5 Ways to Achieve Top Line Business Value Through Sustainability

Published July 12, 2010

In a comprehensive study released recently by the United Nations Global Compact and Accenture, a survey of 766 CEOs from around the globe indicate that despite the economic downturn, sustainability will be critical to the future success of their companies. An amazing 93 percent of CEOs indicated that a tipping point could be reached that integrates sustainability with core business processes and systems, and its supply chains.

So this suggests that triple bottom line (TBL) practices and measurements will become commonplace in business … or will they. Perhaps there is another way of looking at this trend given the top-down commitments that CEO’s believe are necessary to create this massive shift in corporate behavior. This point of view is called triple top line, but has generally been trumped by its “bottom line” twin.

Setting the Context

Top-Line Definition

The total revenues an organization reports on their income statement. While many activities within an organization are focused on reducing costs, initiatives such as innovative product and service development focus on creating more valuable and desirable offerings that increase revenues. Attention to human and natural capital (as well as financial capital) can often increase revenue by differentiating a company and its offerings in a beneficial way to the market. When this is done poorly however, it can be seen as green-washing and results in the opposite effect.

In contrast, bottom-line refers to Net Income (top line revenues -- expense). Bottom-line activities typically focus on cutting expenses in order to improve income. William McDonough also coined this term from a design perspective in his landmark book Cradle to Cradle: Remaking the Way We Make Things (2002, North Point Press).

Triple Top Line Definition

The effect that attention to sustainable management of natural, financial, and human capital has to an organization by increasing revenues (by offering more desirable products and services) and reducing costs and expenses throughout operations (through more streamlined operations. While many of these benefits are measured in terms of triple bottom line accounting, even more valuable are their effects to a company’s top-line financial performance because they require less capital investment and reduce the cost of capital.

In the UN/Accenture report, CEOs cited several barriers to achieving their sustainability goals, including ‘organizational silos’, competing priorities and lack of ‘value recognition’ by investors. To counteract these barriers, several steps were needed, including CEO leadership to create real, value-added and long term change. Specifically, five key areas were mentioned:

Shaping consumer preferences for sustainable products.
Training, training, training on sustainability issues- not only for the rank and file but managers too.
Improved investor communications with investors to create a better value proposition about sustainability.
Improved TBL metrics and communication of the value of business in society.
Partnering with governments to shape policy and regulation and create a level playing field.

Next Page: 5 Steps for Achieving Top Line Value

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5 Ways to Achieve Top Line Business Value Through Sustainability

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