The Triple Bottom Line – A Study

The Triple Bottom Line-A Study

An Introduction

Everyone wants to be part of a company that provides her with a sense of pride. Besides rendering employees with amenities, a good company treats its stakeholders with respect. The way they treat their suppliers, team members, effort to promote environmental sustainability, etc proves that such companies do not operate in a cut-throat manner, unlike its contemporaries. There is always a possibility to improve in such companies. This kind of a company can be created by implementing the Triple Bottom Line.

An Idea of Triple Bottom Line

John Elkington wrote a book in 1997 and called it "Cannibals with Forks: The Triple Bottom Line of 21st Century Business." This was the first time triple bottom line was explained by an expert. It is a bottom line which measures profits; however, it also measures the company’s influence on people and the society at large.

The idea behind the triple bottom line is that the organization is responsible to all stakeholders and the planet. This approach at the first instant may appear naive. But, many trends support the requirement for companies to be benevolent to a certain extent.

Triple Bottom Line

  • Several companies think that their success depends on encouraging, recruiting and retaining good people. In media organizations, sponsored stars are richer than shareholders. These companies focus on their people, i.e., stakeholders. In fact, shareholders are only a certain part of stakeholders.
  • In several parts of the world, especially in specific industries, responsible people are rare. Organizations which are not careful about the welfare of its employees tend to lose their resources. They are also not able to attract workforce.
  • Varying generations have differing behavior to work. While erstwhile generations tolerated poor working conditions, the generations of X and Y look for better working atmosphere. If they are not provided proper working conditions, they move on for better jobs.
  • Potential employees and consumers have more choices than they formerly had. People are now-a-days more learned about the environmental stances taken by organizations. Some people decide the company to purchase from and join depending upon their knowledge of the company’s policies on ethical issues.

Three Bottom Lines in Details

The three bottom lines are people, planet and profit. Mentioned below is a detailed account of the three bottom lines.

# People

Organizations that maintain the triple bottom line while functioning are careful about the impact of their actions on the people who are directly or indirectly involved with them. Since, it has already been said that people means stakeholders, starting from farmers who supply raw materials to the highest executive in the company everyone is considered a stakeholder. Such organizations are bothered about the welfare of all stakeholders. These organizations are careful about respecting human rights and thus, do not employ child laborers or employ human resource under depressing working conditions. They also ensure that employees are provided civilized working hours, health care, opportunities to progress in career through advanced education, etc. The people bottom line often includes the community where the company is functioning.

# Planet

Companies that follow the triple bottom line make sure that they have reduced carbon footprint. They are aware of the fact that ‘going green’ is useful for the sustainability of the organization in the long run. However, sustainability does not only refer to monetary gains, it also indicates the complete effect of the actions of the company on the environment. They get rid of harmful waste in a way that does not harm the environment or the population of a locality, decrease their energy consumption and avoid developing products that are harmful for the people on the planet.

# Profit

Whether companies are bothered about people and planet or not, they are interested about the financial aspect of business. They might not use the triple bottom line, but profit is an important bottom line for them. However, when looking at profit from the perspective of triple bottom line, it cam be said that it sustains the entire community and not just shareholders.

Applying Triple Bottom Line

While a company may not consider the Triple Bottom Line to be suitable for its operations, it should think about the way workplaces are altering. After this, the company should decide whether it wants to implement the approach of Triple Bottom Line or not.

To adapt themselves to the changing face of workplaces, some companies have taken necessary measures. Some companies have reduced their carbon footprint by decreasing carbon dioxide emissions, while others have started using renewable energy. Some high end companies buy raw materials directly from farmers who grow crops in an environmentally friendly way and also make sure that the farmers are treated well. Education companies often tend to have a goal to reach underprivileged children.

Triple Bottom Line helps in receiving positive feedback from employees as well as customers.

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Perfect Time to Use Triple Bottom Line

The Triple Bottom Line is actually a reporting system. By itself, the approach cannot make any positive difference to the environment or the people. It can however, help managers to emphasize on the bottom lines and make sure that the organization has positive impact on its stakeholders. Here, it is used as a kind of Balanced Scorecard.

Like all systems of measurements, here also the cost of calculating and controlling three bottom lines is quite considerable. The cost incurred by the company can be justified by indulging in some welfare activities for the stakeholders.

To Wrap Up

From this article, it can be deduced that The Triple Bottom Line is a technique to assess the influence of an organization on people, environment and the profit it earns. With the growing awareness of people regarding the policies of companies, it has become all the more important for organizations to adhere to the three bottom line approach. By adhering to the approach of three bottom lines a company makes sure that it is easily accepted by the stakeholders. People, planet and profit are important lines that help a business in gaining limelight in the twenty first century. Large companies tend to follow the three bottom line approach, so that they are recognized by stakeholders.

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