Economic growth alone is an inadequate indicator of progress towards sustainable development. From an environmental and social perspective, the growth in man-made capital may imply either improvement or deterioration. Although damage is rarely deliberate, the long-term consequences can be irreversible. Yet, efforts to remedy environmental damages or alleviate social inequity require financial resources, generated through economic prosperity.

Economic growth, therefore, is not a goal in itself. Rather we need to look at how the benefits are achieved and how we can offset any harm done. Companies today are rewarded for their financial performance – even if what they are delivering to society may be socially or environmentally damaging.

In addition, current price structures do not reflect, for example, the real costs of clean air and freshwater. Creating an environment in which companies and consumers are rewarded for alleviating social and environmental problems, and penalised for negative impacts, poses a major challenge for governments and businesses alike.

One way in which to create this environment is to begin assessing not only the financial but the economic impact of a company. We are committed to moving in this direction by looking beyond pure profit on the financial bottom line to our wider economic impact in society. This is a difficult task and presently no single method can be applied. Yet, it is imperative that we accept the challenge and attempt to provide more transparent accounting from an economic perspective.

The economic component of the Triple Bottom Line is often assumed to be the same as the company’s financial performance. But economics and finance are not simply the same. The financial concerns the market valuation of transactions that pass through a company’s books.

Economics, on the other hand, is the means by which society uses human and natural resources in the pursuit of human welfare. As such, economics extends beyond a single organisation and is linked to both the environmental and social elements of sustainable development. This implies the need for a much broader approach to accounting, which integrates environmental and social impacts.

In our 1999 and 2000 reports, we began to tackle the wider socio-economic aspects of our business with case studies at the local level. This year, pursuing our goal of developing key performance indicators for social responsibility and the other elements of the Triple Bottom Line, we have begun to use financial data to measure our economic footprint.

Graph: The Novo Nordisk economic stakeholder model