A Look into the Triple Bottom Line (TBL)

social responsibility


TBL or Triple Bottom Line is an accounting concept that takes into consideration the impact an organization has not only on its stakeholders but also on other members of a community or society. Under normal circumstances the ‘bottom line’ of any business organization is the profit or loss it makes during a definite period. However, on a broader perspective a business involves other costs: costs towards society, and cost towards protecting environment. Thus TBL considers economic, social and environmental costs of a business organization.


John Elkington was the first to explain TBL or 3BL in 1997. In addition to evaluating ‘profitability’, this framework also endeavors to measure a company’s responsibility to ‘people’ and ‘planet’. These 3Ps were referred to as the ‘three pillars of sustainability’ of by Elkington. These three pillars measure the impact an organization has on stakeholders, society, and environment.

The 3Ps Examined

Profit – This forms the basic bottom line of every business. From a financial standpoint any business needs to be viable. The purpose of making profit is not just for keeping shareholders and directors contented, but for sustenance of a community as a whole.

People – This pertains to the cost towards the society. For instance, carbon dioxide fumes from a blast furnace results in thousands getting affected with asthma and other respiratory diseases. Cost for medical treatment for the diseased constitutes social cost of producing iron which rightfully should be borne by the factory owner. Health care for the affected, creating a safe work environment, provision of education for children of employees are societal costs that forms the second bottom line for a business enterprise.

Planet – This could be treated as an extension of societal costs. Here concern for environment and conservation of ecology is the lookout of a responsible organization. Effluents flowing into a river from a jute factory harm marine life and also humans using the river water. The third bottom line involves removing carbon footprints or efforts towards creating a ‘green’ environment. The efforts and pains taken by an organization to preserve nature and protect biosphere constitutes the cost towards sustaining a habitable planet.

The challenge of TBL lies in calculating the cost components of societal protection and environmental protection. Quantification of social and environmental projects and evaluating their sustainability is a worry of social scientists and environmentalists. As things stand there is no standard method for 3BL calculation. This could be an advantage as companies might adapt TBL according to their business policies and their geographical area of operation. This adaptation could be at a micro level for a small factory by maintenance of a water body, or at a macro level for a giant conglomerate undertaking by preserving a reserved forest. Triple Bottom Line is also applicable for government infrastructure development projects that could involve rehabilitation of displaced villagers for construction of highways.

Geographic scope, project type, and its scale are the principal determinants of creating TBL. Based on these determinants, stakeholders and experts frame economic, environmental, and social measures for creating TBL.

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Economic Measures

Economic measures form the first or basic bottom line of any commercial organization. It deals with variables like income, expenditure, taxes, employment generation, and business diversification and so on. Some common variables that are normally considered while evaluating economic bottom line are:

  • Personal income – This is the easiest of all measures of economic well being. This data is easily available and acts as an important indicator of improvement or worsening of living standards.
  • Job growth – Creation of new jobs within an organization or through establishment of new companies is another vivid indicator of economic betterment. Job growth in secondary and tertiary sectors is more desirable than a growth in agricultural sector.
  • Underemployment cost – This is a very prominent factor in less developed economies, or economies based on agriculture. Job growth in agricultural or primary sector is not encouraging as it contributes to underemployment. In such instances, an individual produces much below his level of capability.
  • Size of establishment – A growth or reduction in size of an organization in terms of number of employees is a definite indicator of growth or retardation of opportunities.
  • Employment distribution by sector – Sector-wise income distribution according to economists is a relevant indicator of economic growth at both micro and macro levels. Greater employment generation in industrial and tertiary sectors is indicative of a high growth, while creation of job opportunities in the primary or agricultural sector is an implication of low growth.
  • Revenue by sector – Each of the sectors operating in an economy makes a certain contribution to GDP (gross domestic product). The contribution of each sector to GDP determines its importance on a national level. A higher contribution from manufacturing and services sector is always encouraging.

Social Measures

Social measures take into consideration factors like availability of health and education facilities, quality of life, and access to resources, and distribution of income. The parameters that are considered while evaluating second bottom line are:

  • Rate of unemployment – For any social scientist unemployment rate is a prime indicator of well-being. A higher rate of unemployment is implicative of income disparity, poverty, and greater number of crimes. A responsible government or organization should make efforts to reduce unemployment rate.
  • Relative poverty – This is a direct impact of unemployment. The question of relative poverty arises when there is inequitable distribution of income. Organizations seeking to establish social parity create income slabs that are justifiable and sustainable.
  • Participation of women – Women participation in organized sector is an indicator of a society’s progress in socio-economic field. An effort for more job opportunities for women is a positive gauge for a society.
  • Increased life-expectancy – An increased life expectancy implies healthier living conditions and better medical facilities. Life expectancy and infant mortality rate are critical measures of societal wellness.

Environmental Measures

Concern towards environment forms the third bottom line of TBL structure. It is concerned with environment pollution, land usage, availability of drinkable water, use of natural resources, and waste management.

To Wrap Up

In conclusion it could be said that TBL is fundamentally a reporting methodology which on its own does not have much of significance. It works as a guide for entrepreneurs, economists, environmentalists, and social scientists to focus on areas that need an impetus for bettering the life of people as a whole.

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