Friday, January 7, 2011

The TBL business model. Clear as mud.

My brain often makes its limitations clear to me. There are some things I just don't understand. I have puzzled over a comparison between a traditional and a triple-bottom-line costing model now for quite a few minutes, and I can't work out whether I am just dumb or it doesn't make sense (or both).

It all started when a PR notice about Bascom's community outreach dropped into my inbox. It just happened to be one that missed the delete button before I had a chance to react, so I ended up reading it. It starts off like this:

"With over 90 apartment communities across the country participating, the Bascom Group raises $19,000 for the US Fund for UNICEF"

It goes on to describe that range of activities Bascom leveraged "in 95 communities across the nation" to generate $19,000  (that's $200 per community). Whilst I appreciate the efforts this company is making to help others donate money, $19,000 didn't sound like an awful lot to me, and nothing was mentioned about how much Bascom actually donated, if anything, so I read further to check Bascom out. It's a private equity firm in California which buys up properties resulting from foreclosure or bankruptcy, refurbishes them and resells them, as far as I can tell. The Company has completed transactions worth over $6 billion. $19,000 versus $6 billion. I was still curious. Delving deeper, I noticed something that looked quite positive. The community outreach programs that Bascom engages in include free rent for teachers and police officers in return for services to the community, free financial education workshops for all in their residential communities, free ESL (English as a Second Language) lessons, job fairs and more. All of these services are designed to strengthen the quality of life for those who live in Bascom properties. It's a good core-business CSR approach. Well done Bascom.  

The thing that flummoxed me was Bascom's Triple Bottom Line approach.  Bascom offers a detailed cost calculation comparison versus a "traditional model" and a "community outreach" model. The latter results in social value of $486 (net operating income differential) whilst the traditional model delivers $0 value. I worked through each line, and aside from the fact that the community model generates a higher revenue and has higher marketing costs, I for the life of me cannot fathom out how this calculation proves the TBL business case.

If anyone has any suggestions, please do enlighten me.

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices  Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

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