Not a single or double…but a Triple Bottom Line

Posted on 09. Oct, 2009 by in Clean Tech, Interviews

TBLWordle

The infamous Triple Bottom Line, also know as, TBL, 3BL or People, Planet, Profit was coined by John Elkington in 1994 in an article published by the California Management Review.  He later expanded and articulated in his 1998 book, Cannibals with Forks: the Triple Bottom Line of 21st Century Business.  Essentially, the TBL concept requires that business’ responsibility be to Stakeholders rather than Shareholders. A stakeholder is someone who is directly or indirectly influenced by the company, while a shareholder is someone who has just invested money into the company.

In 2007, the United Nations and International Council for Local Environmental Initiatives (ICLEI) adopted the standard for urban and community accounting. This approach combined with human and natural capital measurements helps meet the requirements of TBL reporting.

So what is the Triple Bottom Line you ask? There is a lot of information out there, here is just an overview:

People (Human Capital): This element requires that business practices be fair and beneficial in regards to labor, the local community, and region. Some examples of this include: Not using child labor or contracting other companies that use child labor, fair and competitive wages, tolerable working hours, clean and safe workplace, and giving back to the local community through education, healthcare or community improvement.

Planet (Natural Capital): This element represents business practices that take the environment’s interests to heart. A TBL business strives to reduce its ecological footprint through various sustainability initiatives such as monitoring energy consumption, properly disposing of waste through recycling, composting, etc. “Cradle to grave” is a design theory and process that assesses a product’s lifecycle and is used to measure their true environmental impact from the raw materials being harvested to when the end-user disposes of the product. TBL companies also do not make products that could harm or destroy the environment or people, such as weapons or toxic chemicals.

Profit: This has been the traditional bottom line since commerce began. It is shared by all business whether they are sustainable or not. Within the TBL framework, profit refers to the economic impact the business has on the host society and economic climate. This might mean that a business could take a certain percentage of its profit and invest back into the community that is serves.

Positives of the Triple Bottom Line:

•    Reaching new untapped niche markets that couldn’t be accessed when only profit was the main focus. (e.g. eco-tourism)

•    Expanding new business sectors such as social entrepreneurialism, where new business must design themselves to be financially profitable, socially responsible and ecologically sustainable or they will fail to compete with others who have adopted as such.

•    Providing products or services to under-deserved markets or the environment that are financially profitable.

Arguments against the Triple Bottom Line:

•    Application: Since there is no single way in monetary terms to measure the benefits to the society and environment as there is with profit, it does not allow for businesses to sum across all three bottom lines. In this regard, it makes it difficult for businesses to recognize the benefits of using TBL for the company, itself.

•    Effectiveness: It is observed that concern for social and environmental matters is rare in poor societies.  As a society becomes richer its citizens develop an increasing desire for a clean environment and protected wildlife, and both the willingness and financial ability to contribute to this and to a compassionate society. Support for the concept of the triple bottom line itself is said to be an example of the choices available to the citizens of a society made wealthy by businesses attending to business..It is important that business take a hard look at themselves, and see where they stack up. TBL may not the ultimate answer in helping business become more sustainable, but it is a great place to start. In a world where the half of the top economies in the world are businesses, action needs to be taken so we can have a brighter future.

Consider yourself one step closer to being a sustainable citizen!

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One Response to “Not a single or double…but a Triple Bottom Line”

  1. annoulkPlally

    01. Jan, 2010

    Truthful words, some truthful words dude. Thanks for makin my day.

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