Lecture 3

Lecture 4
Triple Bottom Line
Causal Loop Diagrams
Muhamad Waseem
Department of Civil Engineering
University of Engineering and Technology,
Peshawar
 Course Outline
Week Weekly Lectures CLOs PLOs Remarks

1 Introduction to sustainability the Humanity and 1 7 To be taught from Class Notes"

environment and its state; IPAT Equation;
Sustainability Challenges
2 Development of Public policy; Role of civil 1 7 Class Notes, Chapter 2 of "Sustainability a
engineers in the society; Sustainability and Public comprehensive foundation"
Policy; Environmental Risk Management Assignment No. 1,

3 Definitions; Sustainable Development; Complex 1 7 Lecture Notes

engineering Problems. Introduction to the tools and
approaches for solving complex problems
4 Introduction to Systems Thinking and System 1 7 Lecture Notes
Dynamics as approach to deal with complexity and Quiz no. 1
uncertainty Age of Sustainable Development
Chapter no. 1, Page 1-42

5 Qualitative mapping and modeling of complex 2 7

problems on VENSIM (Systems Thinking Software)

6 Quantitative mapping and modeling of complex 2 7

problems on STELLA (System Dynamics Software)

7 Assigning Complex Engineering Problem to the 3 7

Students and Discussion
8 Presentations and Final Quiz
 Course Outline
Week Weekly Lectures CLOs PLOs Remarks

9 Overview of Disasters; Basic Disasters Concepts and Social 1 7

Contexts of Disasters
10 Hazard, Vulnerability and Risk (Probability and Statistics) 1 7
Concepts
11 A broad understanding of Disaster Risk Management, 1 7
including prevention / preparedness before Disasters and
recovery / reconstruction after Disasters.
12 Disaster Mitigation-Recovery policy and Disaster risk 2 7
management of national level with practical system and laws
13 Creation of Pakistan emergency management system 2 7

14 Introduction to risk management tools 1 7

15 Flood Risk Management 1 7

16 Earthquake Risk Management 1 7

Final Term Exam 1,2,3 7

 Course Objectives

1. Sustainable development: The purpose of this module is to encourage

the students in exploring the challenges that society is facing and to
understand the role of Civil Engineers in the society. To understand the
interactions between the Civil Engineering profession, physical
infrastructure, and social institutions.

2. Disaster Risk Management: The purpose of this module is to provide

an introduction to the roles of Engineers and Planners in Disasters
response and preparedness. Engineers and Planners are concerned with
the long-term aspects of disaster: the processes of pre-disaster
mitigation and post disaster recovery. The course will only minimally
touch on disaster response and emergency preparedness.

3. To introduce students with the tools and approaches to deal with

complexity and uncertainty
Books
 Re-Cap
1. Multi Criteria Decision Analysis
2. Decision Matrix
3. Analytical Hierarchy Process (AHP)
4. Quiz 1
 Learning Objectives
1. Triple Bottom Line
2. Causal Loop Diagrams
3. Class Activity on Causal Loop Diagrams
4. Quiz 1
Triple, Bottom Line
 Concept
• Bottom Line means “ Net Income” reported at the bottom of the Income Statement

• Triple Bottom Line concept is coined by John Elkington in his book ‘Cannibals with
Fork: the Triple Bottom Line of 21st Century Business’ in the year 1997.

• It is a framework or theory in which companies commit themselves to focus on social

and environment concerns in addition to profits. ( It is a line to measure the
sustainability or It measurement of Profit and the impact of organization on
People and Planet)

• Triple Bottom Line means expanding the traditional framework to take into account
ecological and social performance in addition to financial performance.

• The concept of TBL demands that a company’s responsibility lies with stakeholders
rather than shareholders.

