The triple bottom line (TBL or 3BL) is a phrase credited to John Elkington, author and founder of the consultancy firm SustainAbility. He developed the term in 1994, and it became more widely known in 1998 with his popular book Cannibals with Forks: the Triple Bottom Line of 21st Century Business. Basically, the term expresses a way to measure companies by more than their ability to be profitable. Instead it measures performance of a company be evaluating its social, environmental and economic success. It encourages companies to not just endeavor to make money but also to be concerned about what kind of position they hold in the world, and what kind of environmental stewards they become.
Another way of looking at the triple bottom line is to see how a company affects people, planet, and profit. Obviously there is a need for companies to make money or they can’t sustain their practices. Yet those companies trying to achieve the kind of sustainability that Elkington and other business experts discuss can’t be interested only in profit. Sometimes the desire for profit is to the detriment of the people of the world or to the environment in general. For a company to achieve the triple bottom line, it must attempt to fulfill all three things at once.
People affected by a company are often called stakeholders, and in fulfilling the triple bottom line, a company is trying to please its stakeholders, in addition to pleasing shareholders. Stakeholders are those people who can be directly affected by the company’s actions or who might benefit or suffer from the company’s actions in a less direct way. A company that pollutes the environment, for instance, has a high number of stakeholders: anyone who lives in the environment. Direct stakeholders include employees, shareholders, and any people with whom the company does business. The triple bottom line can’t be met if employees are not paid reasonable wages for work, or if the company works with other businesses that exploit their employees.
Usually, when companies look at the “people” factor, they try to figure out how to be socially responsible in a complex world. Many companies now advertise or put out yearly “social responsibility” reports to evidence how they’re attempting to help the world. Others may advertise their “green” practices and the ways in which they’re trying to reduce environmental debt. These practices even become the subject of advertisements on television.
However, not all businesses that advertise environmental or social responsibility are really achieving the TBL. They may be making some improvements, but occasionally advertisements serve to mask areas where companies clearly do not meet environmental, social or economic high standards. It is clear that companies can suffer economically when they don’t at least attempt to achieve the triple bottom line. As consumers become more aware of distasteful or damaging practices (such as using child labor to produce product or routinely exploiting workers), they often choose to use or invest in other companies. Elkington and others have argued that this consumer knowledge starts to impact choice, and that in the future, achieving the TBL may be a litmus test that companies must pass to remain profitable.
One of the most well received books on this subject is authored by Andrew W. Savitz: The Triple Bottom Line: How Today's Best-Run Companies Are Achieving Economic, Social and Environmental Success and How You Can Too . It’s recommended by many in the business field, for anyone attempting to start a business or to improve an existing one. Many consumers have found this book a fascinating read. There are also a number of consultancy firms that have arisen to advise companies on how they can best achieve the TBL and remain competitive in 21st century business practices.