The triple bottom line (or otherwise noted as TBL or 3BL) is an accounting framework with three parts: social, environmental (or ecological) and economic. Some organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value. Business writer John Elkington claims to have coined the phrase in 1994.
Background In traditional business accounting and common usage, the "bottom line" refers to either the "profit" or "loss", which is usually recorded at the very bottom line on a statement of revenue and expenses. Over the last 50 years, environmentalists and social justice advocates have struggled to bring a broader definition of bottom line into public consciousness by introducing full cost accounting. For example, if a corporation shows a monetary profit, but their asbestos mine causes thousands of deaths from asbestosis, and their copper mine pollutes a river, and the government ends up spending taxpayer money on health care and river clean-up, how can we capture a fuller societal cost benefit analysis? The triple bottom line adds two more "bottom lines": social and environmental (ecological) concerns. With the ratification of the United Nations and ICLEI TBL standard for urban and community accounting in early 2007, this became the dominant approach to public sector full cost accounting. Similar UN standards apply to natural capital and human capital measurement to assist in measurements required by TBL, e.g. the EcoBudget standard for reporting ecological footprint. Use of the TBL is fairly widespread in South African media, as found in a 1990–2008 study of worldwide national newspapers. An example of an organization seeking a triple bottom line would be a social enterprise run as a non-profit, but earning income by offering opportunities for handicapped people who have been labelled "unemployable", to earn a living by recycling. The organization earns a profit, which is invested back into the community. The social benefit is the meaningful employment of disadvantaged citizens, and the reduction in the society's welfare or disability costs. The environmental benefit comes from the recycling accomplished. In the private sector, a commitment to corporate social responsibility (CSR) implies an obligation to public reporting about the business's substantial impact for the better of the environment and people. Triple bottom line is one framework for reporting this material impact. This is distinct from the more limited changes required to deal only with ecological issues. The triple bottom line has also been extended to encompass four pillars, known as the quadruple bottom line (QBL) or fourth bottom line. The fourth pillar denotes a future-oriented approach (future generations, intergenerational equity, etc.). It is a long-term outlook that sets sustainable development and sustainability concerns apart from previous social, environmental, and economic considerations. The challenges of putting the TBL into practice relate to the measurement of social and ecological categories. Despite this, the TBL framework enables organizations to take a longer-term perspective and thus evaluate the future consequences of decisions.
Definition Sustainable development was defined by the Brundtland Commission of the United Nations in 1987 at the time when there was a growing realization that finance was the most tool to develop sustainability. Triple bottom line (TBL) accounting expands the traditional reporting framework to take into account social and environmental performance in addition to financial performance. In 1981, Freer Spreckley first articulated the triple bottom line framework in a publication called Social Audit - A Management Tool for Co-operative Working. In this work, he argued that enterprises should measure and report on financial performance, social wealth creation, and environmental responsibility. The phrase "triple bottom line" was articulated more fully by John Elkington in his 1997 book Cannibals with Forks: the Triple Bottom Line of 21st Century Business, where he adopted a question asked by the Polish poet Stanisław Lec, "Is it progress if a cannibal uses a fork?" as the opening line of his foreword. Elkington suggests that it can be, particularly in the case of "sustainable capitalism", wherein competing corporate entities seek to maintain their relative position by addressing people and planet issues as well as profit maximisation. A Triple Bottom Line Investing group advocating and publicizing these principles was founded in 1998 by Robert J. Rubinstein. For reporting their efforts companies may demonstrate their commitment to corporate social responsibility (CSR) through the following:
Top-level involvement (CEO, Board of Directors) Policy Investments Programs Signatories to voluntary standards Principles (UN Global Compact-Ceres Principles) Reporting (Global Reporting Initiative) The concept of TBL demands that a company's responsibility lies with stakeholders rather than shareholders. In this case, "stakeholders" refers to anyone who is influenced, either directly or indirectly, by the actions of the firm. Examples of stakeholders include employees, customers, suppliers, local residents, government agencies, and creditors. According to the stakeholder theory, the business entity should be used as a vehicle for coordinating stakeholder interests, instead of maximizing shareholder (owner) profit. A growing number of financial institutions incorporate a triple bottom line approach in their work. It is at the core of the business of banks in the Global Alliance for Banking on Values, for example. The Detroit-based Avalon International Breads interprets the triple bottom line as consisting of "Earth", "Community", and "Employees".
The three bottom lines
The triple bottom line consists of social equity, economic, and environmental factors. The phrase, "people, planet, and profit" to describe the triple bottom line and the goal of sustainability, was coined by John Elkington in 1994 while at SustainAbility, and was later used as the title of the Anglo-Dutch oil company Shell's first sustainability report in 1997. As a result, one country in which the 3P concept took deep root was The Netherlands.
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