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ACCA Strategic Professional · Advanced Performance Management · Sustainability

Karvale Ltd adopts the triple bottom line to report performance. The board proposes to present a single figure for 'people' performance that is expressed in the same monetary units as profit, so the three elements can be added together. Which is the most significant weakness of this proposal under the triple bottom line approach?

The main weakness is measurement. People and planet outcomes are hard to value in money, so adding them to profit needs subjective assumptions and reduces comparability. The framework still reports profit and applies to any organisation, and no cash basis rule exists.

  1. ASocial and environmental impacts are hard to measure in monetary terms, so a single additive figure involves subjective valuations and loses comparabilityCorrect
  2. BThe framework does not permit any reporting of profit
  3. CTriple bottom line only applies to public sector bodies
  4. DAdding the elements would breach the requirement to report on a cash basis

Explanation

The triple bottom line covers profit, people and planet. Its main criticism is that the social and environmental elements lack a common unit and are difficult to quantify, so converting them into money requires subjective judgements. The other options are false statements about the framework.

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