The Triple Bottom Line: What is it and Why is it important?

The Triple Bottom Line: What is it and Why is it important

The world is full of uncertainty right now.  Major challenges—including war, climate change, inflation, food supply, poverty, mental health and wellbeing and inequality—are at the forefront of everyday life.

As the world’s most pressing challenges evolve, purpose-driven leaders are needed to spearhead initiatives that can lead to positive change—but making those changes isn’t an easy task.

The general goal of a sustainable business strategy is to positively impact the environment, society, or both, while also benefiting shareholders. Business leaders are increasingly realizing the power of these strategies in not only addressing societal challenges, but in driving their businesses’ success. However, having clear and attainable goals and formulating a strategy to achieve those goals can be daunting. One common way to determine a business’s efforts is using a concept known as the ‘Triple Bottom Line’.

What is it?

The Triple Bottom Line is a business concept that suggests that businesses should commit to measuring their social and environmental impact, in addition to their financial performance. It focuses on ‘Three Ps’ for business – People, Planet and Profit.

People:

The first component looks at a business’s societal impact and its commitment to people. Traditionally, businesses have favoured shareholder value as an indicator of success. As firms have increasingly embraced sustainability, they’ve shifted their focus towards creating value for all stakeholders, including customers, employees, and community members. We believe the focus should always be on our people are first. Profits will come out of focusing on people, and ultimately, it is people who affect the planet.

The Planet

The second component is concerned with making a positive impact on the planet. While businesses have historically been the greatest contributors to climate change, they also hold the keys to driving positive change. Many business leaders are now recognizing their responsibility to do so. This effort isn’t solely on the shoulders of the world’s largest corporations—virtually all businesses have opportunities to make changes that reduce their carbon footprint.

Profit:

This is the one we all understand as ultimately, a business’s success most heavily depends on its financial performance. Strategic planning initiatives and key business decisions are generally carefully designed to maximize profits while reducing risks.  In the past that’s all that mattered.

Today, purpose-driven leaders like the Clients we work with at I Am Here are discovering they have the power to use their businesses to effect positive change in their workplaces, without hampering financial performance. In fact employee-led initiatives such as wellbeing programs have proven to drive business success.

WHY IS THE TRIPLE BOTTOM LINE IMPORTANT?

To some, adopting a triple bottom line approach may seem idealistic in a world that emphasizes profit over purpose. Innovative companies, however, have shown time and again that it’s possible to do well by doing good. The triple bottom line doesn’t inherently value societal and environmental impact at the expense of financial profitability. Instead, many firms have reaped financial benefits by committing to sustainable business practices.

Is it time you considered a Triple Bottom Line approach to your business? Why not Book a Strategy Call to see how I Am Here can help?