Passage
An evaluation of a company’s success in financial terms is often referred to as the ‘bottom line’; a reference to the last line of a company’s accounts showing their profit. The ‘triple bottom’ includes environmental and social factors, along with economic – sometimes referred to as ‘people, planet, profit’.
The ‘people’ element refers to the fair treatment of everyone the company impacts on, not just immediate employees. ‘Planet’ refers to environmental impact with companies considering sustainability and seeking to neutralise their environmental impact. Some companies have voluntarily adopted the triple bottom line, though many are now required to use a ‘double bottom line’ due to legislation requiring assessment of environmental impact.
Question
Companies are free to choose whether they adopt double bottom line accounting. (True/False/Insufficient data)
Answer
False - The correct answer is 'False', as the scenario states that "many are now required to use a ‘double bottom line’ due to legislation", meaning that double bottom line accounting is a legal requirement for some companies.
Question
The need to have a positive social and environmental impact can adversely affect financial success. (True/False/Insufficient data)
Answer
Insufficient data - The answer is 'Insufficient data', as no information is given in the scenario about how considering the social and environmental impact may affect financial success either positively or negatively.
Question
According to triple bottom line accounting, a successful company would be financially, environmentally and socially successful. (True/False/Insufficient data)
Answer
True - The answer is 'True', as the scenario states that a company’s success has been evaluated in financial terms, but that the use of triple bottom line adds an evaluation of environmental and social factors to this. Using triple bottom line accounting, the success of a company would therefore be evaluated in relation to their financial, environmental and social performance.