RESCUING THE BABY FROM THE TRIPLE-BOTTOM-LINE BATHWATER: A REPLY TO PAVA Chris MacDonald and Wayne Norman Abstract We respond to Moses Pava's defense of the "Triple Bottom Line" (3BL) concept against our earlier criticisms. We argue that, pace Pava, the multiplicity of measures (and units of measure) that go into evaluating ethical performance cannot reasonably be compared to the handful of standard methods for evaluating financial performance. We also question Pava's claim that usage of the term "3BL" is somehow intended to be ironical or subversive. How we talk about business influences how we think about business. This is at least as true in business ethics as it is in other areas such as strategy, leadership, marketing, or human resource management, where every year potentially costly fads are launched by slogans compressed into the titles of bestsellers. Because our concepts and categories affect how we interpret our world, there is money to be made in business by introducing or propagating the right terminology—not least by selling consulting services based around the vocabulary. There is nothing inherently sinister about this process. We all seek better understanding of our world, and often this requires new perspectives, distinctions and categories. To invoke that terribly overused but nevertheless evocative jargon of the 1990s, this is what it is to "think outside the box." Sometimes our current boxes blind us—even if they also, perhaps much more often, help to organize our understanding of the world in ways that reflect collective and time-honored wisdom. In a free and democratic society (especially one with a blogosphere!), new ideas and concepts are introduced daily, and there is some reason to hope that open debate and experimentation will tend to favor the ones that lead to clearer understanding. Hence our initial interest in the so-called "Triple Bottom Line" (or 3BL), an allegedly new way of talking and thinking about corporate responsibilities. We began investigating the concept and the project behind it about five years after its coinage.' At that point we examined literally hundreds of websites and documents that were enthusiastically using and endorsing the concept, but with virtually none subjecting it to any critical scrutiny. Our primary aim in writing "Getting to the Bottom of 'Triple Bottom Line'" was to launch such a debate, and we are delighted © 2007. Business Ethics Quarterly, Volume 17, Issue 1. ISSN 1052-150X. pp. 111-114 BUSINESS ETHICS QUARTERLY that Moses Pava has taken up this challenge. We find much to agree with in his thoughtful discussion. The basic thrust of our case against the serious use of the language of 3BL is that it is "inherently misleading: the very term itself promises or implies something it cannot deliver" (Norman and MacDonald 2004: 254). The philosophical heart of the issue is our contention that the accounting paradigm is inappropriate as a comprehensive methodology for the ethical evaluation of afirm and its operations. Crucial qualitative distinctions—especially deontic distinctions between different kinds of obligations and responsibilities—would be bulldozed over by an entirely quantitative evaluative scheme. We presented a series of arguments for why it would be impossible to evaluate a firm's so-called "social performance" by aggregating the kinds of data typically measured in social reports (Norman and MacDonald 2004: 249-54). We do not say that any of the supporters of 3BL actually claim to aggregate the data in this way, but only that this is what they would have to be able to do (or at least hope to be able to do) for their analogy with financial accounting to have any meaning or credibility whatsoever. Interestingly enough, Pava does not contest any of our arguments for the impossibility of aggregating various measures of "social performance" to arrive at a "social bottom line." So why does Pava not join us in cautioning against the use of the misleading accounting metaphor in the ethical evaluation of businesses? He seems to have two basic reasons for welcoming the propagation of the language of 3BL. First, he does not think that the impossibility of aggregating ethical or social performance into a single bottom line is especially problematic, because we cannot accomplish such aggregation with regard tofinancial performance either: "It is simply not the case that there exists a single number that aggregates financial performance, and therefore no one should demand this of social and environmental reporting either" (Pava 2007: 107). Pava is puzzled that we had already conceded this point in the original paper when we noted that "the income statement with its famous 'bottom line,' is but one of the principal financial statements used to evaluate the health of a firm. The others include the balance sheet, the statement of cash flows and the statement of owners' equity" (Norman and MacDonald 2004:259, n. 20). He thinks this fact should be "devastating" to our own argument. We obviously disagree. Yes, there is, in effect, more than onefinancial bottom line, and a global assessment of thefinancial performance of a firm will involve astute "balancing" of these, along with assessments about the reliability of the data. But we must not lose sight of the power and usefulness of the social sciences offinancial and managerial accounting and the way they enable us to identify, classify, and aggregatefinancial data. Small variations from year to year (and quarter to quarter) on thesefinancial bottom lines (especially net income and cash flow) cannot be ignored by responsible managers or prudent investors; and the decisions they must take on the basis of these "numbers" can have a tremendous impact on all of the stakeholders of afirm. We cannot stress too strongly how different this picture is from the process of evaluating a firm's ethical or social performance by merely reporting hundreds of interesting