When referring to the bottom line of an organization one usually means the profits
ascertained by the company. However in lieu of the rising public pressures and constant
media coverage in wake of mounting evidence of irreversible environmental damage,
business enterprises have been called upon with a greater duty and responsibility of
adapting the Triple Bottom Line framework, which focuses on the economic, social and
environmental value added or destroyed by the business operations business operations
and aims to business sustainability in the organizations.
Therefore the triple bottom line (TBL) consists of three elements: profit, people, and the
planet which are interdependent and companies are promoted to commit to focus on
social and environmental concerns just as they do on profits.
Three Elements of the Triple Bottom Line
People or human capital pertains to fair and beneficial business practices towards labor
and the community. Achieving the same reciprocates in greater employee loyalty, more
content stakeholders as well as greater consumer engagement that are all intertwined and
interdependent. A triple bottom line enterprise seeks to benefit all communities, not
exploit or endanger any of them.
Planet or natural capital refers to sustainable environmental practices. A TBL company
endeavors to benefit the natural order as much as possible or at the least aims to maintain
the same do and curtail environmental impact. A TBL endeavors primary goal is an effort
to reduce its ecological footprint.
Profit is the economic value created by the organization after deducting the cost of all
inputs. It refers to the sum total of internal profit as well as the external profit created by
the company. The profit aspect needs to also be seen as the real economic benefit enjoyed
by the host society and the impact the organization has on its economic environment.
Challenges of Applying the Triple Bottom Line
Measuring the TBL
A key challenge of the TBL is the difficulty of measuring the social and environmental
bottom lines. Profitability is inherently quantitative, hence easy to measure. However
what constitutes social and environmental responsibility can be increasingly subjective.
At the same time it is extremely challenging putting an economic value to social and
environmental acts.
Mixing Diverse Elements
It is difficult accommodate priorities that are seemingly diverse, maximizing financial
returns while also doing the greatest good for society. Some companies might struggle to
balance deploying money and resources to all prongs of TBL as bias seems to creep in
which results in favoring one at the expense of another.
To illustrate an example of the severe consequences and repercussions faced by a
multinational for not abiding by the TBL framework we have BP plc an oil and gas
company headquartered in London, England. It is one of the world's seven oil and gas
super majors. In 2010 under financial and time pressure, BP failed to properly cap it’s
Gulf Coast, they hastened through procedures to detect excess gas in the well, skipped
quality tests of the cement structure around the pipe, and even assigned an inexperienced
manager to oversee final well tests.
While the company’s actions were not ideal, they were within acceptable industry
standards and legal. The oil released threatened the ecosystems;
Impacting populations of fish, marine birds, and other aquatic wildlife and threatened
fragile wetland ecosystems. The company lost a third of its market value, or about $75
billion, and the company had spent almost $1 billion on cleanup efforts. This highlights
why sustainable business is of increasing interest and importance.
Companies are increasingly adopting or ramping up their social programs. Consumers
want companies to be transparent about their practices and to be considerate of all
stakeholders. Many are even willing to pay more for product if that allows workers to be
paid a fair wage, and careful consideration is given to the environment during production.
This approach to business will be increasingly relevant to students of business and in
other fields as global populations and demand for energy, water, and other resources
increase and our planet faces resource shortages. Over the next fifty years, the world’s
population is expected to grow from 6.8 billion to 9.5 billion, and the demand for energy
and other resources will follow. Following are examples of certain businesses that have
been successful in adapting the framework in practice.
Examples of Company’s following TBL
ITC
ITC has been contributing in all the three parts of triple bottom line, be it economic,
environmental or social initiatives. With special committee for sustainability, Triple
bottom line is always kept in mind when ITC goes ahead with its work. ITC’s ‘Triple
ENVIRONMENT SOCIAL ECONOMIC
WATER CREATING OVER 5 $ 35 BILLION MARKET
POSITIVE,CARBON MILLION CAPITALISATION
POSITIVE,SOLID SUSTAINABLE
WASTE LIVELIHOODS
RECYCLING
POSITIVE
IRRIGATING 98,000 CREATING $ 7 BILLION
HECTARES COMMUNITY ASSETS TURNOVER
ITC’s Watershed Strengthening the agri
Development initiative production base of nearly 4
brings precious water lakh farmers
to over 98,000 hectares
of moisture-stressed
areas
38% RENEWABLE EDUCATING 3,00,000 TOTAL
ENERGY CHILDREN SHAREHOLDER
More than 38% of ITC’s Primary Education RETURNS OF 26% PER
ITC’s total energy initiative has educated over ANNUM
consumption is from 3,00,000 children
renewable sources
GREENEST EMPOWERING 4 29,000 EMPLOYEES
LUXURY HOTEL MILLION FARMERS ITC Group provides direct
CHAIN IN THE ITC’s globally employment to over 29,000
WORLD acknowledged e-Choupal people
All ITC premium initiative is the world’s
luxury hotels are largest rural digital
LEED Platinum infrastructure benefitting
certified over 4 million farmers
1,38,000 HECTARES 40,000 SUSTAINABLE POWERING GROWTH
GREENED LIVELIHOODS FOR WITH MULTIPLE
ITC’s Social and Farm RURAL WOMEN BUSINESS DRIVERS
Forestry initiative has ITC’s Women’s Diversified multi-business
greened over 1,38,000 Empowerment initiative has conglomerate spanning
hectares created nearly 40,000 FMCG, Hotels, Paperboards
sustainable livelihoods & Packaging, Agri Business
and Information
Technology
Bottom Line’ achievements are today acknowledged globally as exemplars in
Sustainability and Corporate Citizenship.
Axion
Axion’s products are made of 100-percent recycled material it builds railroad ties and
pilings using recycled plastic bottles and industrial waste instead of standard materials
such as wood, steel, and cement. This ensures that the recyclables will not end up in
landfills or oceans. Also by replacing traditional wood components they are able to
reduce both the initial and long-term demand for wood. The products also do not absorb
chemicals or other contaminants or leach anything harmful into the environment. The
company is also able to minimize its environmental impact as the products are lighter
than traditional materials, transporting them uses less fossil fuel.
Ben & Jerry’s
Ben & Jerry's is founded on and dedicated to a sustainable corporate concept of linked
prosperity. The company supports opposing the use of recombinant bovine growth
hormone (rBGH) and genetically modified organisms (GMOs) and fosters myriad values
such as fair trade and climate justice.
The company is able to inculcate a sense of social activism through carefully chosen
names of flavors like Empower Mint and Fossil Fuel ice cream. A mint ice cream with a
name that reminds customers the importance of social justice and voting rights gets and
the fossil fuel ice cream is able to become a starter for why Alaska’s arctic wilderness
shouldn't be drilled. The climate campaign flavor, Save Our Swirled, aims to raise
awareness and engage and educate customers and ultimately inspire them to take action.
Mars
Mars, Incorporated's cocoa for generations ensures that it is acquired in a sustainable
manner. Taking the initiative to ensure that a code of fair treatment is followed and trade
certified to those providing labor. In exchange Mars provides knowledge, technology and
buys cocoa at premium prices. They are aiming to reduce their environmental through the
elimination of problematic plastics and focusing on achieving the goal of 100 %
recyclability by 2025.
Strabucks
Starbucks Corporation, which has been socially and environmentally conscious, aims to
increase employment opportunities by promising to hire 25,000 veterans before 2025.
Along with which they have also incorporated the Starbucks Greener Stores framework,
which is committed to design, build and operate 10,000 Greener Stores globally by 2025.
