Triple Bottom Line Accounting Theory:
Triple Bottom Line (TBL) accounting theory expands the traditional reporting framework to include ecological and social performance in addition to financial performance. This approach was introduced by John Elkington in 1994 to measure the sustainability and societal impact of an organization.
1. Triple Bottom Line (TBL): The TBL framework considers three dimensions of performance: social (people), environmental (planet), and financial (profit). It aims to go beyond the traditional financial metrics to include a broader spectrum of values and criteria for measuring organizational success.
2. Complementing Broader Sustainability Frameworks: Rather than replacing or being replaced by broader sustainability frameworks, TBL complements these frameworks by providing a specific approach to measure and report on sustainability. It integrates well with various sustainability initiatives and standards by offering a clear structure for reporting and accountability across the three pillars of sustainability.
References from CFA ESG Investing:
Triple Bottom Line: The CFA Institute discusses how TBL accounting theory provides a comprehensive approach to measuring and reporting on an organization's impact on people, the planet, and profits. This framework complements broader sustainability initiatives by ensuring that environmental and social impacts are considered alongside financial performance.
Sustainability Reporting: The integration of TBL with broader sustainability frameworks helps organizations adopt a holistic view of their impact and performance, aligning with global standards and best practices in ESG reporting.
In conclusion, triple bottom line accounting theory complements a broader framework of sustainability, making option B the verified answer.
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