and rel A REPLY TO PAVA evant bits of data, such as the number of women on the Board, the existence of an ethics code, or the number of workplace fatalities. Data like these, as important as they are individually, literally do not add up to anything. There may be more than one useful financial statement, but there are not hundreds, all reporting different facts with different units of measure. To imagine financial reporting stripped of its aggregative function and in as crude a state as social reporting, consider the "cost of goods sold" category in the income statement. For a manufacturing firm, this typically includes monetary values for different kinds of inventories (e.g., raw materials, work-in-progress,finished goods). Now imagine that rather than adding up these values within the measure for the cost of goods sold (and ultimately, within the general category of "expenses"), afirm simply reported the tonnage of raw materials, the square footage of factory floor space for work- in-progress, and the cubic footage of stored finished goods. We could call these numbers three "inventory bottom lines," if you like; but this wouldn't get us much closer to understanding thefinancial state of thefirm. Well that, with no exaggeration, is the state of so-called social-bottom-line reporting. Financial accounting may not be an exact science—and what social science is?—^but nor is it simply a hodgepodge of disaggregated information. The next time a CEO tells you that her company believes in the 3BL and produces a 3BL annual report for shareholders and other stakeholders, ask her what the social bottom line was last year and how much it increased or decreased from the preceding year. She won't have an answer because the question itself is absurd. Pava's second reason for sticking with the language of 3BL despite the absurdity at its core is, if you will, political and mildly subversive. He implies that the 'bottom line' metaphor in 3BL was never meant to be taken hterally. Rather it is a deliberate irony, since of course the "very claim of more than one bottom line [is] a contradiction in terms" (Pava 2007: 108). Moreover, he adds, "that's the point. There is no bottom line nor was there ever a bottom line—only multiple and contingent bottom lines" (Pava 2007:108). In other words, Pava seems to claim that 3BL advocates are not aspiring to have social performance evaluated with the same rigor, transparency and prominence as financial performance; rather, their intention is to defetishize financial bottom lines by reminding us that they are no more or less important or useful than any other so-called "bottom line." This may be how Pava himself wants to use the language of 3BL, but we see no evidence of this subversive strategy in the enthusiastic literature. The very inventors of the jargon, John EUdngton and the consultancy SustainAbility, are in the business of selling consulting and auditing services to help multinational corporations produce glossy 3BL documents where social and environmental data is included in reports that had previously contained onlyfinancial statements.^ Other major consulting and auditingfirms have followed suit. Even among the activist non-governmental organizations pushing 3BL, we see no hint of the alleged irony. In almost every case they are trying to convince people who already take seriously the financial bottom line that they should also take seriously social and environmental bottom lines. BUSINESS ETHICS QUARTERLY Now Pava himself clearly understands the political danger for the very movements that would like to advance the cause of CSR in this way. With a more powerful case study than we used ourselves, he demonstrates how the extreme vagueness of the notion of 3BL has the unfortunate consequence of allowing virtually any firm (even a tobacco firm!) to present itself as believing in the triple bottom line. And yet, despite this danger, Pava urges that getting rid of 3BL reporting "because it can be misused is like throwing out the baby with the bath water." But it is in fact the deceptive language of 3BL that is the bath water—and it is snake oil! The baby—call it what you will: CSR, social reporting and auditing, stakeholder management—was alive and well before it was dunked in this goo. Let's just dnse it off. Notes 1. The currency of 3BL is generally traced to the British publication in 1997 of John Elkington's Cannibals with Forks: The Triple Bottom Line of 21st Century Business. This book was published in North America in 1998 by New Society Publishers of Gabriola Island, British Columbia, and Stony Creek, Connecticut. Elkington claims to have thought up the term in 1994. 2. Elkington and SustainAbility were most notably brought in to help with Shell's famous turnaround in 1997, and they helped prepare Shell's 1998 annual report, entitled Profits and Principles: Does there Have to Be a Choice? which is infused with the language of triple bottom line (available at www.shell.com). The language of 3BL is now somewhat less prominent in SustainAbility's own consulting services, which are described on its website, www.sustainability. com. The words "triple bottom line" do not appear to have been trademarked by Elkington. The Australian and New Zealand branches of Shell's rival, BP, have also produced annual reports with the words "triple bottom line" in the titles and with no apparent involvement by Elkington or SustainAbility. See, e.g., http://www.bp.com.au/newsjnformation/press_releases/triple_bottom _line_report.pdf, an annual report which was audited by Emst & Young, a company that continues to offer 3BL services in several markets (www.ey.com). References Norman, Wayne, and Chris MacDonald. 2004. "Getting to the Bottom of 'Triple Bottom Line,'" Business Ethics Quarterly 14(2) (April): 243-62. Pava, Moses. 2007. "A Response to 'Getting to the Bottom of "Triple Bottom Line,"'" Business Ethics Quarterly 17(1) (January): 105-10.