Business Finance Homework Help

Managers at some banks and mortgage companies have argued that providing subprime mortgages was based on their desire to give poor people a chance to participate in the American dream of home ownership. Others have argued that bankers and mortgage companies were only looking out for their own commissions and company profits.

What is your opinion of this explanation in terms of ethics and social responsibility? Use the concept of Triple Bottom Line from Chapter 5 to answer this question (see summary below):

The triple bottom line refers to measuring an organization’s social performance, its environmental performance, and its financial performance. This is sometimes called the three Ps: People, Planet, and Profit.

1. The first P, People, looks at socially responsible aspects including fair labor practices, diversity, supplier relations, treatment of employees, customers, and contributions to community.
2. The second P, Planet, measures aspects such as the organization’s commitment to environmental sustainability.
3. The third P, Profit, looks at the organization’s success in making sustainable profits, the financial bottom line.

Based on the principles that what you measure is what you strive for and achieve, using a triple bottom line approach to measuring performance ensures that managers take social and environmental factors into account rather than blindly pursuing profit, no matter the cost to society and the natural environment.