What Is the Triple Bottom Line (TBL)?
In economics, the triple bottom line (TBL) maintains that companies should commit to focusing as much on social and environmental concerns as they do on profits. TBL theory posits that instead of one bottom line, there should be three: profit, people, and the planet. A TBL seeks to gauge a corporation’s level of commitment to corporate social responsibility and its impact on the environment over time.
In 1994, John Elkington—the famed British management consultant and sustainability guru—coined the phrase “triple bottom line” as his way of measuring performance in corporate America. The idea was that a company can be managed in a way that not only makes money but which also improves people’s lives and the well-being of the planet.
Key Takeaways
- The concept behind the triple bottom line is that companies should focus as much on social and environmental issues as they do on profits.
- The TBL consists of three elements: profit, people, and the planet.
- The triple bottom line aims to measure the financial, social, and environmental performance of a company over time.
- TBL may result in retaining employees, increasing external investments, boosting sales from ESG-interested customers, and gaining long-term operational efficiencies.
- TBL may also be difficult to measure, costly to implement, and cause competing strategies across triple bottom line components.
Understanding the Triple Bottom Line (TBL)
In finance, when speaking of a company’s bottom line, we usually mean its profits. Elkington’s TBL framework advances the goal of sustainability in business practices, in which companies look beyond profits to include social and environmental issues to measure the full cost of doing business. Triple-bottom-line theory says that companies should focus as much attention on social and environmental issues as they do on financial issues.
TBL theory also says that if a company focuses on finances only and does not…