Importance of ‘Triple Bottom Line’

The triple bottom line (TBL) refers to the social, environmental, and economic value of an investment. The concept is increasingly salient to economic development-related fields such as business, finance, planning, and real estate. The triple bottom line term was coined in the 1990s by business consultant John Elkington to describe the economic, environmental, and social value of the investment that may accrue outside a firm’s financial bottom line (Elkington, 2004).

The TBL approach aims to more accurately value assets and leverage resources so that capital is employed as efficiently and effectively as possible. The concept is sometimes referred to as the 3Ps (people, planet, profit), triple value-adding (Roberts & Cohen, 2002).

Source: Google Images

Inherent in the definition of sustainable development are concepts of environmental stewardship and inter- and intragenerational equity. Efforts to define and address sustainability were born from the recognition that existing development patterns cannot proceed without jeopardizing the environmental systems necessary to sustain life and economies, and that significant disparity within and between generations is neither sustainable, ethical, nor in tune with development goals.

Triple bottom line and sustainable economic development understand the purpose of economic development to be improved well-being and quality of life through the creation of jobs and wealth, and the process of economic development to include creation, expansion, retention, and recruitment, of jobs and businesses through a mix of techniques. These techniques include, for example, business assistance, workforce development, and the cultivation of networks, infrastructure, and amenities that support business development and influence business location decisions. It adds to this conventional view a recognition that economic development is inextricably connected to environmental and social factors, and that all three must be addressed for economic development to succeed.

Business development professionals should generally favor the consideration of economic, environmental, and social dimensions when making economic development investments, yet few do so. A number of interrelated factors may contribute to this gap.

First, economic development is situated in a broader context in which understanding of and support for TBL concepts may be limited. Research in related areas of planning, administration, and sustainability suggest that organizational and community characteristics impeding uptake and implementation of TBL concepts may include insufficient capacity, a weak understanding of and support by key organizational and political leaders, and low socioeconomic status.

Second, economic development occurs in a highly competitive environment where much of what affects outcomes are outside the jurisdiction’s control, and success is narrowly defined.

Furthermore, TBL economic development may be impeded by a lack of integration and coordination among various policies and programs, with existing programs often at odds with TBL principles, and trade-offs between economic, environmental, and social goals assumed to be required.

Finally, TBL or sustainability principles do not core to academic and professional accreditation for business professionals, which likely translates into a lack of knowledge and skills to infuse TBL concepts into practice.

The Triple Bottom Line is not an explicit measurement tool but a way of thinking and understanding an industry’s performance where financial, social, and environmental performance is mutually dependent. It broadens the basis of industry performance reporting and evaluation from a short-term focus on financial aspects to include longer-term social, environmental, and financial impacts.

Moving the TBL beyond a company-reporting tool towards a broader policy measuring and managing framework can help to shape more inclusive and holistic thinking around sustainable futures. However, the TBL concept is not intended to represent a single measure of so-called sustainability, it measures some of the broad impacts of an industry’s performance which can help shape alternative resource use assessments in understanding optimal and sustainable futures.

Source: Google images

The Triple Bottom Line needs organization-wide adoption to be effective. Executives & company directors establish organizational goals, suggest benchmarks measure TBL success and determine how profits will balance with people and the planet. As such, these leaders may ask themselves the following questions:

Should the planet, people, and profits be weighted as equals?

Should leaders only consider planet & people initiatives that support profitable ventures?





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Arush Sharma

Arush Sharma

Student | Sporadic writer | Voracious reader | Traveler | Observer | Thinker

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