With organizations of all shapes and sizes becoming more ‘woke’ to the concept of Corporate Responsibility and moreso, Creating Shared Value, we’re seeing a broadening purview of traditional business priorities, beyond financials, towards a more holistic approach. One of the seminal paradigms that has helped businesses evaluate and measure their impact is the ‘Triple Bottom Line’.
Coined by John Elkington in 1994, Triple Bottom Line is an innovative way of measuring a business’s social, economic and environmental impact. Today, companies (especially those with damaged reputations) use this model to measure performance.
What is the Triple Bottom Line?
The Triple Bottom Line is a model that companies use to prioritize social betterment and sustainability. Specifically, businesses that use this conceptual-tool equally prioritize three ‘bottom lines’: profit, people, and planet. The model states that it’s not enough for firms to focus solely on gaining profit – they should also help build healthy planets and communities.
Businesses that use the Triple Bottom Line model have robust sustainability plans and can work collaboratively with activists and community leaders to influence positive change in the community.
For instance, a company can adhere to the TBL model by recycling waste materials, paying fair salaries, sourcing their raw materials locally, etc. This way, such a firm will be helping the local people, making profits, and preserving the environment.
Let’s have a deeper look at the three bottom lines of the TBL model.
What the 3Ps mean
Elkington conceptualized the TBL model with the intentions of reducing our negative impacts- and maximizing our positive effects on all the three Ps – People, Planet, Profit.
Here is what each of these P’s entail:
Planet: This represents the negative and positive effects a business has on its natural environment. Here, a business can reduce its carbon footprint and the emission of toxic materials. What’s more, firms can support the planet by supporting or actively participating in such activities as reforestation, removal of waste materials, and restoration of natural harm.
People: This involves the negative and positive effects a business has on its essential stakeholders, including customers, employees, communities, etc. Fair product prices and wages for workers exemplify how companies should support people.
Profit: This is the negative and positive effect a firm has on the international, national, and local economy. For instance, a business can create employment, pay taxes, create wealth, promote innovation, etc. – all that support the economy.
The last P is often misinterpreted as the financial profit a business makes. Yes, it can be used to mean that, but that would be limiting its meaning in this context.
Benefits of the Triple Bottom Line
Putting our planet and people at the heart of your business, on the same level as profit, isn’t just the right thing to do; It’s one of the best drivers of profits for industries worldwide. It’s no wonder big companies like Unilever, General Electric, and Procter & Gamble embrace this model.
Here are some of the benefits you’ll enjoy by focusing on People, Planet, and Profit:
Improve customer relationships
Promote business productivity and performance
Improve corporate culture
Strengthen the supply chain
Reduce regulatory compliance and governance risk
It doesn’t ignore social concerns
It encourages environmental sustainability
Improving your business’s Triple Bottom Line
Given its benefits, implementing the TBL model should be a no-brainer for you. Lucky for you, incorporating this conceptual tool into your business is easy.
Here are three best ways to enhance your business’s TBL:
- Enhance your human capital management strategy: You should invest in your people by providing recognition, rewards, incentives, etc. Dedicating a portion of your profits towards improving the human capital can be the difference for your business’s success.
- Implement a sustainability management system: You can be responsible for the planet by managing your firm’s sustainability and limiting its carbon footprint on the environment.
- Become socially responsible: As a business owner, you have the responsibility and power to impact your community’s prosperity. You can do this by innovating, creating jobs, paying taxes, generating wealth, etc.
Now it’s time to enact performance over promise… Want to know more about how you can implement this conceptual tool for your brand? Give us a shout. And in the meantime get involved with worthy organizations that better your company and the environment. We’ve recently become official members for 1% for the Planet, working with tons of other devoted brands and companies ready to make an impact for a better tomorrow. If you’re in search of a nonprofit partner, opportunities to volunteer as a team, and other ways to donate and give back…start here and make a difference.