In 1994, John Elkington developed Triple Bottom Line as an accounting basis. Elkington is an entrepreneur and author. Triple Bottom Line (TBL) aims at incorporating sustainable accounting in business inclusive of social, environmental, and economic aspects. John Elkington is known as one of the founders of the global sustainability movement, he is an experienced CSR advisor in the business world.

John has addressed over 1,000 conferences around the world. He was a faculty member of the World Economic Forum from 2002-2008. He has served on over 70 company boards. He has won several awards and is the author and co-author of 20 books. John’s book titled Cannibals with Forks in 1997 popularised his ‘Triple Bottom Line’ concept triple bottom-line consists of People, Planet, Profit and has laid the foundations for sustainable business strategy.

In 2008, The Evening Standard which is a daily newspaper in London declared John among the ‘1000 Most Influential People’ in London, he is described as “true green business guru”, and as “an evangelist for corporate social responsibility” long before it was a fashionable concept in business world.

The triple bottom line (TBL) framework prepares an organization in realizing its responsibilities towards society and ecology. It is all about accountability for the overall effect of the company’s business practices and contribution towards non-profitable aspects. Triple bottom line theory expands conventional business success include its contributions to social well-being, environmental health, and a fair economy.

TBL theory focuses on the 3Ps that makes firms socially responsible:

People

Organizations are accountable for the well-being of the society and its people. Their responsibility pertains to people and behaving and conducting business ethically and with sensitivity towards social, cultural, economic, and environmental issues. Besides maximizing shareholder value, businesses should operate in a way that benefits society. People include employees working in the organization and the society at large.

Profits

It is every company’s responsibility to pay its lenders, operational creditors, and employees. Profit is capital that companies can use for maintaining the workplace buy machinery and equipment, upgrading infrastructure, buying expensive items, or investing in new products, services or employees. In a capitalist economy, a firm’s success most heavily depends on its financial performance, or the profit it generates for shareholders. Strategic planning initiatives and key business decisions are generally carefully designed to maximize profits while reducing costs and mitigating risk. It’s important to make the distinction between a firm’s shareholders and stakeholders. Stakeholders consists the entire society.

Planet

It is concerned with the geographical location, i.e., the nation, area, city, or state in which the company is located. Companies have to make sure that the neighbourhood and the location is clean. They must ensure that their operations don’t affect the environment adversely. Organizations must learn to reduce, reuse, and recycle waste. We as consumers must cut down on what we keep throwing away, we must volunteer for clean-ups in our community, educate children about importance of sustainability of our planet; conserve trees, plant trees, conserve jungles, conserve water, reduce dependence on electricity etc. Corporate social responsibility is a part of every organization’s core business strategy as well as the foundation upon which its core values and culture are based. Organizations don’t exist in vacuum; they are committed to having a positive impact on society and respecting and preserving the environment.

Why Triple Bottom Line is important?

Prof. Michel Porter – strategic management guru feels why should companies turn to NGOs and governments to solve society’s major problems? It is time for business organizations to address societal needs and challenges through creating shared values, in which a company prepares a business model addressing a social cause which will augment their profits. Because when business solves an external problem, it makes a profit and in return the action lets that solution grow. The shared value concept enhances corporate policies and practices add to the competitiveness of a company while simultaneously advancing social and economic conditions in the communities in which the company sells and operates.

For example, IDE Technologies, which is considered a leader in desalination technologies, turns salt water into fresh water. The Israeli company supplies 70% of the tiny Middle Eastern country’s potable water. Its largest local plant, located just south of Tel Aviv, produces 165 million gallons of freshwater daily. Though privately held, IDE also builds and operates some of the biggest desalination plants in about 40 other countries, including Mexico, Chile and China.

When organizations make profit on the basis of shared value, they enable society to advance and companies to grow faster. When corporates include societal issues into their strategies and operations major transformations take place. Some organizations which adopt a triple bottom line approach seem principled in a world that emphasizes profit over purpose. Innovative companies, however, have shown time and again that it is possible to do well by earning great profits.  Many firms have reaped financial benefits by committing to sustainable business practices.

