Reference no: EM131702585

Question: One well-known approach to corporate responsibility is the so-called "triple bottom line." Traditionally, a corporation's bottom line referred to the company's net profits. "In practical terms, triple-bottom-line accounting means expanding this traditional reporting framework to take into account ecological and social performance in addition to financial performance. The phrase was coined by John Elkington in 1994. It was later expanded and articulated in his 1998 book Cannibals with Forks: The Triple Bottom Line of 21st Century Business. Sustainability, itself, was first defined by the Brundtland Commission of the United Nations in 1987. The concept of TBL demands that a company's responsibility be to stakeholders rather than shareholders. In this case, "stakeholders" refers to anyone who is influenced, either directly or indirectly, by the actions of the firm. According to the stakeholder theory, the business entity should be used as a vehicle for coordinating stakeholder interests, instead of maximizing shareholder (owner) profit." [https://en.wikipedia.org/wiki/ Triple_bottom_line] Assume that an American corporation decides to adopt the triple-bottom-line approach with regard to its environmental and labor relations policies worldwide. What are the pros and cons of this decision for the firm's traditional bottom line? What response should shareholders make to this decision? Does your answer to the second question depend upon whether the particular shareholder happens to be

(1) an individual investor,

(2) a university endowment fund, or

(3) an employee pension fund?