In almost every business, sustainability is a term that is used more frequently. You might have heard many times about how a particular practice or implementation is workable. Still, sustainability can be much more than this.
If you are taking a universal approach, sustainability can be broken down into three equal parts namely:
This is referred to as the Triple Bottom Line.
In the year 1994, John Elkington, the founder of a British consultancy known as Sustainability devised the term Triple Bottom Line. He argued that the companies should prepare three distinct bottom lines.
Out of three different lines, the first one is traditional to measure corporate profit i.e., the bottom line of the profit and loss account.
The second line is the bottom line of the people account of the company i.e., a measure which shows that whether an organization is socially responsible or not. If yes, how much it was responsible throughout its operations.
The third line is the bottom line of the planet account of the company i.e., a measure that shows its environmental responsibility.
All the three accounts are considered essential but when it comes to people and planet account it is difficult to measure it in terms of profit or cash.
Some people suggest monetizing all the dimensions of the triple bottom line including environmental damage as well as social welfare. Though there would be an advantage of using a common unit, many people object to put a dollar value on commodities that are non-tradable like endangered species and wetlands. Another question that arises is finding an appropriate method of finding the right price of the commodities without having a monetary value.
In order to avoid the problems related to reducing everything to a monetary value, one more solution is to compute the triple bottom line in terms of an index. The incompatible unit’s issue can be eradicated with the help of an index but only if there is a globally accepted method of accounting that allows comparisons between companies.
A third way to compute every branch of the triple bottom line is to do away all the comparisons together. To make each branch as successful as possible, it is imperative to measure the sustainability of each bottom line on its own. It will lead to more flexibility and customization.
It is up to each individual company to choose an appropriate method of measuring Triple Bottom Line. Every company should take into account the culture of the corporates and then decide which method suits their business plan in the best possible way. Regardless of which method you have chosen, it is essential to develop initiatives related to sustainability and to enlarge all the three bottom lines.
You might have an idea of enhancing profits works in an entity but the question is how to appropriately invest in the branches of people and planet of a sustainability plan?
There is a need to relate the initiatives of people to people. The companies must participate in programs that make them more socially responsible. Following are few examples of the ways in which companies can get more involved:
- By donating money
Companies need to make it clear that a specific percent of the pre or post profit sales will go to a particular organization.
- By donating money
Companies should make their employees volunteer on paid company time for a specific good cause. It will not only contribute to the community but is also a good way to build team morale.
- By donating goods and services
Companies should design its products and services in such a way that it helps the customers and the community too.
When it comes to planet initiatives, the focus of the programs should make the companies as environment friendly as possible.