Omar Bennett
The triple bottom line (TBL) is a business concept that states that companies should focus on social and environmental issues as much as financial issues. It was developed in 1994 by British management consultant John Elkington. The three bottom lines that a sustainable enterprise pursues are the environmental bottom line, the economic bottom line, and the social bottom line. The TBL can be broken down into three Ps: profit, people, and the planet. This means that, in addition to profits, companies should focus on their societal impact and their environmental impact.
| Characteristics | Values |
|---|---|
| Economic | Profit, financial performance, corporate profit, return on investment, shareholder value |
| Social | People, societal impact, societal needs, societal change, societal challenges, societal goals, societal growth, societal inclusion, societal inequality |
| Environmental | Planet, environmental impact, environmental sustainability, environmental responsibility, environmental issues, natural environment |
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What You'll Learn
Profit, but not solely
The triple bottom line (TBL) is a business concept that states that companies should be measured on their social and environmental impact, in addition to their profits. This means that businesses should pursue economic sustainability, alongside environmental and social sustainability.
The three interconnected components of the TBL are often referred to as the "three P's": profit, people, and the planet. The profit aspect of the TBL is the traditional measure of corporate profit, or the profit and loss account. This is the easiest component to report as it follows established accounting practices. However, in the context of the TBL, profit can mean more than just how much money a company makes. It can also refer to whether the money is earned in an ethical and fair manner.
The people component refers to the societal impact of a business. This measures how socially responsible an organisation has been throughout its history. This includes the treatment of its employees, customers, and community members. For example, companies can ensure fair hiring practices and encourage volunteerism in the workplace. They can also work with non-governmental organisations (NGOs) and suppliers to support programs that improve workers' lives.
The planet component refers to the environmental sustainability of a business. This measures how environmentally responsible a company has been and can include initiatives such as reducing water or carbon impacts, using recycled materials, and banning certain practices that harm the environment.
By adopting the TBL framework, companies can integrate sustainable practices into every facet of their operations, positively impacting society and the environment, in addition to turning a profit.
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People and societal impact
The triple bottom line (TBL) is a business concept that states that companies should be measured on their social and environmental impact, in addition to their financial performance. The three dimensions of the TBL are often referred to as the "three Ps": people, planet, and profits.
The "people" component of the TBL refers to the societal impact of a business and its commitment to human well-being. It involves measuring how socially responsible an organization has been throughout its history and how it interacts with its stakeholders. This includes customers, employees, community members, and shareholders.
To positively impact people and society, companies can implement fair hiring practices, encourage volunteerism in the workplace, and ensure ethical and fair business practices. They can also form strategic partnerships with non-profit organizations to drive social change and improve workers' lives. For example, businesses can work with non-governmental organizations (NGOs) and key suppliers to support programs that enhance the lives of their employees.
Additionally, the "people" aspect of the TBL may contain both financial and non-financial measurements. For instance, employee retention and increased external investments from customers committed to social goals are indicators of a company's positive impact on people.
By focusing on the "people" component of the TBL, businesses can contribute to social inclusion, reduce marginalization and social inequality, and create value for all their stakeholders, moving beyond a sole focus on shareholder value. This shift towards creating value for all stakeholders is a key aspect of the TBL's emphasis on societal impact and its recognition that businesses should strive to improve people's lives and the well-being of society.
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Environmental sustainability
The triple bottom line (TBL) is a business concept that states that company performance should be measured on social issues and environmental sustainability as much as on company profits. The three dimensions of performance are social, environmental, and financial, and they are commonly referred to as the
The environmental sustainability of a business is measured through the so-called "planet account", which identifies the environmental sustainability of the business. This includes the business's impact on the natural environment, such as its carbon footprint, and the built environment, such as infrastructure and urban growth patterns.
Businesses can take several steps to improve their environmental sustainability and reduce their carbon footprint. This includes using ethically sourced materials, cutting down on energy consumption, and streamlining shipping practices. Businesses can also set and achieve above-industry-benchmark waste targets, ban sandblasting, and use recycled materials.
