Triple Bottom Line of CSR & corporate value management

   
In 1980, John Elkington, a British scholar, proposed a representative accounting framework for corporate social responsibility, that is, the Triple Bottom Line, which incorporates three dimensions of performance: economic, social and environmental.
 
“Triple” refers to that enterprises shoulder economic, social and environmental responsibilities. “Bottom Line” means that enterprises should hold the bottom line of these responsibilities and otherwise, they are irresponsible enterprises.
 
The bottom line of economic responsibility is no deficit. The bottom line of environmental responsibility is to meet the environmental indexes and requirements. The discharge of waste water, waste gas and waste residue must be within the amount that can be borne by the environment and conform to the industrial standards and the basic requirements of the laws and regulations.  
 
Besides, the bottom line of responsibility for stakeholders, such as the enterprises’ responsibility to the government, is embodied in observing the laws and regulations like paying taxes. The enterprises’ responsibility to the employees include signing labor contracts with the employees, providing a wage no less than the national lowest wage standard and paying social insurances and housing fund.
 
From this prospective, there are bottom lines for all the three corporate social responsibilities (economic, social and environmental responsibilities). Those who break the bottom lines are irresponsible enterprises. However, it’s not enough to only conform to the bottom line. All the enterprises should try to seek a balance in assuming economic, social and environmental responsibilities on the basis of holding the bottom line.
 
The GRI Sustainability Reporting Guidelines clarifies the performance indexes for the sustainability of an enterprise or organization, including performance indexes in economy, society and environment. Creating the integrated values of economy, society and environment has become the pursuit of leading enterprises internationally.
 
The Central State-owned Enterprises’ Strategy for Harmonious Development during the 12th Five-Year Plan Period issued by the State-owned Assets Supervision and Administration Commission of the State Council in 2010, clarifies to improve the ability of creating integrated values as one of the three goals for central state-owned enterprises in shouldering social responsibility. Especially, Shanghai Stock Exchange proposed the concept of social contribution value per share in 2008, which requires listed companies to disclose information on creating integrated values for stakeholders from the perspective of value quantification.
 
Listed companies are required to issue annual reports, since the earning per share reflects their responsibility to shareholders and response to the appeals of shareholders and investors. Then, how is the enterprises’ responsibility to other stakeholders embodied? Social contribution value per share can represent appeals and profits of more stakeholders.
 
Social contribution value per share equals to, the earning per share plus values created for other stakeholders (such as responsibility to the employees, contributions to the national revenue, interests to financial institutes, charitable donations, etc.) and minus negative values (money owed to environmental governance and salary and welfare of the staff).
 
This is becoming a new assessing criterion.
   
For instance, social contribution value per share of China Railway Group Limited is calculated like this: social contribution value per share = corporate social contribution value/ total equity. Corporate social contribution value = profit contribution + tax contribution + debt interest contribution+ employee contribution + public welfare contribution + other contribution – negative contribution to the environment – negative contribution to the safety and quality – other negative contribution.
 
Why do we need to calculate social contribution value per share? It’s not enough to guide investors in virtue of earning per share only. Even though the earning per share of two companies is the same, their responsibility and performance contribution to stakeholders and social contribution may not be the same.
 
Social contribution value per share is a more comprehensive assessment to corporate value, which not only guides investors make responsible investment, but also indicates the direction of sustainable development for enterprises to create integrated values.
 
The concept of social contribution value per share links integrated value creation and stakeholders organically.
 
For organizations, the final goal of fulfilling responsibility is to contribute to the sustainable development of society, which is the first criterion assessing an organization’s performance in fulfilling social responsibility. An organization’s performance in fulfilling social responsibility and making sustainable contribution is a touchstone and the specific goals are reflected in integrated values it creates for the stakeholders and society.