Understanding the Triple Bottom Line

The Triple Bottom Line (TBL) was coined by John Elkington, a serial entrepreneur, in 1994. It refers to a piece of framework with three components – ecological, financial and social – that has been taken on by several organisations looking to evaluate their performance to create greater business value. The framework aims to assign value to the ecological and social aspects, which are usually challenging to be given appropriate manners of measurement, especially when it comes to financial measurement.

It may already be apparent that measuring the TBL is a feat in itself, as profits are measured in hard currency, but social capital and environmental gain have nothing similar. There is, of course, the option to assign value to a forest or a park, but this comes with a range of issues. Equally, another solution is to calculate the TBL as an index, and allows for easy comparisons between different items. The issue here is the weighting, as each aspect of the TBL may get different weighting assigned to it.

Issues aside, the TBL incorporates the following aspects, split into their respective ecological, financial and social brackets:

Environmental	Financial	Social
Sulphur dioxide concentration	Personal income	Unemployment rate
Concentration of nitrogen oxides	Cost of underemployment	Female labor force participation rate
Selected priority pollutants	Establishment churn	Median household income
Excessive nutrients	Establishment sizes	Relative poverty
Electricity consumption	Job growth	Percentage of population with a post-secondary degree or certificate
Fossil fuel consumption	Employment distribution by sector	Average commute time
Solid waste management	Percentage of firms in each sector	Violent crimes per capita
Hazardous waste management	Revenue by sector contributing to gross state product	Health-adjusted life expectancy
Change in land use/land cover

It may be hard to recognize why something like the TBL is important, but it is, in reality, crucial. Enabling businesses to implement the TBL can boost both profitability and sustainability, without compromising either. For example, developing ecotourism in an existing tourism market, such as South America, can have social, environmental and economic benefits with no hindrances. Moreover, though quite cynical, implementing the TBL makes for fantastic public relations, which in turn can yield indirect profit.

Besides profit, TBL can be used by businesses to demonstrate the wider value they provide by fulfilling in socially responsible activities. Businesses no longer provide just a product – they provide a brand people can associate with and feel represented by. Hence, consumers will often prefer to support a business that engages in responsible activities, be they outside of the workplace by directly volunteering on a sustainability project, or simply by reducing their water and power usage in their factories, for example.