Last editedSept 20202 min read
Conceived by John Elkington in the 1990s, the concept of the triple bottom line can help you understand your organisations impact on the environment and society, thereby helping you to improve sustainability on a local and a global scale. Get the inside track on the triple bottom line, starting with our triple bottom line definition.
Triple bottom line definition
So, what is the triple bottom line? Essentially, the triple bottom line is an accounting framework for measuring the performance of a business beyond traditional measures like profits. Instead, the triple bottom line looks at environmental and social factors. So, rather than a business having one “bottom line,” the triple bottom line approach posits that there are three “bottom lines” (hence triple), referred to as the “three Ps”:
People – Think about the impact of your business on everyone connected to it. This includes everyone, from the CEO down to the farmers and labourers at the very end of your supply chain. Do you offer fair pay? Does your business give back to society? Do you pay your taxes in full? You need to consider your impact on everyone involved with the business.
Planet – Next, the triple bottom line encourages businesses to think about their environmental footprint. Not only is “going green” the most ethical way to run a business, but it could also result in greater profits in the long run. After all, a sustainable corporate image is becoming increasingly important for consumers and potential hires alike. Think about green initiatives that your company could pursue, from going “paperless” to committing to only using raw materials that are sourced in a sustainable way.
Profit – Finally, there’s profit. Profit is important for all businesses (they can’t survive without it), but the triple bottom line approach doesn’t view it as isolated from either “people” or “planet.” In other words, profit can help to empower communities as a whole, rather than just the CEO and shareholders of the company itself.
As you can see, the triple bottom line approach forces us to think about businesses in a more holistic way, beyond the numbers at the end of an Excel spreadsheet. If you’re committed to improving your company’s corporate social responsibility, it’s a great concept to bear in mind.
Triple bottom line reporting
One of the key issues with the triple bottom line approach is how to measure it. Of course, it’s easy to work out how profitable your company is, but how do you account for your company’s impact on society, or the planet as a whole. For instance, when it comes to the first “P” – People – it can be difficult to know where to stop. Should you consider just employees? What about people who live near your company’s buildings? Does the triple bottom line approach prohibit making redundancies, even if your business is in dire financial straits?
Ultimately, there’s no universal approach to triple bottom line reporting, so you should use triple bottom line metrics that make sense for your company. Try to determine how far your environmental initiatives have helped to reduce your company’s carbon emissions, or compare the benefits offered to your employees with other companies. In most cases, your company’s social and environmental impact will be seen in your supply chain. You can use supply chain mapping to gain visibility into your company’s impact.
Benefits of the triple bottom line
There are extensive advantages associated with the triple bottom line approach. By looking at your business in a more holistic or sustainable way, you can craft a brand that really speaks to customers. In turn, this can help you to attract more talented employees and grow your profits. In short, everybody wins. When it comes to the benefits of the triple bottom line concept, it’s also important to remember that millennials now make up the largest share of the US population, and almost three quarters of millennials are willing to pay more for sustainable products. In other words, the triple bottom line makes sense for the world we live in now.
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