In response to a subsequent report, the meeting of the Finance, Corporate Services and Governance Committee resolved: "That a report be prepared for the June 2000 Council cycle which outlines an Implementation Plan (including costs) for the introduction to the organisation of the Triple Bottom Line concept as a basis for decision-making and reporting, and recommends the most appropriate tools to ensure the efficient monitoring of performance."

3. An extended definition of triple bottom line and the principles which underpin it are attached. Triple bottom line is a means of progressing the simultaneous achievement of economic prosperity, environmental quality and social equity.

4. Triple bottom line reporting and decision making can be included in Council’s current reporting and decision making frameworks.

Issues
Opportunities and risks for the City of Melbourne

5. Most of the leading work in triple bottom line reporting is in public reporting by the private sector. Few local governments are positioning to pursue triple bottom line reporting both as a corporation (ie, the Corporate Plan) as well as in their relationship with the community (ie Municipal Strategic Statement). To do so presents both a challenge and an opportunity.

6. John Elkington (from the UK) coined the term "triple bottom line". He has consulted to companies, such as BP, Dow, Du Pont, Ford, General Motors, Unilever and the World Bank, and is a member of the European Forum on the Environment & Sustainable Development. On his recent visit to Melbourne, John Elkington met with City of Melbourne staff and gave advice regarding the implementation of a triple bottom line the organisation. Some of the opportunities and risks he identified included:
6.1. Early leaders in triple bottom line reporting experience returns which are disproportionate to the resources they devote to the project.
6.2. Many corporations adopting triple bottom line approaches are doing so due to increased community expectations regarding non-financial performance. Shareholders are becoming increasingly interested in "ethical" investments and it is likely that residents of the City of Melbourne will begin to reflect similar concerns.
6.3. Adopting triple bottom line reporting would help Melbourne gain an international profile in sustainability.
6.4. Council can facilitate and support businesses which act as "pioneers" in the municipality in the implementation of triple bottom line practices. Council’s Sustainable Melbourne Investment Fund may provide incentive and support to such companies.
6.5. The themes of transparency, accountability and efficiency which are crucial to triple bottom line reporting also constitute good governance. Improved information and reporting allow for more informed and transparent decision making, particularly in areas of potential conflict between economic, social and environmental values.
6.6. Companies which have adopted a triple bottom line approach to reporting and decision making excel in the documentation of their economic and often their environmental performance. Reporting against social and economic performance is less well developed and indicators in these two areas will be developed by the City of Melbourne as implementation progresses.

Implementation plan
7. A summary of the triple bottom line implementation plan is presented in the table in attachment two. Each element of the implementation plan is discussed in paragraphs 8 to 13 below.

8. Corporate planning and reporting. A brief audit of Council’s current corporate planning processes (ie, the Corporate Plan, Annual Plan and Report) revealed some strengths and weaknesses against current practices in triple bottom line reporting and the Global Reporting Initiative, which is recommended as a guide. Many goals, for example, have no targets associated with them and seek to increase or decrease a certain parameter without giving a percentage or numerical target to be achieved over time. Future reviews of the Corporate Plan and Annual Plan should be undertaken with a view toward reporting against the triple bottom line. This will require a discipline of establishing targets, indicators, benchmarking and reporting of performance against the economic, environmental and social capital of the corporation. Corporate triple bottom line indicators are currently under development to enable public reporting against performance by June 2002.

9. Municipal Strategic Statement. The revision of the Municipal Strategic Statement is an opportune time to incorporate triple bottom line planning and reporting. It is proposed that one economic indicator, one social indicator and one environmental indicator be developed for each of the seven proposed themes of the new MSS. Such macro indicators can then be used to draft contributing indicators in the development of the Annual Business Plan. For example, a possible environmental indicator for Sustainable City may be greenhouse gas emissions. The Annual Business Plan, as developed by branches, may reflect the energy consumption associated with various Council activities such as buildings and streetlights.

