The Triple Bottom Line: What Is It and How Does It Work?

Sustainable development

Sustainable development?is an?organizing principle?for meeting?human development?goals while simultaneously sustaining the ability of natural systems to provide the?natural resources?and?ecosystem services?on which the economy and society depend. The desired result is a state of society where living conditions and resources are used to continue to meet human needs without undermining the?integrity?and stability of the natural system. Sustainable development can be defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Dimensions?Of Sustainable development

Sustainable development can be thought of in terms of three spheres, dimensions, domains or pillars: the environment, the economy and society. The three-sphere framework was initially proposed by the economist Rene Passet in 1979. It has also been worded as "economic, environmental and social" or "ecology, economy and equity".This has been expanded by some authors to include a fourth pillar of culture, institutions or governance, or alternatively reconfigured as four domains of the social – ecology, economics, politics and culture,?thus bringing economics back inside the social, and treating ecology as the intersection of the social and the natural.

The Triple Bottom Line

The TBL is an accounting framework that incorporates three dimensions of performance: social, environmental and financial. This differs from traditional reporting frameworks as it includes ecological (or environmental) and social measures that can be difficult to assign appropriate means of measurement. The TBL dimensions are also commonly called the three Ps: people, planet and profits. Refered ?as the 3Ps.

Well before Elkington introduced the sustainability concept as "triple bottom line," environmentalists wrestled with measures of, and frameworks for, sustainability. The TBL "captures the essence of sustainability by measuring the impact of an organization's activities on the world?... including both its profitability and shareholder values and its social, human and environmental capital.

Economic Measures

Economic variables ought to be variables that deal with the bottom line and the flow of money. It could look at income or expenditures, taxes, business climate factors, employment, and business diversity factors. Specific examples include:

·????????Personal income

·????????Cost of underemployment

·????????Establishment churn

·????????Establishment sizes

·????????Job growth

·????????Employment distribution by sector

·????????Percentage of firms in each sector

·????????Revenue by sector contributing to gross state product

Environmental Measures

Environmental variables should represent measurements of natural resources and reflect potential influences to its viability. It could incorporate air and water quality, energy consumption, natural resources, solid and toxic waste, and land use/land cover. Ideally, having long-range trends available for each of the environmental variables would help organizations identify the impacts a project or policy would have on the area. Specific examples include:

·????????Sulfur dioxide concentration

·????????Concentration of nitrogen oxides

·????????Selected priority pollutants

·????????Excessive nutrients

·????????Electricity consumption

·????????Fossil fuel consumption

·????????Solid waste management

·????????Hazardous waste management

·????????Change in land use/land cover

Social Measures

Social variables refer to social dimensions of a community or region and could include measurements of education, equity and access to social resources, health and well-being, quality of life, and social capital. The examples listed below are a small snippet of potential variables:

·????????Unemployment rate

·????????Female labor force participation rate

·????????Median household income

·????????Relative poverty

·????????Percentage of population with a post-secondary degree or certificate

·????????Average commute time

·????????Violent crimes per capita

·????????Health-adjusted life expectancy

?Uses of the Triple Bottom Line in Businesses?

The TBL and its core value of sustainability have become compelling in the business world due to accumulating anecdotal evidence of greater long-term profitability. For example, reducing waste from packaging can also reduce costs. Among the firms that have been exemplars of these approaches are General Electric, Unilever, Proctor and Gamble, 3M Although these companies do not have an index-based TBL, one can see how they measure sustainability using the TBL concept. Cascade Engineering, for example, a private firm that does not need to file the detailed financial paperwork of public companies, has identified the following variables for their TBL scorecard:

??????Economic

o???Amount of taxes paid

???Social

o???Average hours of training/employee

o???From welfare to career retention

o???Charitable contributions

????????Environmental/Safety

o???Safety incident rate

o???Lost/restricted workday rate

o???Sales dollars per kilowatt hours

o???Greenhouse gas emissions

o???Use of post-consumer and industrial recycled material

o???Water consumption

o???Amount of waste to landfill

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