A triple bottom line (TBL) reimagines a company’s priorities as more than just “profit” and instead places money brought in alongside “people” and “planet,” thus measuring Corporate Social Responsibility (CSR) and evaluating social impact.
What is a triple bottom line?
Coined by John Elkington in 1994, the term triple bottom line uses “people,” “planet,” and “profit” to measure the success of a business and evaluate the quality of a business’ impact. The strategic framework moves away from traditional monetary markers as the only measures of accomplishment. Instead the TBL spurred the growth of many sustainably-minded business practices and strategies, like Environmental, Social and Corporate Governance (ESG) and circular economies. Remarkably, the sustainability sector has grown dramatically and the U.N. Sustainable Development Goals forecast market opportunity of over $12 trillion per year by 2030 – Elkington’s TBL framework played a large role in creating that very sector.
“The core concept [of TBL] is sustainability here. In other words, it can be defined as meeting the needs of the present without compromising the ability of future generations to meet their own needs.” – Avinash Chandra, founder and CEO of BrandLoom
But what exactly do the three components that make up TBL mean? Here’s how Forbes defines each of the 3Ps:
- People: “the positive and negative impact an organization has on its most important stakeholders. These include employees, families, customers, suppliers, communities, and any other person influencing or being affected by the organization.”
- Planet: “the positive and negative impact an organization has on its natural environment. This includes reducing its carbon footprint, usage of natural resources, toxic materials and so on, but also the active removal of waste, reforestation and restoration of natural harm done.”
- Profit: “the positive and negative impact an organization has on the local, national and international economy. This includes creating employment, generating innovation, paying taxes, wealth creation and any other economic impact an organization has.”
How to Implement a Triple Bottom Line
Let’s talk about some concrete examples of how to begin implementing a triple bottom line strategy. In order to truly fulfill a sustainable philosophy, a business must orient both short and long term goals towards their larger impact strategy. It can be a big undertaking, but Green Buoying Consulting has some great ideas to start:
- People
- Having 12 week parental leave
- Strengthening the organization’s Diversity & Inclusion policies and initiatives
- 401k matching policies
- Creating employee volunteer days
- Sending out regular employee surveys
- Planet
- Support zero waste initiatives
- Think about ways to reducing office energy use
- Implement strategies to cut back on consumption of single use items
- Profit
- Reconsider governance policies
- Implement verified risk management
- Potentially have 10% operating cost Community Investment policy
Some of these ideas are relatively small changes, but there are endless ways to insert sustainable practices and ethical policies into a company. Let’s take a look at a significant success story.
Case Study: Novo Nordisk
Novo Nordisk, a Danish pharmaceutical company, is one of the shiny examples of how to embody the TBL mentality. Founded in 1923, the company primarily tackles diabetes and has provided insulin for nearly a century. The company rechartered itself in 2004 around the concept of TBL and pledged transparency and accountability in their operations. Their annual report is organized around three areas: financial, environmental and social – sound familiar? They realigned according to Elkington’s framework and pushed themselves even further to incorporate other ethical strategies. Novo Nordisk is guided by many principles, including “The Triple Bottom Line and Novo Nordisk Way” and the “UN Human Rights Guiding principles,” among others. Novo Nordisk describes how their TBL strategy, “is applied to ensure that business decisions balance financial, social and environmental considerations, always keeping in mind the best interests of the patients we serve.” Meanwhile, their dedication to the UN Human Rights Guiding Principles aligns Novo Nordisk’s business practices with the United Nations’ Protect, Respect, and Remedy framework. This strategy emphasizes that human rights ought to be prioritized at the nexus of state and business – guiding Novo Nordisk into ethical business practices and helping to progress towards their “people” goals under their TBL strategy.
The changes have benefited Novo Nordisk – in 2015, Lars Rebien Sorensen, CEO of Novo Nordisk, was listed as the world’s best-performing CEO in the Financial Times. Sorensen even credited the TLB as an essential part of the company’s “credo and ethos.”
Time for a Revamp?
Twenty-nineteen marked the 25th anniversary of the term “triple bottom line.” Its creator, rather than indulging in celebration, issued a “strategic recall” in the Harvard Business Review. Elkington argued that the spirit of the TBL was “to provoke deeper thinking about capitalism and its future,” but it quickly turned into an accounting tool and “many early adopters understood the concept as a balancing act, adopting a trade-off mentality.”
“To truly shift the needle, however, we need a new wave of TBL innovation and deployment. But even though my company, Volans, consults with companies on TBL implementation, frankly, I’m not sure it’s going to be enough. Indeed, none of these sustainability frameworks will be enough, as long as they lack the suitable pace and scale — the necessary radical intent — needed to stop us all overshooting our planetary boundaries.
Hence the need for a “recall.” I hope that in another 25 years we can look back and point to this as the moment started working toward a triple helix for value creation, a genetic code for tomorrow’s capitalism, spurring the regeneration of our economies, societies, and biosphere.” – John Elkington
TBL is just one way to make a company or organization more sustainable. While we continue to debate the merits of the term and come up with new ways to push forward Elkington’s ambition, here are some other ways to increase corporate sustainability that Novel Hand has been exploring:
- Alexa’s articles, “What is Social Impact?” “How Can We Hold Big Business Accountable to Stated Social Impact Goals?” and “Not Business as Usual: How B Corps Create Positive Social & Environmental Impact”
- Heream’s article, “Evaluating Ethical Businesses: B Corp and Fair Trade”
- Erika’s article, “Getting Down to Business: Corporate social responsibility”
- And my article from last month, “Impact Investing for College Students and Recent Grads”
