businesses-giving-back

Triple Bottom Line – The Modern Business Model

By Natalie Brooks | Better Business, Features

Triple Bottom Line, though not a new concept has really only realized true potential over the past few years. Entire business models are now formed around the idea of Triple Bottom Line including some of your favorite consumer brands. We explore in this article what Triple Bottom Line is and where it came from, why and how it is important, ways that it is being misused, and how it’s return can be measured in customer satisfaction.

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Diagram of Triple Bottom Line. Image Courtesy Ey.com

Definition of Triple Bottom Line

It’s really quite simple. People. Planet. Profit. The three P’s. Triple Bottom Line is a company or organization’s ability to report gains on their efforts resulting in dollar amount (profit), positive impact on communities (people), and sustainable environmental practices (planet).

In this writer’s opinion, Triple Bottom Line or TBL as the eco-chic kids say, is the modern way of doing business. And if you’re smart you’ll see how much opportunity there is in modelling a business this way.

History of Triple Bottom Line

TBL is far from a new concept. Fifty years ago it was seen as a radical left-wing, environmental and social activist push against giant multi-national corporations or “the man”. Nowadays it’s a socially accepted and consumer-demanded way of doing business. The term itself was coined in 1994 by John Elkington in his book Cannibals With Forks. He is the founder SustainAbility which helps companies integrate corporate social responsibility into their business practices.

In 2007 the United Nations and ICLEI ratified  the standard for triple bottom line performed in urban and community accounting as part of the UN’s Global Compact Board.

Many large corporations now put policies in place that measure the level of corporate social responsibility (CSR) being performed as demanded by its stakeholders. This type of business practice has becoe more common because not only is it a great way to differentiate your business from your competition, it’s also the right thing to do.

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Young Suri boy in Ethiopia. Image by Dietmar Temps.

Why Is Triple Bottom Line Important?

Triple Bottom Line by definition has three keys areas of benefit; economic, social, and environmental. For a business the benefits could include increased revenue from a niche market, strong employee morale, reduced operating expenses like energy and water consumption costs, and less waste.

An example of company that saw the business value in triple bottom line accounting is TOMS Shoes. TOMS has been wildly successful because they went into the business of giving back. The founder, Blake Mycoskie decided that for every pair of shoes sold another pair would be donated to a child in need from an underdeveloped country. They provide shoes to children in over 60 countries. Not to mention the shoes are manufactured from sustainable and vegan materials. Recently TOMS has started providing eyewear from every sale of Toms brand sunglasses to people in need of vision correction.

Triple Bottom Line Downfalls

Because businesses see the value in TBL or CSR they know that others will choose to do business with them. Unfortunately, not all socially responsible companies are honest companies. Take British Petroleum for example. This is a company that had an enormous CSR budget. They convinced their shareholders and stakeholders that even though they are a large oil production company they still practiced environmental and social sustainability. We know now that absolute negligence on their part caused the worst oil spill in US history and all that talk and credibility about TBL went right out the window.

As consumers we need to be careful about what we see and believe. There will continue to be companies that will try to capitalize on TBL and use it to assuage their dishonest practices.

Accountability And Measurement Of Triple Bottom Line

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River Gambia in the Niokolokoba National Park in Senegal. Image Courtesy: Wikimedia Commons. Source: US Government.

So how are businesses held accountable for their TBL practices? There is still no one set way for businesses to account for TBL because many of the positive outcomes are not measurable. There’s no dollar amount you can place on the comfort a young girl in Malawi feels every time she puts on her pair of Toms shoes. There’s no ROI assessment done when a mentally handicapped man feels valued and is given a purpose because of the results he’s seen from his hard work at a community garden. There’s no way you can calculate revenue earned from a low-income woman who is able to send her child to school with the necessary supplies.

But customer loyalty and buy-in can definitely be measured. And brands taking a TBL approach to their business can teach everyone a thing or two about the expectations of modern day consumers.

So no, it’s not a perfect system and we have a long way to go. And yes, companies are still in business to make money and always will be. But the more we talk about, and the more consumers demand this kind of business practice, the more truly amazing, world-changing results we will see, feel, and be a part of. Smart, honest, and compassionate people are what ensure TBL is implemented and accounted for. Not greedy and corrupt executives at places like BP. In this writer’s opinion the world needs more business people like Blake Mycoskie.

Feature Image: Giving Back. Courtesy Shutterstock.

About The Author

Natalie Brooks
Natalie is an avid blogger and writer with a passion for sharing her stories and ideas about sustainable design and integrated urban agriculture. Her motto: "Green is beautiful!"