Triple Bottom Line and Corporate Governance

To what extent can corporate governance according to the “triple bottom line” act as a disseminator of corporate social responsibility and thereby serve as a mechanism to promote sustainability within the fast-fashion industry in the United Kingdom? Comparative study between the UK and Germany to analyse the efficiency of triple bottom line in respect to corporate social responsibility.

Corporate governance goes beyond the inward-looking approach that focuses on internal director-related rules. It is more of an outward looking multifaceted approach that is more inclusive (Plessis, Hargovan, & Harris, 2018, p. 5).

The 2015 G20/OECD Principles of Corporate Governance described corporate governance as comprising a set of relationships between a company’s management, its shareholders, boards, and other stakeholders. It provides the structure that sets the objectives of the company and the means of achieving the objectives and determining the monitoring of performance (OECD, 2015).

Corporate governance further governs the compliance and security best practices beyond the company’s directors and senior management. It also governs the interests of all the other parties that are involved and the relational nature of the corporate governance (Plessis, Hargovan, & Harris, 2018, p. 6). The inclusiveness of the principle of corporate governance and the structure that corporate governance provides to achieve its objectives could also mean that the principles govern the objectives of the company towards the society.

The principles of Corporate Social Responsibilities (CSR) aim to make bigger companies responsible towards the community. In addition to complying with the laws and regulations, the companies must also ensure their activities are conducted in a manner that respects environment, treats employees fairly, sources raw materials from companies that follow sound labour and environmental practices, and are ethical to the society. Thus, the role of corporate governance is not merely to serve the best interests of the shareholders of the economic interests of the company (Walsh & Lowry, 2011, p. 45).

A corporation may be considered to owe its existence and continued prosperity to not only its successful operation of the economy, but also the viability of the social arrangements (Boumol, 1970, p. 3). Considering the recent CSR developments, it could be seen that there is adoption of laws and regulations streamlining corporate laws to include principles of CSR. For instance, Germany law requires that certified private and occupational pension schemes must report ethical and social aspects in their investment policies (Rahim, 2013, p. 35).

The principles of corporate governance provide a foundation upon which CSR principles can be enhanced. The concept of the triple bottom line (TBL), which was coined by John Elkington in 1994, is the appropriate disciple that directs corporations to both the economic value and the environmental and social value that the corporations can add (Elkington, 2013, p. 3).

To what extent can corporate governance according to the “triple bottom line” act as a disseminator of corporate social responsibility and thereby serve as a mechanism to promote sustainability within the fast-fashion industry in the United Kingdom? Comparative study between the UK and Germany to analyse the efficiency of triple bottom line in respect to corporate social responsibility.

TBL is linked with seven closely linked revolutions, as what Elkington states. Because of TBL, if a capitalist corporation has to transition to a sustainable transition, there is will be a complex transition. The reason is that the seven revolutions constitute the new paradigm that will replace the old one. The new paradigm will be market competition from market compliance; soft values from hard values; open transparency from closed; function oriented life-cycle from product oriented technology; symbiotic partnership from subversive partnership; longer sustainability from wider sustainability; and inclusive corporate governance from exclusive corporate governance (Elkington, 2013, p. 3).

The concept of TBL is that a business can deliver concurrently financial, social and environmental benefits. The crucial question is whether TBL can act as the mechanism that can facilitate corporate governance to achieve its corporate social responsibility and could promote sustainability. TBL is particular important in context to corporate governance and corporate social responsibility. Environmental and social criteria impact the market in complex ways. As such, corporations have willingness to respond to the public pressure of improving their performance to address non– economic issues through the principles of TBL. TBL allows corporations to use their powers and pressures to change their behaviour (Sridhar & Jones, 2013). As it is, corporate governance in big corporation is difficult to be concretised. The problem may lie in broad and flexible interpretation of the principles of corporate governance. The problem is enhanced with factors such as the competing pressures on the corporations, which have complex attributes. Such pressures may include pressures from the investors or regulators to adopt certain standards and practices that govern financial transparency and fiduciary accountability. One of the pressures is also CSR (DuaneWindsor, 2009).

The complexity of corporate governance may find some redressal in the form of TPL principles. TPL sets the framework objectives for corporations to be concurrently enabled to meet their financial, social and environmental benefits.

Principles of TBL are interpreted and implemented effectively by the entrepreneurship of a company’s management. It is observed that there is a strong link between entrepreneurialism and environmentalism. Entrepreneurialism enables pursuing environmental, social and economic goals. This must be supported by willingness of corporates to quantify their CSR efforts; the community and social partners who can provide employment and risk free growth-oriented training for disadvantaged people; and by government and social institutions that provide support and special concessions (Dixon & Clifford, 2007).

To what extent can corporate governance according to the “triple bottom line” act as a disseminator of corporate social responsibility and thereby serve as a mechanism to promote sustainability within the fast-fashion industry in the United Kingdom? Comparative study between the UK and Germany to analyse the efficiency of triple bottom line in respect to corporate social responsibility.

This aspect of TBL as a disseminator of CSR must be examined in close quarter by critically evaluating it in the context of the fast-fashion industry. In the United Kingdom, CSR is not specifically dealt with by the UK Corporate Governance Code. The Code, however, has elements of CSR principles. For example, directors of a company must set the values and standard of the company. They must ensure that the company’s obligations towards shareholders and others are met (Amodu, 2020). Risk assessment by companies and businesses must cover financial risks, health, safety and environmental issues, and other business probity issues. The Companies Act 2006 also requires companies and their directors to consider community and environmental issues while exercising their duties to promote the company’s interests. The concern for interests is not only for the shareholders or the management of the company, but also for others. TBL is a principle that enhances the inclusive objective of corporate governance and intent to link the business with wider social concerns (Amodu, 2020).

TBL finds basis on sustainability, environmental, economic and social. TBL is particularly relevant to production processes of garments and textile in fashion industry, which releases many concerns on sustainability in the forms of energy use and water consumption, hazardous waste generation, greenhouse gas emission and discharge of toxic effluents (Zhang, Zhang, & Zhou, 2021).

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