NationStates Jolt Archive

What do you think of them?

For those who aren't clear on what I mean, traditionally firms used one bottom line: the financial one.

These days it's become trendy to add additional bottom lines, like a "social bottom line", an "environmental bottom line" and so on. Particularly governments are constantly working on new bottom line ideas to justify the things various internal interest groups want to do (I got the inspiration for this thread from a project I'm working on for my local council at the moment).

Sure, the idea is initially appealing. Everybody cares about social or environmental outcomes to some degree, so for them not to be measured and actions not being judged on them surely is a bad idea.

The problem I'm having with all this however is that we're comparing apples with oranges. The whole idea of a financial bottom line is to have a clear, objective statement about how a firm or a project is doing. Measuring social and environmental outcomes on the other hand is difficult - non-market valuation methods are expensive, complex and failure-prone. Too often subjective judgements turn a decision either way.

And adding a "Sports Development Bottom Line" is just farcical, turning the idea of the bottom line on its head.

So if only the financial bottom line can reliably be calculated, if only the outcome and meaning of the financial balance sheet are really known - do you think other bottom lines should be added as equals?

2 threads in a minuet?! your a machine dammit! :p

do you think other bottom lines should be added as equals?

some lines should definitely be added, people are taking more of an interest in what they buy nowadays and so it can be an important indicator on what there future image and thus income will be

just look at foods new obsession with trying to look healthy and natural

Without evaluating the health of the environment they operate in and their contribution to that environment you will not be able to accurately predict the financial bottom line or realize that you've managed to fuck your selves to the point where the financial one is meaningless.

It's far beyond the time that cooperations take into account the impact they have since it effects them, too.

It appears to be a method for accounting for externalities.

The idea is that those don't show up on financial bottom lines.

It appears to be a method for accounting for externalities.
Yes. The difficulty is in accurately measuring them.

In what limited experience I have in seeing how they're applied, it seems to come down to who gets to make the assumptions. If it's a financially-orientated person, they'll be undervalued, if it's a greenie sort of guy (or girl) they'll be overvalued.

As a tool they're extremely limited. I wonder whether it actually makes sense then to give them equal weight to the hard, financial facts.

Yes. The difficulty is in accurately measuring them.

In what limited experience I have in seeing how they're applied, it seems to come down to who gets to make the assumptions. If it's a financially-orientated person, they'll be undervalued, if it's a greenie sort of guy (or girl) they'll be overvalued.

As a tool they're extremely limited. I wonder whether it actually makes sense then to give them equal weight to the hard, financial facts.
There's only one bottom line. That's profitability. Despite the best intentions toward whatever external factor, a company can't stay in business if it can't pay its bills, its workers, its taxes, and so on... Every cent a company makes above its break-even point is the profit it can use to buy recycled toilet paper, sponsor green events, or donate to PETA. Or do what is smart and re-invest in the business. And this assumes that there are no shareholders or analysts to satisfy with increased earnings and quarterly dividends.

Nope, only one bottom line.

Very difficult to judge accurately, impossible to judge in fact. There is no way to cost them out because by their nature there is no economic data to analyze.

I do believe the most reasonable way is already done, whereby accountants balance social and economic spending as a "good will" asset equal to the expenditure.