Triple bottom line

Triple Bottom Line

Diagram illustrating the Triple Bottom Line

The Triple Bottom Line (TBL or 3BL) is a framework or theory that recommends that companies commit to focus on social and environmental concerns just as they do on profits. It is a transformation from the traditional single bottom line of profit to a more comprehensive approach that includes three dimensions of performance: social, environmental, and financial. This concept is often summarized as "people, planet, and profit."

History

The term "Triple Bottom Line" was coined by John Elkington in 1994. Elkington argued that companies should prepare three different (and quite separate) bottom lines. One is the traditional measure of corporate profit—the "bottom line" of the profit and loss account. The second is the bottom line of a company's "people account"—a measure in some shape or form of how socially responsible an organization has been throughout its operations. The third is the bottom line of the company's "planet" account—a measure of how environmentally responsible it has been.

Components

People

The "people" aspect of the Triple Bottom Line pertains to fair and beneficial business practices toward labor and the community and region in which a corporation conducts its business. A TBL company conceives a reciprocal social structure in which the well-being of corporate, labor, and other stakeholder interests are interdependent.

Planet

The "planet" aspect refers to sustainable environmental practices. A TBL company endeavors to benefit the natural order as much as possible or at the least do no harm and curtail environmental impact. This includes reducing its ecological footprint by carefully managing its consumption of energy and non-renewables and reducing manufacturing waste as well as rendering waste less toxic before disposing of it in a safe and legal manner.

Profit

The "profit" aspect is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up. It is the real economic impact the organization has on its economic environment.

Implementation

Implementing the Triple Bottom Line involves a shift in corporate culture and strategy. Companies may need to adopt new metrics and reporting standards to measure their performance in social and environmental areas. This can involve adopting Corporate Social Responsibility (CSR) initiatives, engaging in sustainability reporting, and integrating sustainable development goals into their business models.

Criticisms

While the Triple Bottom Line has been praised for encouraging a more holistic approach to business, it has also faced criticism. Some argue that it is difficult to measure social and environmental impacts accurately and that the TBL can be used as a marketing tool rather than a genuine commitment to sustainability.

Related pages

• Corporate Social Responsibility
• Sustainability
• Sustainable Development
• Environmental, Social, and Corporate Governance