For example, Nike Inc. decided to weave shoes more efficiently by reducing the raw material and labour time needed to make each shoe. That has kept more than 3.5 million pounds of waste from reaching landfills since 2012. But the good news doesn’t stop with the environmental impact. The company is spending less on transportation, materials and waste disposal…this is highly appreciable.

Tech giants have spent billions of dollars on solar and wind power, cutting greenhouse-gas emissions and energy expenditures at the same time. Alphabet Inc.’s Google, Amazon and Facebook Inc. are now some of the largest buyers of green power in America. The fact is that it’s not just easy being green — it also can be profitable. Google, Facebook and Amazon are among the largest energy consumers in the United States, and a lot of that power is now emission-free. Each company committed to getting 100% of their power for their data centres from renewable resources such as wind and solar.

Challenges faced by TBL

The biggest challenge TBL faces if of greenwashing which is a spin of corporate social responsibility in declaring itself to promoting environmentally friendly policies whereas in reality, the company does not live up to the commitment. Companies keep making unsubstantiated or misleading claim about the environmental benefits of its products, services, technology and strategic practices. It’s in fact an eye wash. Greenwashing is an unsupported claim to deceive consumers into believing that a company’s products are environmentally friendly or have a greater positive environmental impact than they actually do.

Way back in 2019, the controversy about McDonald’s introduction to paper straw which turned out to be non-recyclable is a classic case of greenwash. Aside from the questionable practice of cutting down trees to make disposable straws is a classic example of how a corporate giant can pretend to be ethical while cheating on its consumers. The so-called paper straws were made out of plastic creating plastic pollution. Another mocking greenwashing move is to slap a green label on something to make it appear more sustainable or healthy, as Coca-Cola did with Coca-Cola Life with 6.6% sugar was far from a healthy drink. Consumers were taken for a ride – you would probably get less Life if you drank a lot of it.

On 23^rd May 2017, the Tata Trusts had organized a session on “Transforming World: The Role of Business in Society” the speaker was Michael Porter. One of my friends Ms. Debsmita Pani who works for Tata Trusts invited me for the session. And, for me this was a propitious occasion, after all hearing Prof. Porter speaking in person is an exceptional opportunity.

Prof. Porter’s talk was focused on CSR. He feels why should companies turn to NGOs and governments to solve society’s major problems? It is time for business organizations to address societal needs and challenges through creating shared values, in which a company prepares a business model addressing a social cause which will augment their profits. Because when business solves an external problem, it makes a profit and in return the action lets that solution grow. The shared value concept enhances corporate policies and practices add to the competitiveness of a company while simultaneously advancing social and economic conditions in the communities in which the company sells and operates.

Prof. Porter emphasized that profit involving shared value enables society to advance and companies to grow faster. When corporates incorporate societal issues into strategy and operations major transformations take place. He gave examples of the Fortune 500 companies ‘change the world list of 2016’.

GlaxoSmithKline ranks at number one in the 2016 list. GSK has made a calculated bet on intellectual property leniency in poor nations; it releases drugs from patent protection by lowering their prices. Though it lowers their revenues a bit, but GSK says it doesn’t lose money in any market where it operates. Over the time the approach builds goodwill and a strong market presence around the globe.

IDE Technologies, which is considered a leader in desalination technologies, turns salt water into fresh water. The Israeli company supplies 70% of the tiny Middle Eastern country’s potable water. Its largest local plant, located just south of Tel Aviv, produces 165 million gallons of freshwater daily. Though privately held, IDE also builds and operates some of the biggest desalination plants in about 40 other countries, including Mexico, Chile and China.

General Electric (GE) launched its massive renewable business strategy called ‘Ecomagination’ which in fact GE’s growth strategy to enhance resource productivity and reduce environmental impact at a global scale through commercial solutions for their customers and through their operations. They started their strategy with a pledge to generate power worth $20 billion in annual revenue from green products.