Additionally, businesses can integrate sustainable practices into every facet of their operations, including supply chains, business partners, and renewable energy usage. This can also extend to external initiatives, such as forming strategic partnerships with non-profit organisations that share a common purpose-driven goal.
By focusing on comprehensive investment results with respect to performance along the interrelated dimensions of profits, people, and the planet, triple bottom line reporting can be an important tool to support sustainability goals.
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Social responsibility
The triple bottom line (TBL) is a business concept that states that companies should be measured on their social and environmental impact, in addition to their financial performance. The three dimensions of the TBL are often referred to as the "three Ps": profit, people, and the planet.
The "people" component of the TBL refers to the social bottom line, which is concerned with a business's societal impact and its commitment to human well-being. This includes both a company's employees and its wider community. Social responsibility can be demonstrated through fair hiring practices, encouraging volunteerism in the workplace, and ensuring ethical and fair business practices.
Working with non-governmental organizations (NGOs) and suppliers to support programs that improve workers' lives is one way to improve societal impact. Additionally, companies can look beyond their immediate operations to effect change on a larger scale. For example, forming strategic partnerships with nonprofit organizations that share similar purpose-driven goals can positively impact society.
The social bottom line is about more than just internal practices; it's also about how a company interacts with the world and its impact on people's lives. This includes specific stakeholders, such as employees and customers, as well as the community as a whole. Social enterprises are organizations that pledge to behave in a socially responsible manner, even while pursuing profits.
The TBL provides a framework for businesses to measure their social performance and determine their impact on society. This can include both financial and non-financial measurements, with the ultimate goal of creating value for all stakeholders, not just shareholders. By embracing the TBL concept, businesses can strive for sustainability and positive societal impact alongside economic success.
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Economic development
The triple bottom line (TBL) is a business concept that suggests that a company's performance should be measured not only by its financial success but also by its social and environmental impact. This idea was developed by British management consultant John Elkington in 1994 to address the narrow focus on profits that had led to unethical practices and negative social and environmental consequences.
The three dimensions of the TBL are often referred to as the "three Ps": people, planet, and profits. The "people" component refers to the societal impact of a business, including its treatment of employees, customers, and community members. This includes fair hiring practices, volunteerism, and partnerships with non-governmental organisations (NGOs) to improve workers' lives.
The "planet" component refers to a company's environmental sustainability and responsibility. This includes reducing water or carbon impacts, setting waste benchmarks, and using renewable energy.
The "profits" component of the TBL is the easiest to measure as it typically involves traditional financial metrics such as net income, gross margin, and tax payments. However, the TBL framework broadens the definition of "profit" to include ethical and fair practices, encouraging companies to consider the full cost of doing business.
The TBL concept can be applied at a regional level to encourage sustainable economic development. This involves collaboration between businesses, non-profit organisations, governments, and citizens to create a sustainable economy. For example, the Sustainable Cleveland 2019 (SC2019) initiative used the TBL concept to focus on four key areas: the personal and social environment, the natural environment, the built environment (infrastructure), and the business environment.
In conclusion, the triple bottom line's "economic development" dimension challenges businesses to pursue economic sustainability alongside social and environmental sustainability. This involves adopting sustainable strategies that reduce costs, retain reputations, and attract investors who value ESG (environmental, social, and governance) metrics. By focusing on comprehensive investment results, the TBL framework assists businesses in making decisions that benefit society and the environment, in addition to turning a profit.
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Frequently asked questions
The triple bottom line (TBL) is a business concept that states that companies should focus on social and environmental issues as much as financial issues. The three dimensions are commonly referred to as the three Ps: people, planet, and profits.
The social bottom line measures how socially responsible an organisation has been throughout its history. This includes fair hiring practices, encouraging volunteerism in the workplace, and working with NGOs to support programs that improve workers' lives.
The environmental bottom line is measured through the "planet account", which identifies the environmental sustainability of a business. This includes reducing water or carbon impacts, setting and achieving above-industry-standard waste benchmarks, and banning practices that are harmful to the environment, such as sandblasting.
The economic bottom line is typically measured by profit. However, it can also include other financial metrics such as gross margin by geographical region, historical federal income tax payments, and historical information on late payments or penalties.
