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The Triple Bottom Line

Using the 3Ps to Measure Organizational Impact

The Triple Bottom Line - Using the 3Ps to Measure Organizational Impact

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Profits don't need to come at the expense of people and the planet.

Traditional organizational strategy models often focus on profit as the key goal and indicator of success. But, with growing demand for organizations to be more environmentally and socially aware, many have turned to strategic models that enable them to measure their impact beyond profit.

One such model is the Triple Bottom Line (also known as TBL or 3BL), which allows organizations to measure their overall economic impact, by measuring their performance in three key areas – people, planet and profit.

In this article, we'll explore the 3Ps of the Triple Bottom Line in more detail, as well as the benefits of using it.

What Is the Triple Bottom Line?

The Triple Bottom Line was first outlined by John Elkington in his 1999 book, "Cannibals With Forks: The Triple Bottom Line of 21st Century Business." [1]

He argued that in order for companies to effectively manage and measure their true economic value, they should set out three separate bottom lines. These should focus on profit, but also the organization's social and environmental impact. By doing this, organization's can effectively measure their full impact, beyond pure profit-making.

Although the Triple Bottom Line was first coined over 25 years ago, it remains a popular approach to corporate social responsibility, measuring impact, and setting strategy.

Benefits of the Triple Bottom Line

The growing support for sustainability strategies and corporate social responsibility programs, particularly among large organizations, such as Lego, Starbucks and IKEA (to name a few), have enabled organizations to improve not only their social and environmental impact, but their profits as well.

IKEA, for example, has saved over $1million by recycling food waste. [2] Meanwhile, toy manufacturer, LEGO has committed to use 100 percent renewable energy by 2030, and has begun creating plant-based plastics to make its products more sustainable. [3]

But a strategy built around the Triple Bottom Line doesn't just create value for shareholders. Other benefits of the model include:

  • Improved brand reputation. Customers are increasingly discerning about the brands they use, and much more aware of their own environmental impact. According to research, 64 percent of U.S. consumers consider the ethical performance of a company when purchasing products. [4]
  • Talent attraction and retention. The Triple Bottom Line means that people – including customers, the community, and employees – are considered as just as important as profit and environmental impact. So, having a strategy designed to improve employee outcomes, as well as the wider society, can be a great way to attract and retain talent, particularly in a competitive market.
  • Minimizes compliance risks. Although reporting on your social and environmental impact may not always be statutory, it has increasingly become best practice to do so. This can be particularly important if non-compliance with environmental laws (for example, failings in pollution or emissions levels) results in hefty fines or reputational damage.
  • Improved investment opportunities. Measuring output in the three key areas of planet, people and profits means that organizations are transparent and accountable, which can help to improve investment opportunities and make a clearer, more impactful business case for prospective investors or business partners.
  • Driving prosperity for all. The Triple Bottom Line also ensures that organizations focus their attention outward. This means looking at the sustainability of supply chains, as well as the impact of operations on the local communities that it operates within, and improving them to ensure that their are prosperous outcomes for all involved. This may mean, for example, ensuring that supply chains are ethically managed, using more sustainable resources, and reducing harmful activities that damage the environment or local communities.

The Three Ps of the Triple Bottom Line

Let's look at the three bottom lines – People, Planet and Profit – in more detail.

People

Companies that follow the triple bottom line way of doing business think about the impact their actions have on all the people involved with them. This can include everybody, from farmers supplying raw materials, up to the CEO of the company. Everyone's well-being is taken into consideration.

People-related goals may focus on employees of the company, or communities in which the company operates. They may include things like:

  • Offering healthcare plans for employees.
  • Providing flexible working options.
  • Encouraging employees to volunteer (for example, through paid volunteer days).
  • Ensuring the workplace is safe and healthy.
  • Providing opportunities for career advancement and education.
  • Ensuring that the company and suppliers do not exploit their labor force (for example, by using child labor or running sweatshops).
  • Offering fair wages for all.
  • Driving and supporting inclusivity and diversity at work and within the wider community.
  • Giving back to local communities (for example, through charitable partnerships and investment in social impact projects).

While the concept of the People bottom line is certainly attractive, it can often be difficult to determine how far you will extend it. Will you only apply it to employees? Or go further than this, looking at your suppliers and your local communities, for example.

It can also be difficult when you need to make tough decisions, for example, redudancies. If you need to restructure the business, for example, should your concern for people mean that you refuse to make redundancies, even though this could negatively impact your profit goals.

Planet

Triple bottom line companies take pains to reduce or eliminate their ecological footprint. They strive for sustainability, recognizing the fact that "going green" may be more profitable in the long run.