• In this case, “Stakeholders” refers to anyone who is influenced, either directly or

indirectly, by the actions of the firm.
 Key Features of Triple Bottom Line
• It the concept of Sustainability applied in the companies through
the Sustainable Development principles
• It is a way of assessing business performance based on three
parameters
• The Bottom Line means Profit and Loss, it is different than the
traditional bottom line
• This Bottom Line is more concerned with the Stakeholders rather
than Shareholders
• Profit means gains in revenue social and environment sectors
• 3BL is more profit is the long run
• 3BL is social and economic equity of Stakeholders
• It is paying back to Stakeholders and Planet.
 Bottom Line of Triple Bottom Line
• 2016, opinions polls in USA, Showed that 64 % of general
public is America showed concerned over Climate Change.
• “ Companies that harm Environment and should also bear
its Cost”
➢ Reduce Waste
➢ Use Renewable Energies
➢ Reuse of Waste
 Triple Bottom Line
• Overview: Traditionally, business
leaders concerned themselves with their
bottom lines or, the monetary profits
their businesses made.
➢ Traditional Bottom line include
profits only.
▪ The triple bottom line theory expands
the traditional accounting framework to
include two other performance areas:
the social and environmental impacts of
their company. These three bottom lines
are often referred to as the three P’s:
people, planet, and profit.
Cont.
 People
• People considers:
➢ This is sometimes called the social equity or human capital
bottom line and is concerned with a company’s
stakeholders other than shareholders. They include
employees contractors, customers suppliers, and the wider
community in which the business operates.
➢Employees: means the manpower involved in a
corporation’s work. It considers if the company pays fair
wages and takes steps to ensure human working conditions.
➢Community: Where a corporation does business.
People living in vicinity are called the Community
➢ Together, they constitute called the “Stakeholders”
 People
• This bottom line is interested in the welfare of
these stakeholders. That includes whether
employees, contractors and other suppliers
receive fair payment for their work and/or
goods and whether their working conditions
are good. This bottom line is also concerned
with the company’s impact, directly and
indirectly, on the general public.
 Examples of Triple Bottom Line
• Actual Examples:
• (1). Bill & Melinda Gates Foundation to provide $200 million to
Pakistan for Ehsaas program.
• Under the terms of agreement, the amount will be spent on 134 poverty
alleviation projects across the country, undertaken as part of the Ehsaas
program.
• (2). Bill Gates, recently visited Pakistan and donated a huge amount to
fight “polio” and put his part towards a polio free society.
• The main reason behind his social activities and charities is that he is
bound to follow his company’s Triple Bottom Line framework.
• The above examples show the real life applications of “People’s” aspect
of Triple Bottom Line. It shows the interest of corporate and private
sector companies providing social benefits towards society.
 Planet
• Planet Considers:
➢ The environmental or planet of TBL, refers to engaging in practices
that do not compromise the environmental resources for future
generations ( Sustainability development concept).
➢ The “planet” piece of the triple bottom line indicates that an
organization tries to reduce its ecological footprint as much as
possible (Negative Impact on Planet).
➢ A TBL company does not produce harmful or destructive products
such as weapons, toxic chemicals or batteries containing dangerous
heavy metals for example.
➢ It pertains to the efficient use of energy resourses, reducing waste,
investing in renewable energy, reducing greenhouse gas emissions,
and minimizing the ecological footprint, etc.
➢ Example: Apple has invested heavily in environmental sustainability.
In 2016, the company announced that 93 percent of its energy comes
from renewables energy sources.
 Planet bottom Line
• This is also called the planet bottom line or
natural capital and is concerned with the size of a
company’s ecological footprint and how to keep it
as small as possible. This is done by controlling
energy consumption, reducing manufacturing
waste (especially the toxic kind) and disposing of
It safely. In addition, It means managing the life
cycle of a company’s products from start to finish.
That Includes lessening the environmental Impact
from the raw material sourcing stage, to the end-
of-life disposal stage.
 Companies with TBL Strategy
• Almost all the companies are now
working towards adopting the TBL
strategy but a few firms are exemplary
for embracing it quickly, specially the
environmental/planet aspect:
 Cont.

