Triple Bottom Line Accounting: A Truer Measure of Success

How is your company’s Triple Bottom Line, (TBL)?  Triple Bottom Line is the concept that a balance sheet can be more than profit or loss.  Social and ecological factors, as well as economic factors, need to be considered for a company to be truly successful.  People, planet, and profit.

TBL can even be considered for your personal life.  Almost everyone makes/spends money.  Everyone has an impact on the environment.  Everyone has social interactions.  How is your personal TBL?  Where would you like to improve?

TBL is highly relevant for a family farm.  We own/manage the farm. We live and raise our family on the farm.  We are the labor.  We consume its products.  We interact with neighbors and the surrounding community.  We pass the farm on to another generation.  Farmers were thinking about TBL before the concept was named.

Let’s look at TBL from the perspective of my farm.

PROFIT          

There are three of us on this farm.  No one has an off-farm job or any other source of income.  We need to make enough profit every year to cover our living expenses or we will have to borrow the difference from the bank.  This would take our net worth in the wrong direction.

A farmer can use many write-offs to reduce his tax burden.  Machinery depreciation, interest on loans, and health savings accounts, are examples of write-offs, along with regular business expenses as well.  However, it’s worth noting that if a farmer wishes to pay down debt he must use after-tax dollars.  So, even though we want to minimize our taxes, it’s not a bad thing to show a profit.

Our farm had two tough years in 1998 and 1999 when the hog market crashed.  Since then, we have been able to cover our living expenses and pay down some debt every year.  Our economic bottom line is ok for now.

PEOPLE

For the most part, the three of us work well together.  We communicate regularly and respect each other’s contributions.  Each of us can take time off from the farm when we want to.  We take time to interact in our community and visit friends and family.

What concerns me is our average age, which is 56.  It’s been said that if the average age in your company is over 35, your company is dieing. 

How will I manage the work-load if my parents want/need to retire?  I don’t really want to work with an employee.  Could I find an intern who would like to apprentice farm?

Our social bottom line is ok for now, but changes loom in the future.  We need to visualize and make plans now. 

PLANET

There are many ways to measure ecological bottom line.  Soil is probably the most popular way to measure ecological bottom line for a farm.  Is there a net gain or loss in volume of soil?  Is the soil more or less mineralized?  Are we growing better crops with less synthetic fertilizer or does it take more synthetic fertilizer to grow the same crop?

Soil is vitally important to us.  We use contour strip cropping to protect our soil from erosion.  We use no-till planting on some of our acres.  We use crop rotation to break the pest cycle.  We use legumes to produce nitrogen for the subsequent corn crop.  We use animal manure to mineralize the soil.  We have started mob grazing in our pastures to mimic the soil-building properties of the bison-made tall-grass prairies.

With all of these techniques though, I’m still not happy.  Soil tests don’t show an increase in organic matter.  I want to double the organic matter in our fields.

Last spring I saw some soil erosion in our tilled fields.  I don’t want to see any.

On the other hand, we continue to grow excellent crops with very little synthetic fertilizer.  Animal performance on our pasture is excellent.  Wildlife seems to be as abundant as ever.

I’m excited about changes we are making, but we need to monitor our ecological bottom line closely.

This is an overview of the thought processes that constitute our TBL.  What factors are important for your personal TBL?  Does your company practice Triple Bottom Line accounting?

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