Is Everything Better in Threes? Discussion Regarding the Triple Bottom Line

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The conventional way to measure a business is it’s bottom line, or its net profits. However, it has become increasingly trendy for businesses to openly advocate that they are now functioning under the triple bottom line model, or, putting equal emphasis on their social and environmental impacts. Quantifiable environmental impacts include consumption of finite resources, water quality and availability, and pollution emitted. Social impacts include community health, worker safety, education, quality, and diversity. The triple bottom line is sometimes also know as the 3P’s, or Profits, People and Planets. It was coined by John Elkington in the 1990s, an Englishman who has been working in the field of sustainability for decades.

How many times are we caught looking at two different prices for the same product, only to find that one is somehow stamped as “green friendly?” (And then put it right into a plastic bag at the check-out-I jest!) We often choose the green-friendly product so that we can feel good about our purchase. In other words, “green” is in, and being heavily marketed toward the consumer. But is this movement really just a “fad?” It is argued by many that companies that factor these impacts into their overall corporate balance sheets will be more successful because it delivers greater efficiency, makes them more competitive and sparks innovation — all drivers of profitability over time. Additionally, people who work in LEED-certified buildings typically show 6 percent to 16 percent improved productivity, roughly 10 times the initial energy savings. That becomes a measurable benefit that can ultimately be linked to profitability and shareholder value. What’s more, employees feel better about their work environment and their employer, creating stronger employee relationships and company loyalty.

However, there has been debate surrounding the methodology of equating social and environmental with business practices. In an article called “Getting to the Bottom of the ‘Triple Bottom'” it is asked, “What are the ethical/social analogues of, say, revenue, expenses, gains, losses, assets, liabilities, equity and so on? The kinds of raw data that 3BL advocates propse to collect do not allow for a straightforward subtraction of “bads” from “goods” in order to get some kind of net social sum.” In essence, the triple bottom line implies that social and environmental goals and metrics are transferrable with financial goals and metrics, which many argue aren’t compatible in terms of metrics and equating. It’s like trying to measure your height in centimeters with a ruler. The article also cites that business leaders know that businesses can’t run on purely profit-maximization models to be successful. Many times the social and environmental bottom lines are already gathered by standard departments within a large organizations, make the triple bottom line redundant.

-Brittany

sources:
http://moneythink.org/blog/2010/03/02/is-“triple-bottom-line”-simply-a-marketing-gimmick/
http://www.greenbiz.com/blog/2010/01/08/why-triple-bottom-line-matters-more-ever

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One response »

  1. Pingback: Giving to the poor – is that really the role of a business? | It makes perfect sense

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