What is Triple Bottom Line (TBL)? (Explained with Examples) – The Future Benchmark

 Model Name : Triple Bottom Line
Creator : John Elkington
 Year : 2013
Purpose : Sustainable business practices| financial measures, environmental and social measures | sustainability development strategies | Corporate Social Responsibility

 

It was the old time when business companies were only concerned about their profits and revenues. With the change in time, many innovations and modifications cropped up. But, what’s more, surprising is the incredible and drastic change that occurred in our ‘way of thinking’.


We don’t just get modernized in our fashion industry or architectural designs or construction business, but we have widened our horizons of thinking and understanding nature. We have begun caring about our environment and become aware of its present conditions.

Thus, the concept of sustainability was originated that focuses on effective utilization of natural resources for a balanced ecological system.

Since the emergence of this concept at the end of the 20th century, a multitude of theories, conceptualizations, studies, and business systems were introduced by management scientists.

Companies embark on the journey of developing their sustainability plans and initiated several programs to tackle environmental issues and bringgreenchange in the world.

Corporate social responsibility (CSR)

A popular phenomenon becomes so crucial in the business world, that without this, no company set its foot in the industry. With the numerous NGOs and not-for-profit organizations being phased in the market, environmental concerns are given substantial significance. Even, customers criticize those companies openly who harm the environment by any of their actions.

Employees love to work for those organizations who play a vital role in sustainable activities and address the environmental and social issues competently. You may have watched several advertisements for example, which give inspiring and enlightened messages favoring the social interests for the care of our environment and society.

This is where the roots of sustainability development grow into the business world and the development of the ‘Triple Bottom Line’ system set in motion for business entities and organizations. It shares the same notion.

The term triple bottom line was created by John Elkington in 1994. In fact, he wrote a book on the concept, entitled, “Cannibals with Forks: The Triple Bottom Line of 21st Century Business“. Triple bottom line originates a new track for business leaders to look beyond the current picture and sustain themselves for longer in the market.

What is the Triple Bottom Line (TBL)?

Triple bottom line is the accounting framework which draws the attention of business managers to incorporate social and environmental factors along with the financial aspects.

When a company emphasizes on its financial value, economic standing, profits, and revenues, it must also give considerable thought to its social and environmental responsibilities.

What are the 3 Ps of TBL?

TBL essentially deals with 3Ps called

  • People
  • Planet
  • Profit

In contrast to the conventional business theme of generating maximized profits and large sales, this concept aims to broaden business value by focusing on social (people’s) and environmental (planet’s) measures. This advanced approach enables you to measure your business productivity by answering the question;

What impact your organization has on :

a) the people and

b) our Earth (Planet)?

3 Ps of Triple Bottom Line TBL - People, Planet, Profit
3 Ps of Triple Bottom Line TBL – People, Planet, Profit

Cover your 3Ps

All three aspects are explained below:

1. Look After Your Planet

Companies are using natural resources and raw materials for the manufacturing and production of products all the time. Thus, it is also their duty to pay attention to the conditions of our planet.

  • If the use of energy resources is not efficient
  • If greenhouse gas emissions are polluting the environment
  • If oil spill accidents are contaminating the sea, oceans, and lands, and
  • If an ecological system gets disturbed because of business operations, then who is responsible?

In contrast, if we perform sustainable activities for the sake of our environment, it gives us an upper hand over our competitors.

Research Study of Triple Bottom Line

In 2009, Dow Jones Index did a research analysis on 99 companies. The results showed that those organizations surpassed their market peers who perform sustainable activities to protect the environment and the interests of their shareholders.

2. Do Something for People

Employees are acclaimed as the assets of any organization.

a) Your labors,

b) the community in which you work and

c) the human capital that you utilize need some assurance that you are not only using them but also giving something in return to them.

You can return them in terms of equal opportunity employer, fair distribution of labor wages, and resolving health and poverty issues.

It has been widely recognized and reported that the companies who ignore their people and social good are subjected to higher economic costs and lower profits.

3. Don’t forget involving Profits

Your organizational activities are also playing some part in maintaining the economic system, not for today only but for future generations as well. So, you can’t make it without earning profits for your company. After all, who wants to earn loses!

Revenue of IKEA - Triple Bottom Line | TBL
Revenue of IKEA (2016)- Triple Bottom Line

One of the famous examples is IKEA, a renowned Swedish furniture company. Ikea raised its sales to 37.6 billion dollars in 2016, but it didn’t swallow all the profit, it turned the profits in recycling the waste material like the remnants of the tree and exploited that wastage in making some of its top-selling products.

Now, it is recognized as the company that adds “zero waste to landfill.”

Hence, the salient point is your economic value promotes and supports the people of tomorrow when you perform all your business operations with the inclusion of the environmental sustainability aspect.

Example of TBL - Ikea uses Egg Carton material to make Furniture
IKEA uses Egg Carton material to make Furniture

 

Why TBL is a Lucrative Strategy?

Triple bottom line theory entails innumerable and superb benefits for the organizations. Few are as follows:

  1. Raises transparency that mitigates the shareholder’s concerns of concealed information
  2. Involves accountability of organizations’ actions
  3. Delivers growth and better economic situations for your company
  4. Gives a competitive advantage over industry peers
  5. Strengthen your business purposes
  6. Enables you to be a part of world betterment
  7. Minimizes the risks of public scrutiny
  8. Propels us to make our world ‘a better place to live.’

 

Companies with TBL Strategy

Almost all the companies are now working towards adopting the TBL strategy but a few firms are exemplary for embracing it quickly:

 

They are:

After all, sustainability is the only benchmark for the future!

Examples of Companies adopting Triple Bottom line Strategy
Companies adopting the Triple Bottom line Strategy (TBL)
 

Here are examples of a few companies that are embracing sustainability and setting up ambitious goals.


1. Unilever – aims to reuse 100% of plastic packaging, by 2025 


2. DHL – aims to reach zero emission by 2050


3. Patagonia –  reuse old clothes


4. Coca Cola Company – plans to achieve major recycling initiative by 2030

5. Apple – achieved 100% green energy

Tell us what you think? Did you find this article interesting?                                                   
Share your thoughts and experiences in the comments section below.

S.K. Gupta

S.K. Gupta

A management consultant and entrepreneur. S.K. Gupta understands how to create and implement business strategies. He is passionate about analyzing and writing about businesses.

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