7.+Triple+Bottom+Line

Dustin Pennington, Dan Stout, Jordan Pugmire, Steven Arhart
 * Triple Bottom Line **

Triple Bottom Line (TBL) reporting is a framework that can be used for the purpose of determining the sustainability of a country, company, project, asset, or individual. There is not a universally accepted definition of TBL reporting due to the varying nature of the metrics being measured. In a general sense, and for the purpose of this chapter, TBL reporting will be defined as an entities approach to managing social, economic, and environmental factors. Through assigning dollar values or indices to these factors, results can be analyzed to determine performance as it relates to sustainability or sustainable development. The goal of this chapter is to evaluate the methodology, applications, and limitations of using the TBL framework to assess sustainable development.

Unfortunately several different frameworks currently exist for evaluating sustainability and there is not a currently accepted standard. This is the case in the US and other countries, such as Costa Rica. Due to the large number of frameworks and reporting systems used, it is difficult to establish a baseline to compare one country, company, or project to another.


 * Frameworks **

Several frameworks exist for determining sustainability. Determining which framework will be used is an important first step for a company as a whole or a specific project. A framework provides the project with a pre-determined set of guidelines that can be considered and incorporated into the overall projects scope and design. Other than TBL, common frameworks are Pillars of Sustainability, Scale-Density, and Built Form Ecology. The Pillars of Sustainability framework organizes systems into five categories: water, energy, materials, community, and ecology with an emphasis placed on the balance between them. The Scale-Density framework considers the ability of a project or company to be increased or decreased based on demographic and economic needs. It can be used to illustrate where certain designs or business models are appropriate. The Built-Form Ecology framework considers the interconnectivity between natural ecosystems and human environments. It can be useful in determining the effect human development will have on surrounding flora and fauna and ways to mitigate those effects that are deemed to be undesirable.

One example of a framework that attempted to gage sustainable development on a worldwide scale was the Commission on Sustainable Developments (CSD) Work Programme. The goal of this study was to make indicators of sustainable development accessible to decision makers at the national level. Much of the work was carried out by the United Nations and several countries participated including Costa Rica, which acted as a representative for Latin America and the Caribbean. In addition to the study, the CSD Work Programme also provided workshops and trainings for nations to incorporate and explore sustainable development. Programs such as this one, that go beyond providing a framework and also incorporate tools for decision makers are increasingly important for countries similar to Costa Rica that are in the midst of sustainable infrastructure challenges [1].


 * Why Use the Triple Bottom Line Framework **

TBL reporting is a framework that can be applied to entire countries, companies, or projects. It can be used as a simple guide or to provide detailed analyses for estimating social, economic, and environmental factors relating to sustainability. In this sense it is a useful framework that could potentially be applied worldwide to evaluate the sustainability of projects. Another important aspect of TBL is that it goes beyond the typical bottom line approach to include environmental and social factors that are often equally important in the long term success of a company or project. For these reasons, many corporations and government agencies are trending towards TBL reporting. A short explanation, by Dr. Karl-Henrik Robert, of how this interconnectivity can be applied to the TBL can be viewed at: [|Sustainability, The Triple Bottom Line].


 * Calculating TBL **

TBL reports often contain both quantitative and qualitative information. Reports should have the following characteristics: reliability, usefulness, consistency of presentation, full disclosure, and auditability. Following these general report characteristics will produce objective, balanced, and credible information that can then be used by stakeholders [2].

Calculating TBL can be achieved through a number of methods. Currently there is not a standard unit of measurement used in the calculation of TBL. Two of the common methods used are monetizing and indexing. Monetizing involves assigning a dollar value to the economic, social, and environmental dimensions of the TBL approach. Monetizing the economic portion of the TBL framework is realistic in that accounting terms such as revenue, cost, and return on investment can be expressed in terms of a common currency like the dollar. However, monetizing social and environmental dimensions of the TBL can be challenging and subjective. For example, when considering agricultural development in Costa Rica, how does one assign a cost in dollars to the environmental damage caused by deforestation vs. the social value of increased economic opportunity the deforested land will provide? The pictures below show how deforestation can affect the landscape.



Questions such as these have led to an alternative method for calculating TBL through indexing. Indexing involves using a numerical scale to compare variables based on a reference number or value. Although no universally accepted standard exists for indexing economic, social, and environmental measures, the TBL framework can incorporate indices based on an entities needs or specific project.

Economic, social, and environmental measures that can be used to establish an index include:

//Economic Measures//
 * Income
 * Expenditures
 * Cost of underemployment
 * Job growth
 * Cost of living

//Social Measures//
 * Unemployment rate
 * Median household income
 * Quality of life
 * Educational opportunities
 * Relative poverty
 * Life expectancy

//Environmental Measures//
 * Priority pollutants
 * Deforestation
 * Solid waste management
 * Land use
 * Electricity consumption
 * Water quality
 * Air quality

Upon determining the measures to be included in a given index, data is gathered on a national, state, or local level. This data is then compiled and analyzed allowing a rating, or score, to be assigned to each category. This enables projects of similar scope to be compared to one another to determine the relative sustainability [3].


