The triple bottom line: making your company more sustainable

At SustainLab, we talk a lot about making your company more sustainable, but what being a sustainable company even mean? One framework for corporate sustainability is the triple bottom line (sometimes called "TBL") approach. In this blog post, we'll be looking at:

• What is the triple bottom line?

• The bottom line: profit

• The double bottom line: people and profit

• The triple bottom line: people planet profit

• Why is the triple bottom line important?

• Will social and environmental action hurt my company financially?

• How can your company achieve the triple bottom line?

What is the triple bottom line?

The concept of the "triple bottom line" was developed by entrepreneur John Elkington in 1994, based on the idea that companies should consider their social and environmental impacts, rather than only measuring financial performance. For companies, committing to the triple bottom line means committing to focusing on social and environmental issues as much as on earning a profit.

The triple bottom line comes from the "bottom line" in financial accounting, which refers to a company’s profits. The 3Ps of the triple bottom line are:

• Profit: the traditional measure of a company’s financial success

• People: how socially responsible the company is and has been throughout its history

• Planet: how environmentally responsible the company is and has been throughout its history.

A company which has equal concern for its financial performance, environmental impacts, and social responsibility is said to be sustainable. Therefore, managing a company’s triple bottom line is often used synonymously with becoming a sustainable company.

The bottom line: profit

In a capitalist economy, companies are often evaluated based on their financial success, i.e. how profitable they are. The system rewards companies whose decisions and strategies revolve around maximizing profit, reducing costs, and mitigating risks.

Happy shareholders, happy life, right?

The problem is, taking such a one-sided view of success means that the company is ignoring the full picture, and not addressing the full cost of doing business. Prioritizing profits over all else can reap massive repercussions on the planet and the people living on it, including the people in the company itself. Some common examples are the destruction of ecosystems and the exploitation of laborers.

Now that we’ve established that it’s not enough to only look at profit, let’s explore the other aspects of the triple bottom line.

The double bottom line: profit and people

Social responsibility is the second component of the triple bottom line. Whereas purely financially-driven companies have traditionally focused on maximizing value for their shareholders, in other words, people who own shares in the company, the double bottom line shifts the focus to encompass all stakeholders.

The double bottom line considers all stakeholders who are impacted by business decisions, and considers ways to create value for them. Such stakeholders include a company’s customers, employees, and community members.

Your company can create value for all its stakeholders in many ways, such as by:

• Ensuring the safety of your products for users

• Implementing fair hiring practices

• Forming strategic partnerships with nonprofit organizations that share common goals with your company.

In short, the double bottom line is your company’s commitment to serving society.

The triple bottom line: profit, people, and planet

Here’s a grim statistic for you: did you know that 100 companies in the energy sector are responsible for 71% of the world’s historical greenhouse gas emissions?

Indeed, corporations love to push the responsibility for solving climate change onto individual consumers (Stop using plastic straws! Use a bamboo toothbrush!! Bike everywhere!!!), but the fact is, it’s corporations who have largely fueled the climate crisis.

But let’s look at it another way: it’s also companies, like yours, who can have a much greater, farther-reaching impact on the environment through positive change.

There are so many ways your company can reduce its environmental impact. You can:

• Switch to ethically sourced materials

• Lower your energy consumption

• Streamline your shipping practices

And so much more.

Taking concrete actions towards reducing your environmental impact and increasing your commitment to serving society will help your company achieve sustainability and the triple bottom line.

Why is the triple bottom line important?

We are past the point where companies can afford to prioritize today’s profits at the expense of tomorrow’s planet and society. We need a massive overhaul of the way business is conducted if companies are going to survive in the long term.

Will social and environmental action hurt my company financially?

Probably not. Financial success and social and environmental action are not mutually exclusive. In fact, many companies have actually seen their profits grow from committing to sustainable practices.

What’s more, investors are also starting to consider environmental, social, and governance (ESG) metrics when making investment decisions. Therefore, enhancing your company’s sustainable business strategies can help make you more attractive to investors.

How can my company achieve the triple bottom line?

Companies are very used to measuring their financial sustainability, but the challenge is measuring social and environmental aspects which can be more subjective. Your company should start by reevaluating success to encompass more than financial profit.

There are many quantifiable aspects of environmental and social sustainability you can monitor. From an environmental standpoint, there are effects such as:

• Carbon emissions

• Electricity consumption

• Waste output

• Effects on deforestation and habitat destruction.

There are some less cut and dry effects as well, such as biodiversity impact.

On the social side, consider the human cost of your company’s practices. Take a look at your company’s policies regarding factors such as:

• Fair pay

• Pension schemes

• Flexible working hours

• Parental pay and leave.

There are also some more qualitative metrics, such as how your company works to actively improve racial, gender, and cultural diversity and inclusivity.

Some measures go hand in hand. For instance, creating policies stopping your company from fueling the deforestation of tropical rainforests, such as the Amazon, will also have a positive impact on the Indigenous communities who safeguard the forest and call it home.

And what about how to measure all of these metrics? About 75% of the world’s 250 largest companies use the Global Reporting Initiative (GRI) standards for non-financial reporting.

Even with the GRI standards, there are still a lot of new measures to track when your company switches from only monitoring its financial performance to taking a more holistic view of sustainability.

That’s where we come in.

Using SustainLab’s sustainability management software, you can set KPIs related to any and all aspects of sustainability. Then, we make it easy to upload your raw sustainability data in any file format, and our advanced AI technology automatically extracts, processes, and transforms the data into meaningful visualizations to help you keep a consistent overview of your progress.

Contact us to learn more about how SustainLab can help you achieve the triple bottom line and create better business - better planet.