Imagine going to work everyday for a company that you are truly excited about, and proud to be a part of. Sure, the pay is decent and there's a company crèche, but those aren't the only reasons why you love working there. You're proud to be a part of this company because they're honorable.
They stand out from the typical "cut-throat" business world by the way they treat suppliers, their commitment to environmental sustainability, and their desire to empower and promote their team members instead of dragging them down. There is a constant air of excitement and possibility at the office, and you love coming to work everyday.
Sounds pretty amazing, right? Well, a company like this isn't just a fantasy anymore. And one approach to building this type of company like this, and monitoring what it does, is to use "the triple bottom line".
The triple bottom line was first fully explained by John Elkington in his 1997 book "Cannibals With Forks: The Triple Bottom Line of 21st Century Business". It's a bottom line that continues to measure profits, but also measures the organization's impact on people and on the planet. The triple bottom line is a way of expressing a company's impact and sustainability on both a local and a global scale.
The concept behind the triple bottom line is that companies are responsible first and foremost to all their stakeholders, and these include everyone that is involved with the company whether directly or indirectly, as well as the planet we're all living on. This approach sees shareholders as part of the stakeholder group, but only as part of it.
At first, this approach can seem naïve. However, a number of important trends support the need for organizations to be benevolent, at least to some extent:
So let's look at the three bottom lines in more detail:
Companies that follow the triple bottom line way of doing business think about the impact their actions have on all the people involved with them. This can include everybody from farmers supplying raw materials, on up to the CEO of the company. Everyone's well being is taken into consideration. The company offers health care, good working hours, a healthy, safe place to work, opportunities for advancement and education, and does not exploit their labor force (by using child labor or offering sweatshop wages). In some cases, the "people" bottom line can also include the community where the company does business.
Triple bottom line companies take pains to reduce or eliminate their ecological footprint. They strive for sustainability, recognizing the fact that "going green" may be more profitable in the long run. But it's not just about the money. Triple bottom line companies look at the entire life cycle of their actions and try to determine the true cost of what they're doing in regards to the environment. They take pains to reduce their energy usage, they dispose of any toxic waste in a safe way, they try to use renewable energy sources and they don't produce products that are unsafe or unhealthy for people and the planet.
The financial bottom line is the one that all companies share, whether they're using triple bottom line or not. When looking at profit from a triple bottom line standpoint, the idea is that profits will help empower and sustain the community as a whole, and not just flow to the CEO and shareholders.
While you may or may not consider the Triple Bottom Line appropriate for your business, it makes sense to recognize the way in which the workplace is changing, and consider whether you need to adapt your approach to business to reflect this.
If you decide to explore the concept further, start out by researching what other companies are doing to make a positive change in the way they do business. Looking at the steps they've taken will save you time brainstorming on ways to improve your own business. Some examples from different industries include:
By taking the time to start using the triple bottom line approach, you might be surprised at just how positive the reaction will be from your colleagues and your customers.
The Triple Bottom Line is essentially a reporting system. Of itself, it doesn't actually improve the company's impact on people or the environment, any more than the action of producing a set of management accounts would affect profits.
However, it can be used to drive improvements in the way an organization impacts people and the environment by helping managers focus on what they need to do to improve all of the bottom lines, and keeping this work high on their agendas. In this case, the Triple Bottom Line is being used as a type of Balanced Scorecard.
As with all measurement systems, though, the cost of monitoring and calculating three bottom lines can be considerable. And you can only justify this cost if you can do some greater good as a result of having the figures. What's more, you certainly don't have to have Triple Bottom Line reporting in place to treat people well, or be conscientious about your impact on the environment. In many cases, money that could be spent on monitoring the Triple Bottom Line could better be used on people- or planet-friendly initiatives.
The Triple Bottom Line is a way of measuring an organization's impact on people and the environment as well as its finances.
With the Mind Tools Club, you get much, much more than you do here for free.
And we'll give you the 4 workbooks above when you join!
Learn on the move with the free Mind Tools iPhone, iPad and Android Apps. Short bursts of business training ideal for busy people.