What Is The Triple Bottom Line?
[People, Planet and Profit]

What is the Triple Bottom Line People Planet Profit

What is the Triple Bottom Line?

The Triple Bottom Line (TBL) is an accounting framework which incorporates the principles of sustainability into decision making in business.

It encourages and evaluates a business’ Corporate Social Responsibility (CSR) performance by incorporating three dimensions:

  1. People (social)
  2. Planet (environmental)
  3. Profit (financial)

The three Ps of people, planet and profit are the core pillars of sustainability measurements in many business sectors.

Widely used in both for-profit and non-profit government sectors the triple bottom line is adopted to evaluate performance in a broader context.

The phrase, “people, planet and profit”, was coined by John Elkington in 1994 and it nicely summarises the ethos of the triple bottom line.

People

Businesses should operate in a way that is morally fair and meets legal and regulatory requirements in relation to trade, labour and equality rights.

‘People’ refers to all associated stakeholders such as suppliers, customers and communities and not simply just the employees and shareholders of a business.

Planet

Businesses should endeavour to not only limit the negative impacts they create on the environment but also aim to make a positive contribution to the environment.

Sustainable environmental practices may include reductions in waste, consumption and energy usage as well as an awareness of the types of resources being used and disposed.

Profit

Businesses should aim to create profit through their actions in order to be sustainable.

In the triple bottom line profit is measured as the value created by a business after deducing the cost of all inputs, including the cost of any associated capital.

In simple terms, profit is a measurement of the real economic impact the business has on its associated economic environment.

The Triple Bottom Line: People, Planet and Profit

Traditional accounting measures have previously focused only on the financial performance of business covering nothing more than ‘profit and loss’ equations.

This financially focused evaluation of performance is referred to as the ‘bottom line’ or the ‘very bottom line’ but with the broader inclusion of environmental and social outcomes the triple bottom line enriches this measurement.

It allows businesses to identify how they have achieved their financial gains whilst simultaneously contributing positively to society and the environment.

For example, if a business reports an increase in profits but in achieving this has caused harm to society and the environment the triple bottom line measure will highlight this fact.

Similarly, if a business reports an increase in profit but can also identify a positive contribution to society and the environment this will be a more successful triple bottom line measure.

The triple bottom line aims to provide a framework to enable businesses to move away from purely financial thinking towards new business models and activities which incorporate additional considerations of the wider society and environment they operate in.

Social Enterprise is a good example of a business that aims to meet the framework of the triple bottom line.

They function with a purpose of addressing and supporting social and environmental issues whilst also simultaneously making money in the process.

If implemented effectively this model of doing business meets the three pillars of the triple bottom line.

The fundamental principles of the triple bottom line demands that business leaders focus their attention on their stakeholders as opposed to just focusing on their shareholders.

Although shareholders are a stakeholder and should be highly valued they are not the only stakeholder that you have a moral responsibility towards.

There is an entrepreneurial movement known as Stakeholder Entrepreneurship which takes the notion of stakeholder theory to the next level and one that I would encourage you to explore.

The three dimensions of the triple bottom line (people, planet and profit) should be incorporated into the core operation of business and should be stakeholder focused in their implementation.

The triple bottom line is a widely used framework with CSR practice and although there is a need for further development and enhanced measurement accuracy in this area it is a significant concept which has modelled the CSR movement over recent years.