Balancing a Triple Bottom Line
by Leah Feor
Have you ever sat on a three legged chair? Notice that if one leg is longer than the other it doesn’t sit quite right?
Think of the Triple Bottom Line (TBL) as the three legs. If one is longer than the other, it throws things off balance.
Defining a Triple Bottom Line
The framework commonly known and referred to as TBL encompasses three core elements: People, Planet, and Profit.
People: relates to the human resources within a company, as well as the local and global community of people or stakeholders affected by business operations.
Planet: The planet represents all resources we extract from the Earth to produce consumer goods. Both retail and service businesses rely on these goods for operations. Planet also represents all by-products created as a result of production and general operations (both tangible and intangible).
Profit: Perhaps the easiest element to define in this equation, and certainly the most common bottom line to make it onto the financial statements. Profit is the amount of money left over after accounting for expenses paid against revenue earned in a defined period of time.
Is One Line More Important Than The Other?
Some will argue that one line of the TBL is more important than the other. Many times I’ve heard people and planet before profit. If we are talking alphabetical order, yes that makes sense. However, if we are talking about a sustainable business, how can we not put equal emphasis on it?
Since the economic downfall of 2008, making money has been cause for critique. Associating profit with shareholders and the stock exchange leads individuals and companies to downplay the importance of generating a profit. With all the best intentions, they vow to put people and planet before profit.
The other side of the coin is the tendency to put emphasis on profit over the people and planet that make the company run. We need all three to receive equal attention, however since some aspects are intangible, it’s certainly harder to define and measure them.
What Comes First?
Just like one line is not more important than the other, one does not necessarily come before the other. Because all three parts of the equation need to exist; people, planet, and profit, they must all be recognized and defined from the moment the business plan is drawn up.
Though a sole proprietor or small business owner may not be able to give equal weight or attention to each element from the very beginning, it is important to acknowledge it as part of the overall vision, identify it as a long term goal. This will create an opportunity to educate customers – inviting them to be part of the process, letting them know that their support contributes to achieving long term and sustainable goals.
Balancing the Equation
This is where the magic happens. Once you have defined all elements and assigned spots within the equation, you look for leverage points. Leverage points are the sweet spots where if you put just an ounce more of effort, you get an extra pound of output.
Let me give you an example. Your company builds homes. Now, you have the choice on the materials you use, the people you hire, the prices you charge, and the way you disburse your profit.
Company A: Source the cheapest material and labour. Follow basic industry codes and standards when it comes to both environmental and employment laws. Don’t adopt new policies, simply do what has always been done before, it worked then, so why change it? Charge an arm and a leg for an average product by creating hype through flashy advertising, and payout your stockholders sizeable dividends while cutting out year-end bonus to staff.
Company B: Design a home that is built to last. Use innovation and biomimicry when drawing up blueprints and sourcing materials. Hire a diverse team of individuals, including community members that are often overlooked – match people’s passion to their job description, and continuously be open to development and improvement. Market that the value is in the lifespan of the product and charge a fair price. Go above and beyond basic legal compliance; pave the way as an industry leader setting the benchmark. Invest in your stakeholders and recognize that “paying out dividends” doesn’t always have to be monetary.
Analyzing the Results
At the end of the day, both of these companies will likely have a similar price tag on their finished product – but what’s below the surface really defines how well they have achieved a TBL.
Company A followed the profit train and on the way picked up very few passengers, their overall impact trickling down just a few feet. Company B on the other hand has a full cabin, and the ripple effect of their positive impact extends for miles.
Since Company B made choices that aligned with a TBL framework, they will reap rewards of a more productive and empowered team, along with trust from their customer base which translates into positive word of mouth.
With higher retention of staff and increased trust from current and future customers, HR and marketing costs ultimately go down. These are simple examples of leverage points that benefit people and profit.
If a community is full of companies that model themselves after Company B, it’s a community leveraging economic development to improve the environment and social wellbeing of its residents.
To achieve a healthy TBL, you need to shift your perspective. You need to see things differently. You need to see value where others see nothing. Because on a planet of finite resources and a growing population, focusing solely on profit won’t add up to much.
About the Author – Leah Feor
Leah is a strategic advisor and content creator for Simply Sustainable™. Balancing a triple bottom line for organizations and individuals is her utmost goal. She’s a big picture thinker with an eye for detail. Her passion for the environment and social impact bring her business background to life. Outdoor adventures, healthy living, and continuous learning are just a few of her favourite things.