What is the Triple Bottom Line?
Incorporating sustainability into your corporate strategy can raise a lot of questions:
- How do you measure sustainability?
- How do you make sustainability work for your business?
- How do you define sustainability for your corporation?
The Triple Bottom Line is one of the main systems being used by businesses to assess the profits they are making through their corporate sustainability solutions. The Triple Bottom Line method asks you to see beyond the traditional bottom line of business to the profits that your business makes socially, environmentally, and economically. Measuring your business using the Triple Bottom Line is one of the best markers of how sustainable your business is, and how profitable it really is.
The Social bottom line measures your business’ profits in human capital, including your position within your local society. Your social bottom line is increased by having fair and beneficial labour practices and through corporate community involvement, and can also be measured in the impact of your business activities on the local economy. For example, some questions you can ask yourself when measuring Corporate Social Responsibility are:
- Is your business a job-growth driver in your city? Do you or your employees give back to the community?
- Are the people you hire statistically better situated within the community in terms of economic stability and community health?
- Does your business support local initiatives and grow the overall sustainability of your community/region?
- Do you implement fair hiring standards? What are your employee demographics?
After all, if your business is not nurturing positive relationships with your community, your client base and employee pool shrinks accordingly. The social bottom line questions the belief that the less a business pays its work force the longer it can afford to operate. Instead, the social bottom line measures the long-term sustainability of business human capital, with the understanding that a business that is also a desirable workplace will always be able to operate into the future, since there will be a work force striving to be part of the business. Essentially, corporate interests and labour interests are seen as interdependent.
Like most subjective public relations efforts or intangible benefits, your social bottom line can be difficult to measure. However the Global Reporting Initiative (GRI) has developed guidelines to enable businesses to report and measure their social impact.
The Triple Bottom Line approach to sustainability takes the view that the smaller impact your business has on the environment and the fewer natural resources you consume, the longer and more successful your business will be.
Controlling your Environmental bottom line means managing, monitoring, and reporting your consumption and waste and emissions. This is typically the work of your EHS department, though most sustainable business models also make waste reduction and green policies corporate-wide values across all levels of management. A sustainability committee is often required to communicate your sustainability solution and sustainability goals across all departments.
Measuring and reporting your environmental bottom line is certainly possible, though depending on the size of your business, it can be a time-consuming and difficult process. However, EHS or corporate sustainability software can make the process much quicker and cost effective.
Again, the Global Reporting Initiative offers a few helpful metrics for measuring and reporting your environmental triple bottom line. These include (but are not limited to):
- Renewable energy use and energy consumption (direct and indirect)
- Amount of material that is recycled
- Amount of water withdrawn from local water sources
- Total NOx, SOx, and GHG emissions
In the Triple Bottom Line approach, economic sustainability is not simply your traditional corporate capital. Your economic capital under the Triple Bottom Line model should be measured in terms of how much of an impact your business has on its economic environment.
The business that strengthens the economy it is part of is one that will continue to succeed in the future, since it contributes to the overall economic health of its support networks and community. Of course, a business needs to be aware of its traditional profits as well, and the Triple Bottom Line accounts for this.
- Does your business help local suppliers stay in business and innovate? Or do your activities put the local economy at risk?
- Do you pay employees enough to stimulate economic growth and spending? Or does your compensation policy shrink local economy?
- Do you choose materials that are economically a good investment? Or do you buy cheaper products that create issues in other areas? For example, do you buy chemical products that are low emission, or cheaper high-VOC products that put your environmental compliance at risk?
Why to Use the Triple Bottom Line Method
By using the Triple Bottom Line method, your business can expand how it understands its position in the current economy and its ability to survive in the future. Corporate sustainability measures your ability to be in business indefinitely, based on your impact on the environment, your relationship to your community, and contribution to your economy. In reality, all three factors play a major role in determining if your business can stay in business and generate a profit - no single bottom line can sustain a business alone.
- Your business needs a healthy workforce with diverse skills, different perspectives, and the workforce must be content enough to deliver growth.
- Your business can only operate in an economic situation that sees your supply chain and local businesses thrive. If your city or region becomes a dead zone economically, your own business won't have access to people or resources in the long term.
- Your business needs good stewardship of natural resources to ensure they are available 5 - 10 years down the road and beyond.
Unlike the traditional method, the Triple Bottom Line allows you to see your business as a social and environmental entity and measure it along these parameters.
You can learn much more about corporate sustainability by downloading ERA Environmental Consulting, Inc.’s free PDF eBook “The How’s and Why’s of Sustainability”, including case studies, steps to help you implement a sustainability program, and information to help you get the executive buy-in you need.
Click the button below to download your copy today.
September 9, 2011