10. Risk management. Most organisations pursuing triple bottom line have started from a position of assessing, ensuring and reporting their compliance with environmental regulation before progressing toward continual improvement and benchmarking against best environmental practices. The inclusion of broader social and economic criteria in reporting and decision making is not well defined. The City of Melbourne must ensure that compliance with environmental regulations and environmental due diligence can be demonstrated by the corporation. This report recommends that a self assessment of Council operations be pursued as a part of the risk management process which is expected to be completed by the end of this year. The self assessment will identify gaps and certain environmental risks. No additional budget is required to complete this process. However, the self assessment may reveal gaps which require further work, and associated resources, next financial year. Any such work would be reflected in Business Plans for 2001/2002.

11. Sustainability Assessment of Council reports. A six-month trial of environment assessment of Council reports has been completed in four work areas. The final report on the trial recommends that the environment assessment process be rolled out to all work areas. This report recommends that this methodology be expanded to include economic and social criteria and become a sustainability assessment to support triple bottom line decision-making. The necessary changes to the methodology and support can be accommodated within the 2000/2001 budget.

12. External Verification Group. Much of the experience and progress in triple bottom line reporting is in the private sector where triple bottom line has developed in parallel with other concepts such as corporate citizenship. This report recommends that an external verification group be convened at least once a year and include representation by one or more corporations known to have some experience of the process to provide verification of data, processes and mentoring. This technique has been commonly used in the private sector where external stakeholders provide an independent view.

13. Staff training. In order to adopt triple bottom line as an approach to reporting and decision making in sustainability, staff will need to be trained in the basic concepts and principles involved. Three corporate training courses are proposed to commence in 2001 and can be accommodated within the 2000/2001 budget:
13.1. Decision making for Sustainability. Basic level of training for approximately 200 staff involved in day to day decision making which impacts on corporate and municipal sustainability and staff considered to be key to supporting necessary cultural change (eg. Branch Managers, contract managers, officers preparing reports to Council and the Environment Champions). The course would occupy approximately half a day.
13.2. Sustainability Assessment. Presented as an additional module to the course above and run specifically for staff who frequently prepare reports to Council. This course would constitute the appropriate training and support for the implementation of the sustainability assessment process and would be tailored to suit specific work areas of Council. The course would occupy approximately half a day.
13.3. Triple Bottom Line Management. Training in triple bottom line concepts for the CEO and a Director. The course would feature international speakers, experiences of other organisations in triple bottom line as well as issues specific to implementation by local government. The course would occupy approximately ten days.

City Plan
14. The aims of the Sustainable City theme encompass the establishment of sustainable development strategies, in general, and the achievement of best practice in environmental management for Council operations, in particular. These aims are :
To improve the environmental sustainability of Council’s operations and develop an increased awareness of sustainability principles across the organisation;
To use Council’s statutory and policy-making powers in managing the City and its development to enhance environmental quality; and
To take an increased role at local, national and international levels in environmental management, and to demonstrate leadership in influencing local sustainability.

15. Toward this, City Plan stipulates that Council will incorporate environmental performance as a key performance indicator in corporate and operational planning and in performance appraisal processes

16. In relation to the social impacts of Council’s activities City Plan provides limited guidance under the People City theme, particularly within the following aims:
· To achieve a wide range of housing options that will cater for all sections of the population;
· To make services and facilities available to support those living in and visiting Melbourne;
· To welcome all sectors of the community and empower them to participate in the life of the City; and
· To make Melbourne even more liveable by improving amenity, safety and access.

Relation to Council Policy
17. The Triple Bottom Line concept relates to most council policies, in particular, the draft Sustainable Energy and Greenhouse Action Plan, the Forward Plans for Older People and Families and Children, the Strategy for a Safe City and the social housing strategy (A Liveable City). In addition there are links to adopted corporate strategies and targets.

Consultation
18. There will be a need for considerable internal, and some external, consultation in relation to the introduction of triple bottom line reporting to the organisation. The proposed implementation program recommended in this report will require considerable consultation across a wide range of work areas as well as expert advice from outside the organisation.

