The world remains full of uncertainty, yet the imperative for a robust business sustainability strategy is clear in the quest for transformational change. Business leaders are increasingly recognising the importance of making their operations more sustainable to help fight the climate crisis. However, understandably, they have concerns about their business success in the process. One strategy to ensure business prosperity whilst addressing societal and environmental issues is the Triple Bottom Line Approach.
What is the Triple Bottom Line Approach?
The Triple Bottom Line Approach is an accounting framework that prompts business leaders to look beyond standard measurements of profit and loss. This business concept is built on incorporating the three p’s – profit, people, and the planet. It incorporates social, environmental and financial, profit, people, and the planet.
Understanding the three p’s
The Triple Bottom Line Approach is built on embedding the three p’s – profit, people, and the planet. Keep reading to gain a greater understanding of each p.
In a traditional Bottom Line Approach or capitalist economy, an enterprise’s success is largely dependent on its financial performance or its ability to generate profit for its shareholders. Key business decisions and strategic planning initiatives are generally carefully created to maximise profits while mitigating risk and reducing costs. In the past, most firms’ goals have stopped there.
However, in today’s climate, a sustainable business model is not just a moral imperative but a strategic one, as environmental concern has grown and purpose-driven leaders have emerged. These leaders have uncovered the power of using their businesses for good and creating positive change in the world. They have found ways to do this without hindering their financial performance. In the vast majority of cases, embedding sustainability initiatives has been found to drive business success.
The next part of the Triple Bottom Line Approach spotlights an organisation’s societal impact or its dedication to people. It is vital to make the distinction between an organisation’s stakeholders and shareholders. Businesses have traditionally favoured shareholder value as an indicator of success. This has meant they have worked tirelessly to generate value for the people who own shares of their business.
However, firms are increasingly embracing sustainability and because of this, they have moved their focus toward creating value for all stakeholders affected by business decisions, including employees, community members, and customers. Some easy ways businesses can meet society’s needs include encouraging volunteerism in the workplace and ensuring fair hiring practices to push for diversity. They can also establish strategic partnerships with nonprofit organisations that positively affect society.
The final component of this business concept is planet and probably the reason many read up on the Triple Bottom Line Approach in the first instance. It is concerned with creating positive change on the planet. Since the emergence of the Industrial Revolution, big companies have contributed a significant amount of pollution to the planet. This has unfortunately been a key driver in climate change.
However, because businesses have historically been the greatest contributors to the climate emergency, this positions them to be part of the solution. Most business leaders now recognise their responsibility to take action and are making changes within their operations to reduce or minimise their impact. Some of these adjustments include working with more eco-conscious suppliers, cutting down on energy consumption, using ethically sourced materials and much more.
Adopting a Triple Bottom Line Approach may seem unrealistic to some individuals in a world where profit is frequently prioritised over purpose. In saying that, innovative businesses across the globe have shown time and time again that is possible to do good whilst ensuring business success. This approach does not value environmental and societal impact at the expense of financial profitability. Rather, a lot of firms have reaped financial advantages by committing to environmentally friendly business practices.