“Unilever”, aims to reuse 100% DHL – aims to reach zero

of plastic packaging, by 2025. emission by 2050.
 Cont.
• Coca Cola Company –
plans to achieve major
recycling initiative by
2030.
 Profit
• “Profit” is the economic value created by the
organization after deducting the cost of all inputs,
including the cost of the capital tied up.
• It therefore differs from traditional accounting definitions
of profit. In the original concept, within a sustainability
framework, the “profit” aspect needs to be seen as the
real economic benefit enjoyed by the host society.
• It is often confused to be limited to the internal profit
made by a company or organization.
 Profit
• Profit Considers:
➢ The economic or profit of TBL framework, refers to the
impact of the organization’s business practices on the
economic system.
➢ Sustainable organizations also recognize that “profit” isn’t
diametrically opposed to “people” or “planet”.
➢ Example: Swedish furniture giant IKEA reported sales of
$37.6 billion in 2016. The same year, the company turned a
profit by recycling waste into some of its best-selling
products. The company is well on its way to “zero waste to
landfill”.
 Why TBL is a Lucrative
Strategy?
• Raises transparency that mitigates the shareholder’s concerns of
concealed information
• Involves accountability of organizations’ actions
• Gives a competitive advantage over industry peers
• Strengthen your business purposes
• Minimizes the risks of public scrutiny
 Resistance to Triple Bottom Line
1. With any new regulation or procedure, there is always
resistance. This can be explained with “fear of the
unknown”.
2. Other arguments are the amount of additional time that will
be involved, differing expectations, and risks that may be
entailed from implementation of this approach. Additional
work is additional stress on their labor resources, i-e, poor
health and decreased job satisfaction etc.
3. Firms tend to be hesitant towards substantial change. With
traditional financial regulations driving reporting, companies
have structured their policies and operations around these
requirements. To change the very infrastructure that the
company is built on will require stepping out into unknown
territory, and for a prosperous company, that may be too
much of a risk.
 TBL Brings More Profit
• Dow Jones Sustainability Index (DJSI) research
shows that companies using triple bottom line
auditing significantly out perform the Dow
Jones stock market Index.
 Criticism on TBL
• People and Planet Variables of Triple Bottom Line are
difficult to Measure

• One business is not comparable to another due to difficult

in measurement

• It is not legal to operate on Triple Bottom Line, so take-up is

poor
 Benefits of Triple Bottom Line
• Triple bottom line is a societal and ecological agreement
between the community and businesses. TBL reporting
incorporates presenting what the business is doing well,
along with areas that needs improvement.
• Reporting in this way demonstrates a drive towards
increased transparency which can mitigate concerns by
stakeholders on hidden information.
• For global companies, changing operations to minimize
risk and fight climate change, for example, requires a lot
of time and money. But an upfront investment in
corporate sustainability can pay off. An MIT study found
that companies that treated sustainability seriously by
making a business case for it and setting concrete goals
were the ones that profited from sustainable activities.
Causal Loop Diagram (CLD)
 What is a System?
The term “system” is being used in different fields in a variety of meanings . Yet
we can state some general characteristics of systems:
• Systems consist of (definable) elements. Between these elements there
exist (mostly functional) interrelations. A system is more than a mere
accumulation of elements; there has to be also a certain structure of
relations among these elements.

• Every system has a boundary to the surrounding “environment”, which is

more or less permeable. This boundary might be material (like the skin of a
human body) or immaterial (like the membership to a certain social group).
System borders are important for several reasons:
- Borders ensure (and even may determine) the identity of the system.
- The relations between a system and its environment take place
mainly at the borders. It is at the borders, where it is determined, what
can enter or leave a system (input and output).
 Systems Thinking

• System thinking is an holistic approach that allows to study systems and its
elements for understanding the behavior of Problem

It has been applied to study of medical, environmental, political and

educational systems.

• Examining how we analyze problems

• Interaction of elements within and outside the boundary of problem
• To learn about the performance of system

Holistic Adjective (majmoyee) .

emphasizing the organic or functional relation
between parts and the whole
 System Thinking Approach
Traditional Approach
(Analysis)
The analysis approach focuses
on the separating the
individual pieces of what is
being studied; in fact, the
word “ analysis ” actually
comes from the root meaning
“ to break into constituent
parts.
(Without relationships in
elements)
Systems Thinking
(Synthesis)
Systems thinking, in contrast,
focuses on how the thing
being studied interacts with
the other constituents of the
system—a set of elements
that interact to produce
behavior—of which it is a
part.
(With relationships in
elements)
 System Dynamics

• “An approach to understanding the behavior of complex

systems over time. It deals with internal feedback loops and
time delays that affect the behavior of the entire system.”

