Triple-Bottom Line

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The triple bottom line is a term used to articulate a philosophy of business that balances people, planet and profits. The methodology is predicated on the idea of sustainability, a term defined in the 1987 report Our Common Future by the United Nations Bruntland Commission, formally the World Commission on Environment and Development (WCED), as practices that “meet the needs of the present without compromising the ability of future generations to meet their own needs.” Although the original definition represented an approach to sustainable development, it has since been adopted to describe sustainable business.

The concept of a triple bottom line is built upon the idea that business must be accountable for more than maximizing shareholder value, a mandate prescribed by economist Milton Friedman in 1970 as the "one and only one social responsibility of business.” Sustainable business must strive to maximize stakeholder value, engaging in behaviors that will provide interdependent benefit to employees, customers, supply chains and the communities in which companies reside.

Business consultant John Elkington coined the phrase triple bottom line in his 1998 book Cannibals With Forks - The Triple Bottom Line of 21st Century Business. He writes, "In our rapidly evolving capitalist economies, where it is in the natural order of things for corporations to devour competing corporations, for industries to carve up and digest other industries, one emerging form of capitalism with a fork - sustainable capitalism - would certainly constitute real progress."

Financial, social and environmental bottom lines

This paradigm encourages managers to think in terms of not just the financial bottom line, but also in terms of two additional bottom lines: the social bottom line and environmental bottom line. The three prongs of Elkington’s fork are economic prosperity, environmental stewardship and social responsibility. Research indicates an orientation towards a triple bottom line benefit companies by adding value to their relationships with stakeholders, building brand loyalty and mitigating risk.

See also

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Author: Simran Sethi