Eleanor Finch
The triple bottom line (TBL) is a business concept that suggests that a company's performance should be measured not only by its profitability but also by its social and environmental impact. This concept, developed by British management consultant John Elkington in 1994, is based on the idea that businesses should pursue economic sustainability alongside environmental and social sustainability. The three dimensions of the triple bottom line are often referred to as the three Ps: people, planet, and profits. Social enterprises that adopt the TBL framework strive to behave in a socially responsible manner while pursuing profits, and it can be adapted to manage sustainability performance and assist social entrepreneurs.
| Characteristics | Values |
|---|---|
| Social | Human wellbeing, societal needs, social well-being, social inclusion, social responsibility, societal impact |
| Environmental | Environmental sustainability, environmental health, planet |
| Economic | Profit, financial success, financial returns, economic sustainability |
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What You'll Learn
Environmental sustainability
The environmental bottom line is often referred to as the "planet" or the "planet account", and it measures a business's environmental sustainability. This includes reducing a company's carbon impacts, water usage, and waste, as well as banning practices that harm the environment, such as sandblasting.
To achieve environmental sustainability, firms can use the triple bottom line framework to conceptualize their environmental responsibility and determine any negative social impacts they may be contributing to. From there, they can integrate sustainable practices into every facet of their business operations, including supply chains, business partners, and renewable energy usage.
By embracing sustainable business strategies, companies can not only reduce their environmental impact but also attract investors and produce superior financial returns. This is reflected in the growing trend of investors focusing on environmental, social, and governance (ESG) metrics when making investment decisions.
Overall, the environmental component of the triple bottom line encourages businesses to protect natural resources, reduce pollution, and drive positive environmental change, recognizing that their actions have social and economic implications.
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Economic sustainability
The triple bottom line theory, introduced by author and entrepreneur John Elkington in 1994, expands conventional business success metrics to include an organization's contributions to social well-being, environmental health, and a just economy. The three dimensions of sustainability—economic, environmental, and social—are interconnected, and businesses must produce value in all three areas to be sustainable.
To achieve economic sustainability, companies can develop and implement sustainable strategies that allow them to make a profit while positively impacting the environment and society. For example, a company might reduce its water or carbon impacts, leading to reduced costs and a positive reputation in the price-quality ratio. Embracing sustainable business strategies can also be financially attractive to investors, as evidence shows that firms with strong environmental, social, and governance (ESG) metrics tend to produce superior financial returns.
Additionally, businesses can integrate sustainable practices into every aspect of their operations, including supply chains, business partners, and renewable energy usage. By considering the social and environmental impacts of their decisions, companies can contribute to a just economy and improve their economic sustainability.
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Social sustainability
A socially sustainable business will consider the safety of its workers and not compromise their well-being. For example, a company should not force its workers to work in a building that has been deemed unsafe. Social sustainability also involves supporting programs that improve workers' lives and going beyond labour compliance standards by publicly disclosing manufacturing supplier locations.
The UN Global Compact's principles focus on the social dimension of corporate sustainability, with human rights as the cornerstone. Social sustainability covers the human rights of specific groups, including labour, women's empowerment and gender equality, children, indigenous peoples, and people with disabilities. It also covers people-centred approaches to business impacts on poverty, education, and health.
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People, planet, prosperity
The triple bottom line (TBL) is a business concept that expands conventional success metrics to include an organization's contributions to social well-being, environmental health, and a just economy. These three categories are often referred to as the three "P's": people, planet, and prosperity.
People
The "people" component of the triple bottom line considers all stakeholders, including employees, communities within which an organization operates, individuals throughout the supply chain, future generations, and customers. It involves working with non-governmental organizations (NGOs) and key suppliers to support programs that improve workers' lives, going beyond labour compliance standards, and publicly disclosing manufacturing supplier locations. It also includes initiatives that advance human rights, end poverty and hunger, and promote diversity, equity, and inclusion.
Planet
The "planet" component focuses on environmental sustainability and reducing a business's carbon footprint. This includes setting and achieving above-industry benchmarks for waste reduction, banning practices that contribute to pollution, and integrating renewable energy sources into business operations.
Prosperity
The "prosperity" component involves pursuing economic sustainability and profitability while remaining committed to the other two bottom lines. This includes developing and implementing sustainable strategies that allow the company to make a profit, such as reducing water or carbon impacts to lower costs and retain a positive reputation. Evidence suggests that firms with strong environmental, social, and governance (ESG) metrics tend to produce superior financial returns, making them more attractive to investors.
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Social well-being, environmental health, just economy
The triple bottom line theory expands the traditional business success metrics of solely focusing on economic growth to include an organization's contributions to social well-being, environmental health, and a just economy.
The three dimensions of sustainability are interconnected, and businesses must produce all three types of value to be sustainable. Social well-being, the first dimension, involves advancing human rights, ending poverty and hunger, and promoting diversity, equity, and inclusion. Businesses can work with non-governmental organizations (NGOs) and key suppliers to improve workers' lives and publicly disclose manufacturing supplier locations to go beyond labour compliance standards.
Environmental health, the second dimension, involves reducing carbon emissions, using renewable energy, and setting and achieving industry benchmarks for waste reduction. Businesses can integrate sustainable practices into their supply chains and work with packaging suppliers to increase the percentage of recycled materials used.
The third dimension, a just economy, involves developing and implementing sustainable strategies that allow a company to be profitable while retaining its reputation. This includes reducing costs, such as water usage, to maintain a favourable price-quality ratio.
By focusing on these three dimensions, businesses can create a resilient and successful organization that meets the needs of its stakeholders and holds itself accountable for its actions.
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Frequently asked questions
The three categories that make up a social enterprise's triple bottom line are often referred to as the three "P's": people, planet, and prosperity/profit.
The "people" category considers all stakeholders, including employees, communities within which an organization operates, and customers, among others. The "planet" category refers to the environmental sustainability of the business. The "profit" or "prosperity" category is typically measured by the economic success of the enterprise.
The triple bottom line expands conventional business success metrics to include an organization’s contributions to social well-being, environmental health, and a just economy. Social enterprises can use the triple bottom line framework to integrate sustainable practices into their operations and positively impact society and the environment, in addition to turning a profit.
