The Importance of the “Triple Bottom Line”
The world of today is facing many challenges which are becoming ever more urgent day by day. Some of these challenges include climate change, inequality, and poverty. Moreover, the need for sustainability and sustainable strategies is essential for most companies. This development resulted for many companies in adapting a new policy called the Triple Bottom Line (TBL). But what exactly is it about, why is it so important and how is this new policy connected with the challenges mentioned before? In the following article we will take a closer look at it.
What is TBL?
Businesses had to develop a concept that not only focuses on generating profit but also considers their social and environmental impact on society and the planet respectively. For this reason, instead of measuring only their financial performance, they measure their environmental and social performance. The TBL consists of three elements that are also known as “the 3 P’s”: profit, people and planet.
Financial viability and profit are two very important elements that any shareholder or investor would look at in a business. The financial performance of the company is one of the primary considerations and based on this, important decisions are made for the company and several initiatives are taken. In our time, profit is not the only concern of a company, since we have repeatedly seen that if a sustainable strategy is implemented, the company wins not only financially but also socially and environmentally, depending on the practices it applies.
The commitment of a company to people is the second element of TBL. Some of the practices that businesses are implementing to enhance and serve society are encouraging volunteerism in the workplace and ensuring fair hiring practices. In addition, more and more companies are embracing sustainability and focusing on creating value for all stakeholders including customers, employees and community members.
The planet is the third and the final element of TBL. Actions to protect the planet and the environment are the key to driving positive change. Measuring the impact of companies on the planet (e.g. the amount of pollution to the environment, the amount of greenhouse gases GHS’s that were released, etc.) is also essential to achieve sustainability on a large scale and to positively impact the society and the world.
Why is TBL so important?
In a world that emphasizes profit over purpose, TBL is a concept that shatters this ideology. Companies that implement innovative business strategies and have a clear purpose not only to have revenues but to IMPACT the world, have shown that it’s possible to achieve sustainability and a better world for everyone. Of course, this concept requires action! Many companies now strive to move in the direction of upgrading the quality of life in their local area, preserving and protecting the environment and think in terms of a circular economy
In conclusion, TBL is a concept that transforms the current financial accounting-focused business system to take on a more comprehensive approach to measuring impact and success. It focuses not only on profit but also on environmental and social impact. Companies that already have included this concept in their sustainability strategies are more likely to “survive” and succeed in the business sector as the need for innovative strategy methods has increased in the last few years.
Icons for the sections "Profit" and "People" both are sourced from pngtree. Icon for "Planet" is self-sourced.