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The triple bottom line

26 years ago, John Elkington coined the ‘Triple Bottom Line’ of People, Planet and Profit (also known as the 3Ps, TBL or 3BL

triple bottom line

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  30 Jun 2020 5:55 AM GMT

Dr. Boidurjo Rick Mukhopadhyay

International Award-Winning Development and Management Economist. He can be reached

at boidurjo@gmail.com

Prof Bibhas K Mukhopadhyay

Professor of Management, and author of the book 'India's Economy: Under a Tinsel still Tough'.

He can be reached at m.bibhas@gmail.com

26 years ago, John Elkington coined the 'Triple Bottom Line' of People, Planet and Profit (also known as the 3Ps, TBL or 3BL). It soon became another buzzword shortly after a few years 'sustainable development' was proposed by the Brundtland Commission in 1987. 'The triple bottom line' can be defined as a sustainability framework that examines a company's social, environment, and economic impact. People - the positive and negative impact an organization has on its most important stakeholders. Planet - the positive and negative impact an organization has on its natural environment (reducing its carbon footprint, responsible usage of natural resources, etc). Profit - the positive and negative impact an organization has on the local, national and international economy (includes creating employment, generating innovation, paying taxes, amongst others).

While Elkington had a broader base and vision while proposing the concept of triple bottom line, however he realized in his later years that the 3BL has been reduced to an accounting and reporting tool, smartly used by business to show how great they are. Yes, pretty much like KPIs (Key Performance Indicators) of a business. He once explained, "Together with its subsequent variants, the TBL concept has been captured and diluted by accountants and reporting consultants." Shortly after the concept was coined and implemented, 3BL has been a source of inspiration for many accounting and reporting frameworks including, for example, Social Return on Investment (SROI), ESG (a framework focusing investors and financial analysts on Environmental, Social and Governance factors) and the Trucost approach.

Of the three 3Ps, 'profit' has been mostly confused and rather misinterpreted on many occasions over the years. Generally, it would mean financial profit as a company makes – however, this interpretation is too limited and also inaccurate. Rather than 'profit' focusing on the financial aspect only, economic impact is a much wider idea than just financial impact. Also, profit is not simply for an organization only, Elkington emphasized on societal impact—and thus societal profit. Therefore, one could reflect on what Andrew Savitz once said, the triple bottom line "captures the essence of sustainability by both measuring the impact of an organization's activities on the world … including both its shareholder values and its social, human and environmental capital."

A 2017 sustainability survey by Cox Conserves, 88% of small and midsize businesses, across various sectors, have already implemented sustainable activities. It can be argued that the triple bottom line needs to be a part of a company's culture and values to be most successful in the long run and to manifest responsible practices in various forms. Many businesses incorporate triple bottom line principles into their structure.

Let's look at an example of a company that holds itself accountable for its social, environmental and economic impact. DHL – This shipping giant has upgraded its delivery trucks to vehicles that are hybrid, more fuel-efficient or capable of running on alternative energy. Its GoGreen initiative streamlines logistical operations and has trucks take the shortest route. It captures 62% of its electricity from renewable energy and uses couriers on bicycles in many European countries, which alone will reduce its carbon dioxide emissions by 152 metric tonnes per year. It also implements a host of other practices to secure its status as a good neighbour, such as supporting the UN disaster management efforts, helping airports get ready for natural disasters, and partnering with international organizations to improve the education of children and young people.

Also, Unilever – the company that has pledged that 100% of their plastic packaging will be reusable, recyclable or compostable by 2025.

Similarly, Coca Cola - Early last year, they set an ambitious goal by collecting and recycling the equivalent of every bottle or can it sell by 2030.

It is important for institutions, for profit or otherwise to recognize the interdependency of all the human relationships and interactions that enable the company to operate. This can translate into actions such as providing quality healthcare benefits and flexible work schedules to employees, offering opportunities for professional or educational advancement, creating a safe work environment, and engaging in fair labour practices.

Equally, let us recognize even more than the smaller environmental impact a company has, the longer it can operate. At its most basic level, this involves not producing products that are unsafe or unhealthy for the planet and the people on it, but it also includes reducing consumption, waste and emissions. It involves specific actions, such as using renewable energy sources, reducing energy use, disposing of toxic materials safely and adopting a host of green corporate policies.

Question, therefore - how 3BL or Triple Bottom Line can be a lucrative and long-term strategy?

A) Having 3BL raises transparency that mitigates shareholders' concerns of concealed information. In fact, it helps fulfil one of the pillars of corporate governance too – transparency. B) It involved accountability of organizations' action while delivering growth and improved economic situations/opportunity for a business C) Lines up a business to be a part of 'world betterment', therefore at the local levelboosting community development through better practice. D) 3BL improves a company's competitive advantage over peers.

While there are examples galore showing how large and equally small businesses have incorporated the practice of 3BL – there are ways that potentially interested businesses can start doing so also by asking some basic questions to start with. For example, companies that are using natural resources and key raw materials for manufacturing and outsourcing business can check A) are there energy resources are efficient? B) At what levels do oil spill accidents contaminate and harm the water bodies, air and land? and also, C) how the ecological system is impacted from business operations and most importantly, how should own it and be held accountable? It is important to ask these questions before committing your business to 3BL principles because while it is easy to follow the footsteps of your competitors, it instead goes a long way if a business educate itself and have an increased awareness before taking any consequential action.

Start by treating people right, your customers and equally your employees, assure them during crisis period, emphasize on the importance of mental well-being. At the same time, maintain profits not only for today but also future generations also. There are ways to do that too, for example, IKEA (the Swedish furniture company) raised its sales to 37.6 billion dollars in 2016 but it didn't swallow all the profit. It turned the profits in recycling the waste materials like the remnants of the tree and exploited that wastage in making some of its top-selling products. The company, consequently, is now recognised as one that adds "zero waste to landfill".

To conclude, success or failure on sustainability goals cannot be measured only in terms of profit and loss. It must also be measured in terms of the wellbeing of billions of people and the health of our planet, and the sustainability sector's record in moving the needle on those goals has been decidedly mixed. Conscious effort and will, improved stakeholder participation and engagement towards these bigger goals that the businesses can have might fine tune the situation (and newer expectations).

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