 * Shortcomings **

As with any framework, TBL is not the perfect fit for all applications. Some of the areas in which TBL fails to make the grade are: the indexes or values assigned to the social, economic, and environmental factors are subjective and open to interpretation, there is no standardized way to track social and environmental performance, and as Bill Joy, co-founder if Sun Microsystems, famously said: "Businesses can talk about all this social responsibility stuff, but they are likely to do something about it only if there's an economic reason for them to do it."


 * Case Study: Miravalles Geothermal Plant **

In order to explore how TBL can be applied to a specific project, the Miravalles Geothermal Power Plant in Costa Rica will be evaluated. The Miravalles station consists of 5 separate power production facilities that supply approximately 163 Megawatts of electricity (MWe) to the citizens of Costa Rica. The 163 MWe account for nearly 15% of Costa Rica's electricity generating capacity, making this plant a vital part of Costa Rica's infrastructure. Because of its importance, the sustainability of the facility and its impact on the local economy, environment, and society must be considered. As previously mentioned, one framework that can be used to accomplish this is TBL.

Geothermal energy has a positive social affect on communities when compared to other forms of energy production. The footprint required for a geothermal power plant is significantly smaller than hydro, wind, and solar power. The small footprint leads to less displacement and overall impact on local communities. Additionally, geothermal energy production has brought much needed jobs to rural communities along with money for infrastructure and eduction. The Costa Rican Electricity Institute (ICE) supplies many jobs and infrastructure improvements to the communities in which it has public works projects. At the Miravalles geothermal plant in Guanacaste province, ICE has provided schools, roads, and jobs for the town of approximately 5000 residents. Before the geothermal plant was built the town’s primary occupation was farming. With the construction of the geothermal plant, local citizens realized that they could go beyond farming to provide a better quality of life and standard of living for their families. Locals were able to capitalize on the technical jobs and increased tourism this plant brought to the community.
 * Social**


 * Economic**

Economic factors relating to harnessing geothermal energy through the use of geothermal power plants include: subsidies, installation, development, maintenance, and decommissioning costs, and the revenue generated by selling the power produced. These costs all contribute to the total life-cycle cost of the system.

The Miravalles geothermal plant produces high paying technical and skilled labor jobs in this area. This adds to the quality of life for everyone in the surrounding area as money trickles down through the economy. Additionally by selling the electricity produced at the geothermal plant to the residents of Costa Rica, ICE is able to generate funds for upcoming infrastructure and conservation projects.


 * Environmental**

The environmental impact of the geothermal plant seems to be minimal when compared to other power generating technologies. It uses a small land footprint for operations and contaminates released to the air are primarily water vapor and noise pollution. There are concerns regarding depleting the aquifers that supply the heat and water, however measures have been taken to reduce this potential problem as much as possible. Regular testing of the waters coming from the injection and production wells are regularly monitored for suspended solids, dissolved solids, biochemical oxygen demand, and pH. The picture to the right is a copy of the most recent report found on display at the Miravalles Geothermal Plant. Additionally, to offset the environmental impacts caused by the geothermal place, ICE participates in projects aimed at improving the environment. One such project is reforestation. ICE has planted thousands of acres of trees to bring back the rainforest biodiversity that existed before widespread deforestation.

In trying to account for the above mentioned economic, social, and environmental aspects of the TBL, a dollar amount or index would need to be used to determine the actual costs or benefits the Miravalles geothermal plant provides. This is usually straightforward when considering the economics of the project but can become much more convoluted when trying to assign a value to the social and environmental factors.


 * Conclusion **

The Triple Bottom Line is one of many available frameworks used in determining the overall sustainability of a country, company, project, asset, or individual. By accounting for social, economic, and environmental factors, TBL aims to provide a balance between our planet, the people that live on it, and profit. Although the method is not without its shortcomings, it provides a starting point in determining how this generation will be able to meet its needs without affecting the ability of future generations to meet their needs.


 * References **

1. "Indicators of Sustainable Development." Department of Economic and Social Affairs, 2001. Web. 06 June 2012. <[]>.

2. "Sustainability: A Guide to Triple Bottom Line Reporting." Australia's Group of 100, 2003. Web. 15 June 2012. <[]>.

3. Slaper, Timothy, and Tanya Hall. "The Triple Bottom Line: What Is It and How Does It Work?" //Indiana Business Review//. N.p., n.d. Web. 06 June 2012.<[]>.

4. Fung, Antonio. "Chemical and Isotopic Studies in the Miravalles Geothermal Field Costa Rica." Departamento De Recursos Geotérmico, 2000. Web. 10 June 2012. <[]>.