Measuring the new 'triple' bottom line people profits and the planet.

• Author: Cokins, Gary
• Position: BUSINESS PERFORMANCE

Over the past century, free-market capitalism has done much to raise the economic prosperity of citizens in developed nations. Now, capitalism appears to be accepting an advanced mission--to help and possibly save the planet.

Indeed, the focus on corporate social responsibility (CSR) and environmental management is no longer just an afterthought in an annual report or a public relations message. Terms like "sustainability" and "going green" have become fixtures in the business media.

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These terms embrace environmental and climate change responsibility, as well as corporate social interests in consumer safety, health and poverty reduction. And, sustainability is a way of thinking and acting when making decisions, not just a reaction after wrong decisions have been made.

At a minimum, the CSR movement will involve external reporting that falls within the normal role of the chief financial officer. Reporting is one thing. Making positive changes is another. Through a series of questions and answers, the following attempts to discover how CFOs might be affected.

* How do sustainability and green movements affect a CFO's responsibilities?

The issues of oil, greenhouse gas emissions, global warming and poverty affect every organization's social and environmental performance, as well as its financial health. This rather recent occurrence has led to variations of the term "triple" bottom line reporting to encompass profit, people and planet.

The chief financial officer's organization traditionally has been responsible for collecting, validating and reporting data as information. The sustainability and green movement will extend this fundamental role to nonfinancial and nonoperational information as the business community redefines the term "resource."

For example, the economic dimension of sustainability deals with the organization's impact on both economic conditions for its stakeholders and on economic systems at the local, national and global levels. Therefore, an extended financial performance aspect involves sustainability measures that take reporting beyond the traditional measures of performance and quality.

In addition, greenhouse gas and energy reporting to satisfy the triple bottom line will introduce new data sources and data collection procedures, but reporting methods used by accountants will be similar to those already used.

* What key issues and challenges face the CFO's organization?

A key challenge will be to balance new and unfamiliar compliance reporting activities while assisting the organization in making sound decisions regarding improvement efforts.

With accounting, CFOs...