The 2016 list has only two Indian companies in it – Cipla and Godrej Group of Companies. According to Prof. Porter, India is land of opportunities and sky is the limit for Indian organizations to start profitable ventures related to societal problems such as climate change, water management, education, healthcare, rural upliftment etc. Business managers need an approach of engaging with the external environment with an eye of expanding business through finding solutions to some pressing problems. Organizations need to look at how good they are at external engagement: they should answer questions such as – can they innovate something to do better externally, whether they are ready internally to begin on a cause, and how to march ahead. Business organizations are not monolithic entities, but organizations governed and lead by individuals and anchored in the societies in which they conduct their businesses. Corporate social responsibility schemes reflect the human side of organizations.

India is the first country in the world to make the corporates shell out from their annual revenue to charity from April 2014. There are many areas in which they can invest. The major problems are hunger, poverty, healthcare and education. A survey by accountancy firm KPMG found that 52 of the country’s largest 100 companies failed to spend the required 2% in previous two years.  A smaller proportion has gone further. According to an Economic Times investigation, corporates are allegedly deceiving the system by giving donations to charitable foundations that later return the monies minus a commission.

So rooting CSR through the business is not all that great idea at the moment; how much to give and how much to expect in return is a question for most companies. Prof. Porter’s idea of ‘’creating shared values through CSR’’ is profound and has a lot of depth. There are many examples doing great work through sharing values with external environment. After all, being socially good is more profitable for a business.

A Brand Ambassador is someone who, at the most elementary level, symbolizes a brand in a positive way; he/she embodies a brand. The brand ambassador communicates the message of a company to consumers or people who would be interested in buying the company’s brand after learning about it. Thus, BA puts a human face on the multi-million dollar corporations because consumers associate with them more effectively.

The affinity consumers have for certain celebrities can greatly influence their purchase decisions. People perhaps feel that, “If the product is good enough for her, its good enough for me.” This philosophy is often the force behind advertisements for makeup, skin creams, lingerie, banks, eatables, beverages and attire. The brand ambassadors infuse confidence in the consumers to use a product/service. Essentially, the celebrity’s testimonial adds instant reliability to a small or big brand.

That’s why brand ambassador is a part of the company’s marketing and sales team. Celebrities endorse for products in lieu of heavy money. Therefore, they automatically become responsible if the brand turns out to be spurious/bogus/contaminated. It’s simple, before endorsing a product it’s their responsibility to check the credibility of a product/service. In the recent Maggi Noodle’s fiasco, the Uttar Pradesh Food and Drug Administration’s decision to recall packets of Maggi Noodles for reportedly having monosodium glutamate and lead more than permissible limits, film star Madhuri Dixit, who endorsesMaggi’s brand of ‘nutritious’ oats noodles is in trouble. The Haridwar FDA has issued her a notice  seeking an explanation as to how the noodles are nutritious, and on what the basis Nestlé is making such a claim. If she fails to respond within a fortnight, a case could be filed against her, according to officials of the FDA.

Can ambassadors simply shrug off their responsibilities when the brands endorsed by them turn out unauthentic?  Misrepresentation of products, especially in the food sector, is a serious issue, and not as silly  as many would like to believe. In February 2014, last year, the Central Consumer Protection Council, under the leadership of former Union Food Minister KV Thomas, decided  unanimously to propose laws to hold celebrities endorsing products also liable in cases of misleading advertisements. The rationale behind this decision of the CPCC was that celebrities had considerable influence over consumer choice, and that there must be some form of liability for the endorsements being made.

In US, Kellogg’s popular Rice Krispies cereal had a crisis in 2010 when it was accused of misleading consumers about its immunity boosting properties. The Federal Trade Commission ordered Kellogg to halt all advertising that claimed that the cereal improved a child’s immunity with “25 percent Daily Value of Antioxidants and Nutrients — Vitamins A, B, C and E stating the claims were “dubious.” Ironically, just a year prior, the company settled with the FTC over charges that its Frosted Mini-wheats cereal didn’t live up to its ads. The campaign claimed that the cereal improved kids’ attentiveness by nearly 20%, and was shot down when the FTC found out that the clinical studies showed that only 1-in-9 kids had that kind of improvement and half the kids weren’t affected at all. Now, we just cannot imagine this kind of strictness and vigil in the Indian administration. Our laws are indistinct and lack spirit to take up firm steps.