Government Relations
19. The triple bottom line concept is generally consistent with recent State and Federal government initiatives and with current trends in the private sector. For example, the introduction of the concept to the organisation would greatly assist Council in fulfilling its commitments under the Cities for Climate Protection program, which is supported by the Federal Government. It is also consistent with other Australia-wide programs such as Local Agenda 21 and the State's Best Value program which incorporates environmental considerations.

Environment
20. The implementation of a triple bottom line approach to reporting and decision making would assist in more accurately identifying Council’s environmental performance as a corporation and the state of the municipal environment.

21. The more accurate monitoring of Council's environmental performance would assist with the design and implementation of targeted action plans and drive environmental change. Such targeted actions would channel Council's resources and efforts to areas of poorest performance and result in greater efficiencies to the organisation and its role in environmental management. The public reporting of such performance would also demonstrate environmental leadership to other organisations in the municipality who may follow the example.

Recommendation
22. That the Finance, Corporate Services and Governance Committee recommend that Council:
22.1. Endorse triple bottom line as an approach to reporting and decision making; and
22.2. Adopt the triple bottom line implementation plan outlined in attachment 2.

TRIPLE BOTTOM LINE – DEFINITION AND PRINCIPLES

1. Triple bottom line is a vehicle designed to progress the objectives of sustainable development. Because sustainable development involves the simultaneous pursuit of economic prosperity, environmental quality and social equity, organisations that aim for sustainability need to perform not against a single, financial bottom line but against the triple bottom line or economy, society and environment. It is also true that an organisation, which is not socially or environmentally sustainable in the long term, is unlikely to be financially sustainable in the long term.

2. Triple Bottom Line can be viewed as both a reporting device (eg. Information presented in annual reports) and/or an approach to decision making (eg. The use of decision making and reporting tools to present the economic, environmental and social implications of decisions).

3. Triple bottom line involves shifts in corporate thinking around:
· Markets: The sustainable corporation will have a competitive advantage in the 21st century and sustainability itself will increasingly be delivered by the market. (Eg. The Body Shop enjoys a market advantage through such positioning and by being a pioneer in reporting against the triple bottom line).
· Values: A shift from a focus on the "hard" value of profitability to the "soft" values of integrity, community trust, respect for employees and sustainability.
· Transparency: Greater transparency in stakeholder communication is required by organisations which can no longer afford to be closed due to shareholder and public pressure for the "right to know", increased reporting requirements by governments and the risk of involuntary disclosure by a globalised media (eg. Shell’s performance in Nigeria)
· Life cycle: Considerations of life cycle issues will require a shift from product to function and the inclusion of the impacts and behaviours of supply chain companies (ie corporate responsibility does not start or end at the factory gate).
· Partnerships: Corporations will need to form new and symbiotic partnerships to help detect change, foresee problems and achieve outcomes. By engaging with non-government organisations and environment groups, corporations more able to discern changing public concerns)
Time: Most corporations and individuals conceptualise the width of time, that is, more and more demands are made and more events happen in one minute that ever before. Sustainable development requires a consideration of time that is longer as environmental change occurs over a geological time scale.
· Governance: The exercise of corporate governance will need to become more inclusive by developing dialogues with a diverse range of stakeholders. Directors of a sustainable corporation will devote greater attention to prioritising, monitoring and understanding sustainability issues. In essence, triple bottom line is really the achievement of good governance.

4. The concepts of triple bottom line and its associated systems and reporting mechanisms have been chiefly embraced by the private sector due to a number of parallel international and national forces. Australian corporations are subject to environmental regulations and voluntary agreements which require public reporting on environmental performance (eg. Western Mining Corporation). The corporations law, for example, has been amended recently and now requires companies to publicly report their environmental performance. Transnational corporations have pressure to secure public trust due to the nature of their core business or environmental or social incidents such as Shell’s performance in Nigeria or Nike’s use of child labour.

FURTHER INFORMATION:

 

Cool Green Tip Of The Week -

23 April 2017: Only those who decline to scramble up the career ladder are interesting as human beings. Nothing is more boring than a man with a career: Aleksandr Solzhenitsyn, The Gulag Archipelago 1918 -1956.

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