• “A methodology and mathematical modeling technique for

framing, understanding and discussing complex issues.”
 System and System Dynamics
System:
In general, a collection of interacting elements that
function together for some purpose

Properties of dynamic problems:

• Contain quantities that vary over time
• Variability can be described causally
• Important causal influences can be contained
within a closed system of feedback loops
 Casual Loop Diagram
Features
• Causal Loop Diagram (CLD) is qualitative method to study
the Systems Dynamics

• CLD are constructed to study System Behaviors

• CLD provides visualization of systems variables

• CLD shows relationship between the different variables

• CLD show us how different variables influence each other

to create system dynamics
 Causal Loop Diagrams
• CLD consists of set of nodes that represent the variables
that influence the system and connecting lines that
describe relationship between the variables and direction
of relationship.

• By linking variables loop are created and by linking the

loops you can create a concise story of the problem or issue

• Once the behavior in known, you can study it and plan

interventions
 Steps to Construct CLD
1. Theme Selection ( Problem Articulation)

2. Time Horizon ( Time Span e.g, policy making)

3. Behavior Over time Charts ( variables behavior over time)

4. Boundary Definition ( System boundary e.g, policy making for

Pakistan)

5. Level of Aggregation ( Variables should be explicit)

6. Adding delays ( Use realistic delays clear in the diagram)

 Case Study
Take the example of an HR team that has been responsible for
integrating a Total Quality approach in an organization. In the
beginning, there was much enthusiasm around the program,
and demand for training was high. But over time, the TQM
programs seemed to produce diminishing results, and interest
in TQM activities slacked. What happened?

In the above example, you have noticed that, there is a

Problem
 1. Identify the variables

Primary Variables
TQM Activities TQM Training
1. TQM Activities
2. TQM Training

Secondary Variables
1. Perceived Threat
2. Willingness to Change TQM Activities TQM Training

Perceived Threat
 Resistance by
TQM Activities R TQM Training
B Middle Managers

Perceived Threat

Bottom Line is that Resistance by the Middle Managers to Change is the Main hurdle in
the problem. Story:
“Initial TQM activities led to an increase in TQM training, which led to more TQM activities
throughout the company. However, as the number of activities increased, the perceived
threat also increased, which led to increased resistance by middle managers, and a
decrease in overall TQM activities.
 Understand Cause & Effect
A B
(Cause) (Effect)
CLD are based on Cause and Effect phenomena between the
variables
• You need to Identify the variables effecting the Goal
• Some general examples of Cause and Effect
▪ Food intake weight
▪ Fire smoke
▪ Use seat belts reduced highway fatalities
▪ Money happiness
 Feedback
• Thinking in term of “cause and effect” is not
enough
• Feedback: an initial cause ripples through a chain
of causation ultimately re-affect itself
• Search to identify closed, causal feedback loops
are one key element of System Dynamics
 Polarity of Links in CLD

Sustainable Development Disaster Risk Management

Note: It is important to add polarities to the link, to

understand the process Feedback
 Types of Loops in CLD

Population Birth Rate

R

Population B Death Rate

 Positive feedback
• Positive feedback loops / Reinforcing loops
▪ Have an even number of ‘-’ signs
▪ Some quantity increase, a “snowball” effect takes over
and that quantity continues to increases to increase
▪ The “snowball” effect can also work in reverse
▪ Generate behaviors of growth, amplify, deviation and
reinforce
▪ Notation: Place symbol in the center of the loop

