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The New New Deal: A Cooperative Approach to the Integrated Bottom Line

3p Contributor | Tuesday January 6th, 2009 | 12 Comments

by David Bruce, Tina Butler, Brian Bishop and Jennifer Boynton
Policies developed by the Obama administration need to integrate an entrepreneurial approach, government support, and the community in order to fully realize the triple bottom line. With full participation, we can successfully move beyond the Triple and create an integrated bottom line wherein social, environmental and financial benefits are all achievable at the same time
One of the biggest barriers to adopting an integrated bottom line into a traditional business model is agreement on how to quantify the value of environmental and social benefits. Another significant challenge is the ability of investors to capture a return on social benefits. The consequence of these barriers is that projects that can have major gains for a community may not be considered feasible by investors. Developing a community center, for example, with a caf√©, bookstore, farmer’s market, light industrial, and residential housing could have great benefit to a struggling neighborhood by providing jobs and services and drawing other businesses to the neighborhood. But the high cost of capital means a net negative return to investors over a typical payback period. As a consequence, such a project is not considered viable even though the net return for all stakeholders is positive. Our current system only measures benefits of such a project based on the financial returns to the investor. The external benefits like more jobs and services for a community are not captured unless the local government is brought in as a player.


Social investments are the domain of the government.
But even when a government is willing to invest in entrepreneurial projects, the conventional wisdom of the separation of government and business prevails and the involvement is limited primarily to subsidies. This allows the private investor to undertake projects with smaller returns, but the value to the community is questionable as stakeholders are left out of the process. What we need today is a greater involvement by the government to effectively employ resources for the benefit of the community while taking advantage of the dynamism and flexibility of the free market.
The private sector is very efficient at producing economic activity but with a limited view of returns and risks.
By partnering with a government entity, an enterprise can responsibly also consider social and environmental returns that are not normally the domain of the free market. The government is the partner that reaps the social, environmental and external financial returns of the investment and the private party reaps the direct financial returns. The government body would be the capital investor controlling the long-term assets and overseeing their sustained use, and the private body would control the operations and oversee the short-term economic activity.
This unconventional model has several benefits.
First, projects that in the past did not return sufficient returns to investors to pay for large capital investments, but have good returns to the community at large suddenly become viable.
Next, problems with accounting for hard-to-measure external benefits now become the exclusive domain of the government with its responsibility to stakeholders, and not a private party whose concerns are primarily to stockholders and managers. Other problems such as paying absurdly high bonuses to management, which can reduce the social benefits of a government investment, can be addressed in the structure of the partnership. Some control over the practices of the enterprise is necessary to ensure the effective allocation of resources. If the government owned the capital and dictated the terms of its use, guiding principles could be enforced.
Creating a model for government and private enterprise for social returns is a task that must be undertaken by the new administration.
The problems we all face from economic, to social, to environmental are at or perhaps beyond a critical tipping point. Our leaders appear to be unable to use the tools at their disposal to turn our fate around. An integrated approach is a potent tool that combines the power of the Government with the dynamic insight of the entrepreneur in a synergistic model for the future. The New Deal of the 21st century, it is an opportune time to experiment with this idea. As students of the Presidio School of Sustainable Management, we are acutely aware of the failures of the current system and are particularly suited to address the concerns and develop solutions for projects with integrated bottom lines.
Readers, what do you think? Post your ideas here, and we will be eager to read them!
The Presidio School of Management offers MBAs and Executive Certificates in Sustainable Business. The opinions expressed here are those of the individual authors.
Image courtesy of Vanity Fair


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  • http://www.protectyourwaters.net Joe Starinchak

    A model already exists and is being used. The model is known as the Blended Value Proposition. The U.S. Fish and Wildlife Service (FWS) has created three engaging behavioral change campaigns that help individuals mitigate their impacts on the environment. By positioning these campaigns as part of the Blended Value Proposition, the FWS has spurned innovation by enabling companies to see the economic opportunities associated with various environmental issues and pursue them to help facilitate behavioral change. The website (www.protectyourwaters.net) is the website for one of these campaigns known as Stop Aquatic Hitchhikers! It targets recreational users and promotes prevention behaviors to address the complex issue of invasive species. This campaign creates social, environmental and financial value.

  • http://www.protectyourwaters.net Joe Starinchak

    A model already exists and is being used. The model is known as the Blended Value Proposition. The U.S. Fish and Wildlife Service (FWS) has created three engaging behavioral change campaigns that help individuals mitigate their impacts on the environment. By positioning these campaigns as part of the Blended Value Proposition, the FWS has spurned innovation by enabling companies to see the economic opportunities associated with various environmental issues and pursue them to help facilitate behavioral change. The website (www.protectyourwaters.net) is the website for one of these campaigns known as Stop Aquatic Hitchhikers! It targets recreational users and promotes prevention behaviors to address the complex issue of invasive species. This campaign creates social, environmental and financial value.

  • JenBoynton

    Cool, thanks for the info, Joe!

  • Patrick Wilson Mawanda

    This is very excting! I do wish that the new Mr.Obama administration can assist in influencing governments beyond America, especially those in Africa, to start practicing similar models.
    A model of partnership between government and private enterprise for social returns,I’m convinced,is especially more suitable for the poverty-striken rural Africa!

