The Triple Bottom Line (TBL) is a concept that emphasizes the importance of a business’s impact on social, environmental, and economic aspects. It originated in the 1990s and was popularized by John Elkington, who is credited with coining the term. The term “Triple Bottom Line” was coined by Elkington in his 1997 book “Cannibals with Forks: The Triple Bottom Line of 21st Century Business.”
“The triple bottom line is about more than just profit. It’s about creating sustainable value for society and the environment.” – John Elkington
The TBL framework was developed in response to growing concerns about the negative impacts of businesses on society and the environment. Elkington believed that by considering these impacts and integrating them into business decisions, companies could create long-term value for their stakeholders and contribute to sustainable development. As a result, the TBL concept gained popularity in the late 1990s and early 2000s, particularly among businesses that wanted to differentiate themselves by highlighting their social and environmental commitments.
To provide a standardized framework for companies to report on their TBL performance, the Global Reporting Initiative (GRI) published its first set of sustainability reporting guidelines in 2006. The GRI guidelines have since become one of the most widely used frameworks for sustainability reporting, with thousands of companies around the world now publishing sustainability reports based on the GRI standards. Moreover, the TBL framework has also been embraced by governments, NGOs, and international organizations, such as the United Nations, as a way to promote sustainable development.
The United Nations Sustainable Development Goals (SDGs) provide a roadmap for sustainable development and align with the TBL framework. The TBL concept has proven to be a valuable tool for businesses looking to create long-term value while considering the impact of their activities on society and the environment.
In recent years, the TBL concept has continued to evolve, with some advocates calling for a “Quadruple Bottom Line” that includes cultural impacts alongside profit, people, and the planet.
Measuring Your Triple Bottom Line (TBL)
Several approaches can be used to measure TBL, including sustainability reporting, life cycle assessment, social return on investment, environmental management systems, and benefit-cost analysis.
Sustainability reporting is one way for a company to communicate its social, environmental, and governance performance. This method includes metrics such as energy consumption, greenhouse gas emissions, employee turnover, and community involvement.
Another way to measure TBL is through life cycle assessment (LCA). LCA measures the environmental impact of a product or service across its entire life cycle, from raw material extraction to disposal or recycling. By using LCA, a company can identify areas of its operations that have the most significant environmental impact and find ways to reduce its environmental footprint.
Social Return on Investment (SROI) is used to measure the social and environmental impact of a company’s activities by assigning a monetary value to non-financial outcomes, such as improved community health or reduced carbon emissions. Benefit-Cost Analysis (BCA) is a tool used to assess the economic viability of a project or investment by comparing the benefits it generates against its costs.
Corporate Responsibility: Triple Bottom Line in Action
Clothing company Patagonia has implemented sustainable practices in its production processes and has also initiated campaigns to protect the environment such as committing to using 100% organic cotton in its clothing line, which reduces the amount of pesticides and fertilizers used in cotton farming. Further, the company has also launched several environmental campaigns, such as the “1% for the Planet” initiative, which donates 1% of its sales to environmental organizations.
In 2022, the company has achieved a significant milestone, having accomplished 100% renewable electricity in the United States and 76% globally, using both on-site and off-site installations. Its on-site installations in Reno, Nevada, and Ventura, California, campuses have contributed over 1.5 megawatts of renewable power, and it has supported over 1,000 solar arrays on residential homes across the US. Patagonia has also installed over 600 kilowatts of solar panels, ingeniously cantilevered over farmland to enable the cultivation of both sun and crops. Presently, it is exploring additional renewable investments in countries where it operates offices and stores.
Danone, a multinational food and beverage company, has been working to integrate sustainability and social responsibility into its business practices for over a decade. In 2017, the company announced its “One Planet. One Health” vision, which aims to create sustainable value for all stakeholders by addressing global social and environmental challenges. To achieve this, Danone has set ambitious targets across its value chain, including goals to achieve carbon neutrality by 2050 and to use 100% renewable electricity by 2030. In 2021, Danone announced that all of its global operations are now carbon neutral.
In addition to its environmental goals, Danone has also focused on social responsibility and community engagement. The company has launched several initiatives to support smallholder farmers, including a program to help farmers in Africa access finance, training, and technical support. Danone also partners with local organizations to support nutrition and health education programs, with a focus on vulnerable populations such as children and pregnant women.
Danone has also made commitments to diversity, equity, and inclusion, including a goal to achieve gender parity at all levels of the company by 2030. The company has established a range of programs to support this goal, including mentoring and coaching programs for women and leadership development programs for underrepresented groups. Danone has also committed to addressing systemic racism and discrimination, with a focus on creating a more diverse and inclusive workplace culture.
Interface’s Climate Take Back™ program is an ambitious initiative to combat global warming. The company is striving to cut its carbon emissions in half on an absolute basis throughout its entire business and supply chain by 2030 and to become a carbon-negative enterprise by 2040. Interface is committed to creating a climate that is suitable for life by concentrating on four major focus areas: Live Zero, Love Carbon, Let Nature Cool, and Lead the Industrial Re-Revolution. By following these focus areas, Interface aims to operate its business in a way that helps restore the planet, transforming the Climate Take Back™ vision into a reality.
