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.