    • mwana

      Has President obama done what mr. mawanda proposed??

  • Jean Woo

    This is a very potent combination. I would like to see this model work for health care, especially community-based health care. The idea (care of People’s Grocery) of a grocery/whole foods store combined with a coffee shop/gathering place for music and activities and a clinic both for urgent care (walk-in) as well as scheduled chronic care and group health care (yes it does work!) could increase the access to both good food and health care as well as obvious social and environmental benefits (like a community garden! composting and biogas production!) The basic model and capital can be governmental, but the day to day operations can be modeled on present day operations, with benefits, cost controls for medical and pharmaceutical goods and services, based on both local conditions and a reasonable national spread.

  • Jean Woo

    This is a very potent combination. I would like to see this model work for health care, especially community-based health care. The idea (care of People’s Grocery) of a grocery/whole foods store combined with a coffee shop/gathering place for music and activities and a clinic both for urgent care (walk-in) as well as scheduled chronic care and group health care (yes it does work!) could increase the access to both good food and health care as well as obvious social and environmental benefits (like a community garden! composting and biogas production!) The basic model and capital can be governmental, but the day to day operations can be modeled on present day operations, with benefits, cost controls for medical and pharmaceutical goods and services, based on both local conditions and a reasonable national spread.

  • http://www.InquiryConsulting.com Dan Noble

    Thanks, Joe, for initiating this discussion. This, IMO, is core to the value proposition of Triple Pundit.
    However, you seemed to overlook the fact that “Social Enterprises” have created the model you point to over the last 30 years, and one of it’s early progenitors and ongoing voices, is Mohammad Yunus (http://en.wikipedia.org/wiki/Muhammad_Yunus) and the Grameem Bank. If you haven’t already read it(since you didn’t even mention it in your article), I highly recommend reading his most recent book (“A World Without Poverty: Social Business and the Future of Capitalism”; Public Affairs; 2008; ISBN 9781586484934). M. Yunas has A LOT more to say about this subject, based on his vast experience, not just armchair conjecture. He also is well aware of the value problems with existing capital or “profit only” approaches to capitalism.
    This is the core issue, IMO, of the triple bottom line (TBL), which is core to your site (as I said). My view is that we will need to “optimize” the values of people, planet and profit, since it’s mathematically impossible to “maximize” three independent variables at once. And since the TBL variables are by definition are three “independent value spheres” (or domains of human valuing), then it becomes of “game” (or process) of “values optimization”, NOT profit, people or planet maximization. Since these values are also in a natural values hierarchy in “nature” (i.e. profit depends on people, and people depends on the planet), then the planet will always “win”… just not in its “natural” or previous, or even current state, as we are seeing. That is if people go away, there’s no such thing as “profit” if the planet goes away, there’s no such thing as “people”… in addition, to make matters more complicated, profit, people and planet operate on greatly different time frames (profit in days and quarters and years; people in years, decades and generations; and planet in decades, centuries and epochs)… so weighing the independent values, OVER TIME, is one of the biggest “value”/mathematical problems, no matter what “metrics” you use for each.
    In San Diego, we are directly engaged in this exercise in our region, via our sustainability “Metrics Task Force” (a working group with the San Diego Regional Sustainability Partnership, http://www.sdrsp.org, of which I am co-chair), so this issue is front and center for us!
    Onward toward creating an ever more “sustainable” world! Even though we don’t really know what that is!!

  • david bruce

    It has been recently pointed out that if the Government were to buy the land and rent it back to the enterprise, the result could end up looking a lot like the land rent proposed by Henry George in the late 19th century.

  • Aldo Ceccarelli

    when you say “with full participation, we can successfully move beyond the Triple and…”, Triple Bottom-line means “Profits-People-Planet”, when a business has adopted the principle of “Triple Bottom-line” that means that business is committed to making Profits in a manner that is respecting both People and the Planet…what do mean by “beyond”? what is beyond the Triple Bottom-line? I look forward to your response, thank you.

  • david bruce

    Hi Aldo, Great question: What is meant by, “beyond the triple” bottom line? The answer is that, as you mentioned, a triple bottom line incorporates profit-people-and planet in the business model. The integrated bottom line goes beyond considering these three legs of business and actually partners with government. The result is a combination of business and government in an integrated enterprise that doesn’t just make triple bottom line decisions, it is structured to behave that way from inception.

  • david bruce

    Hi Aldo, I need to make a correction to the definition of the Integrated Bottom Line. It has been pointed out that the integrated bottom line already has a separate and more general definition than the approach we are proposing. Theo Ferguson defines the integrated bottom line as a unified statement of the people-profit-planet trio into a single balance sheet and income statement that describes the financial, environmental, and social condition of the enterprise (http://www.sustainabilitydictionary.com/i/integrated_bottom_line.php).
    Our integrated APPROACH (as opposed to an integrated bottom line) proposes a partnership between government and business. The enterprise is structured to behave in an integrated way but the reporting by the partners is separate. This integrated approach sidesteps the sticky issues surrounding social and environmental reporting with their myriad of subjective externalities. This way the for-profit partner uses the accepted accounting rules of today, while the government partner is responsible for the social and environmental returns. Thus in our integrated approach the organization is integrated, not the report.