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24 July 2007

Triple Bottom Lining your business case

Most business cases are simply a matter of cost and new revenue. Corporations apply Net Present Value to discount cash over the product lifecycle. Smaller businesses need a quick payback and so have less need for NPV.

Project business cases may also consider other aspects of business strategy including growth through new markets, taking customers from competitors or defending their position in the marketplace. Some projects are justified through regulatory compliance.

It is also feasible to factor the benefits projects can bring to the triple bottom line.

The triple bottom line is about incorporating the social responsibility aspects to accounting; people, planet and profitability. I guess the idea is that it is often hard to capture the true lifecycle costs of projects and of business itself but there are legitimate costs (and benefits) that can be assessed and measured: Sure we can dump that nuclear waste now, but what will it cost (us, tax payers, somebody else?) to clean it up in 30, 50 or 100 years?

So next time you are writing up a business case, you might want to consider the social costs and benefits of your project.

If you want to read more about the triple bottom line and how it can be applied to financial estimating you can read the Australian Governement's guidelines here . There are also UN and various other government policies and guielines out there.