What Is the Triple Bottom Line?In 1994, author and entrepreneur, John Elkington, built upon the concept of the triple bottom line (TBL) in hopes to transform the current financial accounting-focused business system to take on a more comprehensive approach in measuring impact and success. Historically, businesses operated in service solely to their financial bottom line. However, as a result of the triple bottom line theory and application, some businesses began to realize the connection among environmental health, social well-being and the organization’s financial success and resilience. Today, organizations know success is not just reflected in their profit and loss statements. Rather, to get an accurate, well-rounded perspective of their operations and relationships with the environment, community, and economy, organizations must fully account for all costs associated with doing business by going beyond compliance. Certified B Corporations help the concept of the triple bottom line, as John Elkington designed it, come to life. B Corporations are a relatively new type of business, legally required to consider impacts on all stakeholders including employees, customers, suppliers, community, and environment. Their mission is to become a community of leaders who drive a global movement of people using business as a force for good. Triple bottom line theory expands business success metrics to include contributions to environmental health, social well-being, and a just economy. These bottom line categories are often referred to as the three “P’s”: people, planet, and prosperity. Here are some quick triple bottom line facts:
While there are three categories that make up triple bottom line theory, it is important to remember each category is not siloed. Through a systems theory lens, people, planet, and prosperity are all interconnected. PeopleThe people category considers all stakeholders (versus solely shareholders) including employees, communities within which an organization operates, individuals throughout the supply chain, future generations, and customers—just to name a few. The connections with corporate social responsibility (CSR) are central to this portion of the triple bottom line. CSR is defined as a responsibility among organizations to meet the needs of their stakeholders and a responsibility among stakeholders to hold organizations accountable for their actions. A few initiatives that an organization may consider as part of its CSR goals include: advancing human rights; ending poverty and hunger; diversity, equity and inclusion; gender equity; ensuring a healthy and safe work environment; and community engagement and volunteerism. Not only are CSR initiatives beneficial for stakeholders, but adopting this business strategy is also essential for business. As part of a commitment to advance CSR initiatives, we also see businesses sharing best practices with other businesses and organizations. For example, Evolution Marketing has created resources, free of charge, for anyone to promote social sustainability initiatives in their organization. PlanetPublic opinion, consumer purchasing power, the speed and transparency of information sharing via social media, and even industry-led activism (see Patagonia 1 percent for the Planet) has made it easier for stakeholders to hold organizations accountable for their actions. This is seen in rewarding the positive impacts and reprimanding the negative. When that sentiment appears within the American public, chances are that it will impact who consumers buy from and who they ultimately support. Stakeholders are increasingly aware of not only the consequences businesses have on the environment, community, and the economy but also of the importance of global issues, such as climate change and social justice. In fact, a 2020 Climate Change in the American Mind survey shows that “Nearly six in 10 (roughly 58 percent) of Americans are now either ‘Alarmed’ or ‘Concerned’ about global warming. From 2014 to 2019, the proportion of ‘Alarmed’ nearly tripled.” Over the past couple of decades, we’ve witnessed an increase of businesses adopting practices that help minimize environmental impact. Also, more recently, leading organizations like AT&T, DELL, EASTON, Hewlett Packard, Kohler Co., Levi Strauss & Co., and Target have taken a step further down the sustainability path by creating a net-positive or regenerative impact on the environment and society.
ProsperityTriple bottom line theory is systemic in nature through its view of people, planet, and prosperity. With this connectivity in mind, the United Nations (U.N.) created Sustainable Development Goals (SDGs) that “ensure all human beings can enjoy prosperous and fulfilling lives and that economic, social, and technological progress occurs in harmony with nature.” Many of the U.N. SDGs aim to improve a wide range of areas related to environment, people, and economic opportunities. One of the many prosperity-focused goals aims to provide decent work (safe working conditions, living wages, compassionate leadership) and economic growth for those in specific communities. Examples from the U.N.’s SDGs of how businesses can help support the prosperity of their stakeholders include:
Some companies like Kohler Co. have taken a systemic approach to integrating prosperity into its business:
The definition of “business success” is evolvingThe saying, “business as usual” now holds a new meaning. It is no longer sufficient in the eyes of consumers, employees, and other stakeholders to only meet compliance standards. Understanding and operating through a triple bottom line framework offers opportunities for optimization, innovation, and improvement across industries and sectors. Engaging a business model with comprehensive consideration of people, planet, and prosperity will ultimately lead to increased resilience and cost savings, decreased organizational risk (i.e. supply chain and public relations), a decrease in unforeseen costs, and overall success for all stakeholders involved. While new business models continue to evolve, there is still much work for sustainability professionals within every organization, no matter the industry, sector, or job position. Through triple bottom line theory, sustainability changemakers have the opportunity to strategically engage colleagues and leadership. As a result, we all can make measurable, sustainability-focused progress in virtually everything we do. What’s next?Discover Explore Ask |