But it's not just about the money. Triple bottom line companies look at the entire life cycle of their activities and try to determine the true cost of what they're doing in regards to the environment. To do this, Planet-themed goals may include things like:

  • Reducing pollution.
  • Striving toward a carbon neutral workplace.
  • Introducing recycling and waste initiatives.
  • Increasing usage and investment in renewable and sustainable energy.
  • Offsetting carbon footprint through green initiatives, such as rewilding or tree planting programs, or partnerships with environmental charities.
  • Safely disposing of toxic waste.
  • Ensuring that products are safe and healthy for people and the planet.

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Profit

The financial bottom line is the one that all companies share, whether they're using the triple bottom line or not. When looking at profit from a triple bottom line standpoint, the idea is that profits will help empower and sustain the community as a whole, and not just flow to the CEO and shareholders.

Examples of the Triple Bottom Line

While, to some, the triple bottom line may seem idealistic, it can actually create a more sustainable future, whereby organizational profits are used to drive prosperity externally, which in turn creates more profits for all.

Some may see it as a trade off between profits and social and environmental impact, but it doesn't have to be. Instead, organizations can use it reap financial benefits from more sustainable business practices.

While you may or may not consider the Triple Bottom Line appropriate for your business, it makes sense to recognize the way in which the workplace and working practices are changing, and consider whether you need to adapt your approach to business to reflect this.

If you decide to explore the concept further, start out by researching what other companies are doing to make a positive change, particularly in terms of People and the Planet. Looking at the steps they've taken will save you time brainstorming ways to improve your own business.

Some examples of the Triple Bottom Line in action include:

  • Sportswear brand Nike has refocused its strategy to be more energy efficient, including investing in innovative new materials, and launching sustainable processes to make and remake materials for products. The company runs a number of recycling initiatives, including the Reuse-A-Shoe program and Nike Grind, which involves using discarded or donated waste materials for new products. As of 2018, around 75 percent of Nike apparel contains some form of recycled material. [5]
  • Ice-cream brand Ben & Jerry's has a long history of supporting social and environmental issues. In 2012, the company became a Certified B Corporation, a designation that demonstrates that it's meeting high standards of performance when it comes to things like employee benefits, charitable giving, and good supply chain practices. Recently, the company has committed to goals that focus on improving racial equity at work, as well as piloting new schemes at its dairy farms aimed at dramatically reducing their environmental impact.
  • Outdoor clothes company, The North Face, puts sustainability at the heart of its business practices. It supports this through four actionable commitments: to develop circular systems to recycle previously-owned clothes and reuse raw materials, to use 100 percent responsibly-sourced fabrics by 2025, to work with retailers and suppliers to reduce their environmental footprint, and to eliminate single-use plastic packaging by 2025.

Tip:

The 3Ps of the Triple Bottom Line are best considered in the context of monitoring and managing the organization's progress toward achieving its Critical Success Factors.

Key Points

The Triple Bottom Line (also known as TBL or 3BL) is a way of measuring an organization's true economic impact be assessing and measuring its performance in three key areas, which are known as the 3Ps:

  1. People – refers to the social impact that an organization has on people, both internally and externally.
  2. Planet – refers to the environmental impact the organization has on the planet.
  3. Profit – the financial performance of an organization.

The Triple Bottom Line approach can provide a number of benefits to organizatios including improved brand reputation, greater social and environmental impact, better talent acquisition and retention, creating more sustainable supply chains, and improving profits through cost-savings.

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Comments (5)
  • Over a month ago Michele wrote
    Hello Lobindpreeya,

    We're glad that the article helped to clarify what the Triple Bottom Line is about. It is also referred to as Corporate Social Responsibility or CSR. In the company I work with our Triple Bottom Line initiatives include: reducing waste and consuming less electricity; sponsoring restoration of provincial rivers and streams; and supporting the growth of local industry by reducing our profit margin on their products.

    Michele
    Mind Tools Team
  • Over a month ago Lobindpreeya wrote
    Fantastic! Now I understand theTriple Bottom Line.
  • Over a month ago Dianna wrote
    That sounds like a wonderful book marni. Welcome to the forum!

    Thanks very much for the recommendation. Social responsibility is certainly something that we can't afford not to take seriously. I believe that along with improving ourselves we should be doing things that improve the bigger picture as well. What that "thing" is takes on different meaning and magnitude for all of us, however, whether it's helping build a better workplace, community, country, or world the effort is well worth it and much appreciated.

    Thanks again and I hope to chat again.

    Dianna
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