Sustainability has become a buzz word in the corporate field – but what does this really mean? Can we reconcile a desire for more sustainable, eco-friendly practice with financial concerns? Can what is good for the planet really also be good for business? And how is this sustainability best achieved? The concept of a triple bottom line is frequently used in sustainability to measure success and find a pathway forward.
Our world is in crisis. If we continue to waste natural resources and rely on finite sources of energy to meet our needs, we threaten our continued survival on this planet. Sustainability is not a 'nice to have' – an altruistic endeavor for those who care about nature and humanity – it has become essential. It is not hyperbole to say that if we do not all act soon, it will increasingly become a matter of life and death.
It is time for all those involved in business to step up and take note. Sustainability is not only about creating a better future – it is about whether or not we have a future at all.
Traditionally, the 'bottom line' in business is financial profit (or loss) recorded at the bottom of a financial statement. Triple bottom line is all about moving away from the idea that financial profit is the be-all and end-all of business. In triple bottom line accounting, we move away from a system based only on financial equity and move towards one that is based on the three bottom lines of:
- People (social equity)
- Planet (natural capital/ environmental value)
- Profit (real economic value)
By looking at how value is obtained in each of these three categories, a company or organization can come closer to a truly sustainable business model.
Crucial to any idea of economics is the idea of value. In order to transition to a more equitable, fair and ethical system of doing business, we must all evaluate where value is assigned, how it can be protected, and where it can be added.
Assigning value to social equity, or human capital, is crucial to a truly sustainable business. A business must assign value to its workforce, ensuring good labor practices and worker health and safety. It must also value the people of its wider community, and the region in which they conduct their business. Valuing people might include:
- 'Upstreaming' revenue to make sure original producers up the supply chain profit from the enterprise.
- Paying fair salaries and ensuring good working conditions for employees.
- Eliminating exploitation in all its forms.
- Giving back – contributing to the strength and grown of the community through health care, education, etc..
Sustainable systems must assign value to the assets and resources of natural systems, and promote their conservation. A triple bottom line business tries to benefit the natural order as much as they can, and at the very least do no harm and minimize environmental impact. Valuing planet might involve practices such as:
- Using energy from renewable sources where possible, and reducing energy use as much as possible to reduce carbon footprint & carbon emissions.
- Harvesting rainwater, and taking measures to conserve water in all manufacture and in all business premises.
- Using land responsibly. (For example, in the growing of crops, in communities or building projects.)
- Using materials wisely and conscientiously. (Using only that which is absolutely necessary and reducing prolific use of materials. Refusing, reducing, reusing, repairing and recycling.)
- Undertaking audits and life-cycle assessments to ensure cradle to grave sustainability and reduce the ecological footprint.
True economic profitability is more than just the internal bottom line of a company. While individual profit is, of course, taken into account, in sustainability it is important to look at the bigger picture. The profit referred to in the financial bottom line has to be viewed as the real economic benefit not just to the business itself but to the host society. It is important to look at the real impact (in financial terms) that an organization has on its economic environment.
Triple bottom line accounting is not just traditional accounting with the addition of the two other bottom lines. It is important that all three pillars are viewed holistically. Their impacts, not only independently of one another but also upon one another, must be taken into account.
Choosing to take a triple bottom line approach, act sustainably and aim for sustainability in all business practices can:
- Ensure humanity's survival on this planet.
- Help preserve natural systems and environments for future generations.
- Keep a workforce happy and healthy.
- Keep productivity high over time.
- Help ensure a healthy financial bottom line moving forward.
However, it is important to note that the triple bottom line is merely a concept that serves as a starting point for sustainable progress. It is vitally important that it is not merely an accounting practice or 'concept'. Its ideas on assigning value must be carried forward into real-world, tangible action. There must be quantifiable progress, and attainment in each arena must be measured and weighed. Looking at the bottom line must involve a business ascertaining their actual performance with regards to people, planet and (real) profit.
Unfortunately, 'greenwashing' is prevalent, and real-world practice does not always mesh with stated desire. Sustainability is not something to be 'done' – it should be a continuing process of improvement and change. Something that all businesses should continue to work towards and within the coming years.
Whatever the economic model, and whatever a business's goals, caring for and valuing people and planet should always be central to all practice. It is only when they are that true sustainability arrives.
In reality, one of the problems with the triple bottom line is that it is often conceived as a concept rather than a practice. But as companies learn to truly become more sustainable, they are able to develop systems that take people, planet and profit into account in holistic, real-world ways.
Measuring the success of triple bottom line based policies is one of the main challenges in sustainability. So how can companies work to measure their successes and quantify their failures?
Measuring social equity is, perhaps, the hardest part of triple bottom line accounting. However, there are a number of things that can be recorded in order to measure progress in this field. For example, businesses can:
- Undertake audits of worker safety incident rates etc. to measure successes in creating a safe and healthy working environment.
- Survey workers to see how 'happy' they are, and regularly have employees themselves rate a company's working environment, ethos and workplace morale.
- Undertake a supply chain audit to make sure workers are happy, secure and well-paid at each stage in a product's life-cycle.
- Look at health metrics, educational attainment records, etc. for the local community.
It is, perhaps, somewhat easier to quantify failures and successes in the environmental realm. The most common metric used to measure progress is, of course, the carbon footprint. By measuring the carbon emitted, and carbon savings, a business can see how well they are doing in the sphere of climate change mitigation.
However, there are also other metrics that can be used to determine progress towards goals in ecological sustainability. For example:
- Measurements of water savings/ water conservation.
- Measurement of waste generated/ reduction in waste.
- Calculation of improvement/ regression of ecosystem biodiversity in the area(s) of operation.
In addition to looking at company profit, a company seeking to measure successes and failures in triple bottom line accounting should also look at other economic measures, such as GDP for the nation or nations in which they operate, employment statistics for areas of operation, and at figures that show whether practices in either of the other pillars have fed into real economic profit.
For example, business profit may have allowed giving back to a local community. The philanthropic endeavor may have increased productivity by improving local health and educational opportunities. This, in turn, may have fed into the regeneration of local agriculture along sustainable lines. This may have improved the resilience of the local community and fed into general wealth generation capacity in the region.
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