2021 Operational Metrics
- 76% of the energy used at manufacturing sites is from renewable sources
- A total of 19.2 million pounds of waste was discarded from manufacturing sites
Interface’s materials used to make carpets were from virgin sources in 1994. As of 2021, 64% of the raw materials in its carpet tiles come from recycled or bio-based sources. To enhance the company’s ability to recycle its carpet and products from customers at end of life, they have eliminated materials that should not be recycled, such as phthalates, formaldehyde, and fluorocarbons. The company has also begun the shift to recycled materials in their luxury vinyl tile (LVT) products, which they started selling in 2016. Working with their supplier for LVT, they have increased the recycled content of their LVT products to 39% and have plans to move toward more recycled content across their resilient product portfolio.
In addition to its environmental sustainability efforts, Interface has a strong commitment to social responsibility. The company has implemented various programs to support local communities and improve the lives of its employees. For example, Interface provides employees with opportunities for personal and professional development, and supports community initiatives related to education and health.
As detailed in the 2020 Gender Pay Gap Report, female employees received a median hourly pay that was 39.8% higher than that of their male counterparts. In the 2019 report, female employees were paid 20.9% more than male employees. The median bonus payments for employees increased from 21.6% in 2019 to 26.7% in 2020.
The TOMS 2022 impact report highlights the company’s commitment to social and environmental responsibility. The report covers its progress in the areas of giving, sustainability, and diversity, equity, and inclusion (DEI). In 2022 TOMS was awarded Best for the World ™ B Corps in the Community area.
TOMS has donated more than 100 million pairs of shoes to people in need and has provided access to water, sight-saving surgery, and safe birth services. In 2022 the company donated $100,000 to International Medical Corps, a long-time partner, to assist in providing essential mental health services in and around Ukraine. Additionally, a donation of $10,000 was made to Bright Kids, an organization that aids Ukrainian families with children who have disabilities.
Sustainability initiatives include using eco-friendly materials and reducing waste. Earthwise™ is a badge for products designed with the planet in mind, incorporating earth-friendly elements, and in 2022 30% of footwear products sold met earthwise™ guidelines. TOMS ensures packaging is made with at least 80% recycled materials and they source 100% of packaging from sustainably managed forests.
The company provides DEI training to all employees and has a Diversity Recruiting Program to help increase diversity within its workforce. Additionally, TOMS shoes has partnerships with various organizations focused on social justice and equality, and they support community-based programs that work to promote equity and opportunity.
In December 2020, Unilever’s Board of Directors announced its plan to present a Climate Transition Action Plan to its shareholders. The company aims to seek a non-binding advisory vote on its ambitious emissions reduction targets and the measures it plans to undertake to achieve them. Unilever intends to provide annual reports on the plan’s implementation and submit an updated version for an advisory vote every three years. The Climate Transition Action Plan outlines how Unilever will eliminate emissions in its own operations by 2030 and achieve net-zero emissions across its value chain by 2039. The company believes that taking early action to reduce emissions will lead to a more competitive business overall, as it expects emissions to be priced by governments in the future.
The plan includes Unilever’s approach to reducing the environmental impact of its brands through innovation and its Climate & Nature Fund. To align with the goals of the Paris Agreement, the company recognizes that systemic change is necessary, and it has outlined its public policy advocacy and industry partnerships to achieve this goal.
According to the company, by sharing its plan, Unilever aims to promote transparency and accountability, encourage a more robust dialogue, and inspire other companies to take action.
Takeaways and Current Trends
The adoption of TBL can bring significant benefits to organizations. By taking a more comprehensive approach to business performance, companies can make better decisions, enhance stakeholder engagement, improve sustainability outcomes, and gain a competitive advantage. TBL provides a framework for companies to evaluate their impact beyond just financial success and focus on long-term economic, social, and environmental sustainability.
First, TBL helps organizations make better decisions by taking a broader perspective and considering the long-term impact of their actions. By doing so, companies can identify potential risks and opportunities and make more informed decisions.
Second, TBL encourages organizations to engage with stakeholders from all three dimensions (economic, social, and environmental) and to consider their interests and needs. This leads to increased trust and support from stakeholders, including customers, employees, suppliers, and communities. Moreover, by adopting TBL, organizations can focus on sustainability and integrate sustainability principles into their business strategy. This can lead to reduced environmental impact, improved social outcomes, and long-term economic viability.
In the most recent episode, 5 Factors for Purpose-Driven Businesses, Dev Patnaik, CEO of Jump Associates, a strategy and innovation firm that supports organizations in shifting their focus from profits to meaningful work, shares his insights on the top 5 factors that enable businesses to be genuinely purpose-driven. He also provides data and insights that demonstrate how a purpose-driven approach can result in increased profitability and help to shape the future of business. Dev is also a board trustee of Conscious Capitalism and is a trusted advisor to some of the world’s most recognizable brands.