Snowball Verb
increase or accumulate at a
rapidly accelerating rate
 Negative feedback
• Negative feedback loops / Balancing loops
▪ Have an odd number of ‘-’ signs
▪ Tend to produce “stable”, “balance”, “equilibrium” and
“goal seeking” behavior over time
▪ Notation: Place symbol in the center of the loop
 Casual Loop Diagram
• In order to construct the CLD, you need know
the variables of the system and primary and
secondary factors that influence the variables.
 Feedback
• Thinking in term of “cause and effect” is not
enough
➢ ocean evaporation cloud rain
ocean
• Feedback: an initial cause ripples through a chain
of causation ultimately re-affect itself
• Search to identify closed, causal feedback loops
are one key element of System Dynamics
 Causal Loop Diagrams (CLD)
• Represent the feedback structure of systems
• Capture
▪ The hypotheses about the causes of
dynamics
▪ The important feedbacks
 CLD Examples
➢ Salary Vs Performance
• Salary Performance
• Performance Salary Performance Salary

➢ Tired Vs Sleep
• Tired Sleep
Tired Sleep
• Sleep Tired
 Augmenting CLD
• Signing: Add a plus ‘+’ or a minus ‘-’ sign at each
arrowhead to convey more information
• A plus ‘+’ is used if the cause increase, the effect increase
and if the cause decrease, the effect decrease
• A minus ‘-’ is used if the cause increase, the effect
decrease and if the cause decrease, the effect increase

Augment Verb
enlarge or increase
Causal Loop Diagram

Salary Performance

Tired Sleep
 CLD with Positive Feedback Loop
Salary Performance, Performance Salary

The more salary I get

The better I perform

The better I perform Salary Performance

The more salary I get

The more salary I get

The better I perform
 CLD with Combined Feed Loops
(Population Growth)

Birth rate Population Death rate

 CLD with Nested Feed Loops (Self-
regulating Biosphere)
Evaporation clouds rain amount of water
evaporation
Sunshine

Earth’s A mount of
Evaporation
temperature water on earth

Clouds Rain
 CLD with Nested Feed Loops (Self-
regulating Biosphere)
Evaporation clouds rain amount of water
evaporation
 Exogenous Items
• Items that affect other items in the system but are not
themselves affected by anything in the system
• Arrow are drawn from these but there are no arrows
drawn to these items
 Delays
• System often respond sluggishly
• From the example below, once the trees are planted, the
harvest rate can be ‘0’ until the trees grow enough to
harvest
Name Your Loops
Loop Polarities
Indicate Delays on CLD
Clarity About Variable Name
Clear Meaning of Balancing Loop
Draw a Causal Loop Diagram
 Work Completion Rate

Assignment Rate

Assignment
Backlog
Devoted
Efforts
Variables
1. Assignment Backlog
2. Work Pressure Work Pressure
3. Devoted Efforts
4. Work Completion
Work Week
Calendar time
Due Date
Productivity
 Quiz No. 1
• Question 1: Distinguish between the term 'sustainability' and 'Sustainable development'
from USEPA perspective.
(CLO1, C1, C2, PLO 7)

• Question 2: Define "strong" and "weak" sustainability?

(CLO1, C1, C2, PLO 7)

• Question 3: State, in your own words, the meaning of the "IPAT" equation?
(CLO1, C1, C2, PLO 7)
• Question 4: Write any five Sustainable Development Goals?
(CLO1, C1, C2, PLO 7)
• Question 5: What is the Bruntland Report and its outcome?
(CLO1, C1, C2, PLO 7)
Question 6: Role of Civil Engineer in Sustainable Development? Briefly Outline two
features?
• Questions 7: Write three Key features of Public Policy?
(CLO1, C1, C2, PLO 7)
 References
• https://bstrategyhub.com/what-is-triple-bottom-line-tbl-
explained-with-examples-the-future-benchmark/
• https://www.unilever.com/news/news-and-
features/Feature-article/2018/three-new-ways-we-are-
helping-to-tackle-plastic-waste.html
• https://thenews.com.pk/amp/532400-gates-foundation-
to-provide-200mn-for-pm-imrans-ehsas-programme
• https://arthamoney.com/people-planet-profit-triple-
bottom-line-the-ethical-measure-of-businesses-
53750035035f
 Examples
• https://online.visual-
paradigm.com/knowledge/causal-loop-
diagram/what-is-causal-loop-diagram/
• https://www.coursera.org/lecture/systems-
thinking/tutorial-1-developing-causal-loop-
diagrams-using-vensim-gnZYK
• https://thesystemsthinker.com/causal-loop-
construction-the-basics/