Embracing the Triple Bottom Line for a Sustainable Future
How Focusing on Profit, People, and Planet Enhances Business Success
In today's rapidly evolving business landscape, companies are increasingly looking beyond mere financial gains to ensure long-term success.
The triple bottom line (TBL) is a framework that encourages businesses to focus equally on three critical areas: Profit, People, and Planet. By balancing financial performance with social responsibility and environmental stewardship, companies can create sustainable value for all stakeholders, ensuring not just their survival, but their thriving in the future.
To some, adopting a triple bottom line approach may seem impractical in a world that emphasizes profit over purpose. Innovative companies, however, have shown time and again that it’s possible to do well by doing good.
The triple bottom line doesn’t inherently value societal and environmental impact at the expense of financial gains. Instead, many firms have reaped financial benefits by committing to sustainable business practices. This can help companies capitalize on a growing market for sustainable goods. Beyond that, embracing such business strategies can be highly attractive to investors.
While companies use the triple bottom line internally, environmental, social, and governance (ESG) metrics are a third-party measurement of those procedures. They hold businesses publicly accountable to focus on more sustainable practices in addition to financial profit. Evidence has increasingly shown that firms with promising ESG metrics tend to produce superior financial returns. As a result, more investors have begun focusing on ESG metrics when making investment decisions.
As the world’s most pressing challenges evolve, purpose-driven leaders are needed to spearhead initiatives that can spur positive change—but making those changes isn’t an easy task. Finding these opportunities and making them successful takes both real courage and hard work. It’s often the firms that have a purpose—beyond simply making money—that make the first move.
Where the TBL Came From
The term “triple bottom line” (often abbreviated to “TBL” or “3BL”) was first coined in 1994 by John Elkington, business writer and founder of the management consultancy Sustainability. Elkington claimed that the traditional measure of corporate success – its net income, i.e., the “bottom line” of its profit and loss account – gives an insufficient picture of a firm’s actual value.
A company can be financially successful yet harm the social or ecological environment in which it is embedded. Elkington suggested expanding our way of evaluating corporate performance by adding two further “bottom lines” to the original one. Instead of measuring only their economic bottom line, companies should also report on a social bottom line (their contribution to social equity and welfare) and an environmental bottom line (their ecological impact).
Profit: Sustainable Financial Performance
Profit is still very important. But companies with a TBL approach look at profits in a broader way. They focus on:
- Paying taxes on time and fairly at all government levels.
- Boosting local economies by buying from small businesses.
- Investing in the community through partnerships and sponsorships.
For example, a company might report both its net income and its gross margin by region. This shows fair pricing across different areas. Highlighting tax payments and financial responsibilities also shows their commitment to being financially responsible and transparent.
The TBL approach to profit also includes ensuring that economic progress occurs in harmony with nature. This aligns with the United Nations’ Sustainable Development Goals (SDGs), which aim to ensure that all human beings can enjoy prosperous and fulfilling lives.
By incorporating these goals, businesses can support sustainable economic growth in their communities, ensuring fair wages, ethical sourcing, and workplace health and safety. A key prosperity-focused goal is encouraging professional and economic growth, including safe working conditions, living wages, and compassionate leadership.
People: Social Responsibility and Equity
The 'people' part of TBL checks how socially responsible a company has been. This includes fair wages, safe workplaces, and diverse suppliers. Some social metrics are:
- Average payroll and benefits to show fair wages and good benefit packages.
- Employment demographics to show diversity in age, race, sexual orientation, and religion.
- Vendor demographics to highlight small, LGBTQ-owned, veteran-owned, or minority-owned supplier
By paying fair wages and ensuring safe working conditions, companies can attract and keep top talent. Working with small or minority-owned businesses can also boost community support and improve the company's reputation.
The People pillar of TBL considers all stakeholders, not just shareholders. This includes employees, communities, supply chain members, future generations, and customers.
Corporate Social Responsibility (CSR) is key here. CSR is about meeting stakeholders' needs and being accountable for actions. CSR goals may include advancing human rights, ending hunger, promoting diversity, ensuring gender equality, providing a safe work environment, and encouraging community engagement.
Integrating CSR into business strategy is beneficial for stakeholders and good for business. Sharing best practices with other organizations is common in CSR initiatives.
Planet: Environmental Stewardship
The environmental part of TBL focuses on reducing greenhouse gas emissions, waste, and fossil fuel use. Companies might report:
- Reductions in greenhouse gas emissions.
- Amount of waste generated and recycled.
- Seasonal energy consumption.
- Fossil fuel use per employee or sales lead.
For example, a company can save money by recycling waste into new products. A company can also increase profits by setting goals such as sending zero waste to landfills and using renewable materials. This would make them more attractive to eco-conscious customers.
Public opinion, consumer power, social media transparency, and industry activism make it easier for stakeholders to hold organizations accountable. Stakeholders reward positive impacts and criticize negative ones. This public sentiment can influence consumer support and buying decisions.
Benefits of TBL for Businesses
Using the TBL framework offers many benefits:
- Employee Retention: Fair working conditions and a strong community presence can keep employees longer. Competitive wages, training, and volunteer time can keep them engaged and committed.
- Customer Appeal: Companies that care about social and environmental issues can attract customers willing to pay more for such products. Being transparent and committed to stakeholders can boost brand loyalty.
- Investor Interest: Investors often prefer companies with strong social and environmental plans. This can attract investment from those looking to support sustainable practices.
- Long-term Profitability: While short-term costs may rise, a TBL strategy can lead to long-term savings. For instance, switching to electric vehicles might be costly at first but can reduce energy and maintenance costs over time.
The Impact of TBL on Recruitment
At Remarkable Career, we see the benefits of working with clients who use the TBL approach. These values attract job seekers, making it easier to fill roles. Candidates today want employers who care about social responsibility and sustainability.
One client, for example, has integrated TBL principles into their operations. This has made them more appealing to potential employees who value these principles.
Conclusion: The Future of Business
The TBL approach is the future of sustainable business. By focusing on profit, people, and the planet, companies can achieve balanced and lasting success. This approach not only attracts job seekers but also ensures long-term sustainability and profit.
At Remarkable Career, we proudly support businesses that follow these values. We help them find top talent who share their vision.