There is a notion that brand ambassadors can’t generally be tamed. The ad agencies do speak in favor of their models. When the going is good, everyone wants to be party to the success, but, when the going gets bad you can test the actuality of people. The celebrities behave larger than life. They should be held guilty for false advertisements because they exploit their fan following and their popularity. The fans revere them so much; they follow their personal lives and their styles to no end. Tiger Woods was a brand ambassador for Gatorade, Gillette, Accenture, AT&T, Gold Digest and Tag Heuer. After his plentiful extramarital affairs were revealed, the majority of these brands discontinued him as they found it difficult to continue him as their brand ambassador.

In India in 2012, actress Genelia D’Souza was summoned by court for allegedly making false promises through ads and brochures for a real estate company in Hyderabad. Andhra Pradesh High Court demanded her explanation as brand ambassador for a project called ‘Anjaniputra’ located close to Hyderabad Deccan when the project seems to have gone bust. This is the latest in how society and the laws in India are dealing with the extremely doubtful advertisements. It is a matter of time before similar questions are raised by other consumers who are swayed into investing in products or services, by fraudulent advertisements endorsed by celebrities who are supposed to also be role models.

The Home Trade scam of 2002 had the celebrity endorsement  of three big celebrities, Sachin Tendulkar, Hrithik Roshan and Shah Rukh Khan. Having created not a single product, the company made away with thousands of crore rupees of investor money, and celebrity-endorsed brand building  was a crucial part of their operation. Activists have also been speaking out against ads for sauna-belts, medicines, Hanuman-chalisa yantra and gem-stones on TV screens.

How can celebrities vouch for the authenticity and effectiveness of that product with great confidence without checking them? Like with politicians, an advertisement and the celebrities involved in it can simply be voted out. They can be thrown out in disgrace. This message is clear; the company and ad agencies cannot work on the premise that the consumers are fools. They better learn to respect their constituency, i.e. the consumers.

Due diligence should be exercised before making of an ad. All stakeholders must share their responsibilities. The three stake-holders in ad making are advertiser, advertising agencies and the media. Let’s understand this straight: in advertising, there’s a big difference between pushing the truth and making false claims. Most of us have some or the other time in our life been victims of false advertising. Are we going to take it lying low or question the companies to change their marketing policies? Can we allow the companies to continue to prioritize profits over the consumers?

In progressive countries like America and Europe companies need to face harsh penalties. Companies are made to pay up the consumers for cheating them.
Dannon’s popular Activia brand yogurt lured consumers into paying more for its purported nutritional benefits when it was actually pretty much the same as every other kind of yogurt.

In Canada and America law suits were filed against Dannon for falsely touting the “clinically” and “scientifically” proven nutritional benefits of the product.  In spite of the company got a famous spokesperson, Jamie Lee Curtis, for the supposed digestion-regulator, some customers didn’t buy it. Do you know that a class action settlement forced Dannon to pay up to $45 million in damages to the consumers? The company also had to limit its health claims on its products strictly to factual ones.

In another case, hundreds of car owners were extremely disappointed to find out that Hyundai and Kia Motors overstated the horsepower in some of their vehicles. In 2001, the Korean Ministry of Construction and Transportation uncovered the parody, which for some models was as much as 9.6 percent more horsepower than the cars actually had. A class action lawsuit in southern California claimed the companies were able to sell more cars and charged more per vehicle because of the false claims. In the end, the auto powerhouses had to pay customers; the settlement estimated to be between $75 million and $125 million.

In India, to protect rights of consumers the process of filing complaint and finding resolution needs a drastic improvement. Strict guidelines should be made and law suits must be resolved in minimum a week’s time. Then, we might find respite from getting cheated recurrently by companies, their advertisements and savvy brand ambassadors.