What Is the Triple Bottom Line?

Traditionally, business leaders concerned themselves with their bottom lines—or, the
monetary profits their businesses made. Today, more leaders have begun to
think sustainably. The triple bottom line theory expands the traditional accounting
framework to include two other performance areas: the social and environmental
impacts of their company. These three bottom lines are often referred to as the three
P’s: people, planet, and profit.

Here is each “P” in more detail.

People

“People” considers employees, the labor involved in a corporation’s work, and the
wider community where a corporation does business. Another way to look at “people”
is, how much does a company benefit society? A triple bottom line company pays fair
wages and takes steps to ensure humane working conditions at supplier factories.

Triple bottom line companies make an effort to “give back” to the community. For
example, 3M partners with United Way to fund STEM education across the world.
This initiative is an example of “enlightened self-interest”—acting to further the
interests of others, ultimately, to serve one’s own self-interest. The community
benefits, and 3M provides itself a well-educated source of scientists and innovators for
generations to come.

Planet

A 2016 Gallup poll revealed that 64 percent of Americans are worried about global
warming. Public opinion has dictated that enterprises that harm the environment should
also bear the cost, and you can bet businesses are taking notice. The “planet” piece
of the triple bottom line indicates that an organization tries to reduce its ecological
footprint as much as possible. These efforts can include reducing waste, investing in
renewable energy, managing natural resources more efficiently, and improving logistics.

For example, Apple has invested heavily in environmental sustainability. Its massive
U.S. data centers are LEED certified. In 2016, the company announced that 93
percent of its energy comes from renewables. These actions have nudged other tech
giants like Facebook and Google toward using more renewable energy sources to
power facilities.

Profit
While every business pursues financial profitability, triple bottom line businesses see it
as one part of a business plan. Sustainable organizations also recognize that “profit”
isn’t diametrically opposed to “people” or “planet.” Swedish furniture giant IKEA
reported sales of $37.6 billion in 2016. The same year, the company turned a profit
by recycling waste into some of its best-selling products. Before, this waste had cost
the company more than $1 million per year. And the company is well on its way to
“zero waste to landfill” worldwide. According to Joanna Yarrow, IKEA’s head of
sustainability for the UK, “We don’t do this because we’re tree huggers, we do this
because it’s very cost effective.”

INTERRELATION OF TRIPLE BOTTOM LINE AND SUSTAINABILITY

ACCOUNTING
Sustainable Development
Brundtland report, Hart and Milsten (2003) define sustainability
development as the expectations of improving the social and environmental
performance of the present generation without compromising the ability of
future generations to meet their social and environmental needs. The terms
‘sustainability’ and ‘sustainable development’ are frequently used today in public
arena. In 1987, the United Nations World Commission on Environment and
Development (World Commission) provided what has become a widely-used
definition of sustainability as the ability of a society to meet the needs of the present
without compromising the ability of future generations to meet their own needs.

Sustainable development therefore, focuses on incorporating a forward

thinking approach by businesses toward shearing up world sustainability. A
company whose mission is to be sustainable does not merely make the
statement; it takes appropriate actions needed to move toward this goal and preserves
those actions to continue on this path. It is vital to seek input from different
internal and external persons to gather ideas on how the company can make
use of nature’s resources without exploiting those resources. The need for
well-being and the opportunity for innovation are key attributes to re-building the
corporate environment. These changes, which are necessary for sustainable
survival, may not encourage enthusiasm in the short-run; nevertheless, in the
long-run, they will become essential ‘building blocks’ by which the company thrives.
To create a company whose mission is true sustainability, all engaged
individuals need to have a better understanding of what ‘sustainability’
entails. The spotlight needs to move from the financial bottom line to a
more encompassing viewpoint of the company’s impact on the world. Once this
information is shared, it is then necessary to begin looking at the
community to realize what environmental concerns are being voiced by the
public. To align with these socialistic movements and to move away from
individualism is preparing for long-term sustainable success.