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What is Triple Bottom Line?

        posted by , April 09, 2013

Be careful what you measure, you might just get it.

Successful organizations are good at executing to measured objectives. A business strategy is broken into measurable objectives. These objectives are distributed to everyone in the organization according to the organizational structure. You help your boss achieve their objectives and your team helps you.

Management methodologies such as Management by Objectives and Balanced Scorecard are highly efficient at focusing employees on common measured goals.

Triple Bottom Line (TBL or 3BL) is an accounting technique for ensuring that measured goals are sustainable.

Definition: Triple Bottom Line

Triple Bottom Line (TBL) is an accounting standard accepted by the United Nations that measures three aspects of organizational success: economic, ecological, and social. This is often rephrased "people, planet, profit".

triple bottom line


A traditional accounting approach has a single bottom line: profits. A triple bottom line also measures a organization's impact on the social and ecological systems upon which all organizations depend.

Triple bottom line is the dominant standard for environmental full cost accounting. A organizational or corporate commitment to sustainability implies a commitment to environmental full cost accounting.


Profits

Firms using triple bottom line typically measure profits using well established financial accounting frameworks, standards and best practices.


People

The people side of TBL accounting seeks to measure the impact of business on employees, customers and communities. This includes people impacted by an organization's extended supply chain and partners.

In other words, TBL measures the how socially responsible an organization is throughout its end-to-end operations.


Planet

The planet side of TBL accounting seeks to measure the impact of business on the environment. This includes things like emissions, toxic chemicals, resource use and waste.

An organization may establish goals such as having a neutral carbon footprint, eliminating toxic chemicals in products, reducing waste and reducing consumption of natural resources.

This can be achieved with a wide variety of strategies and best practices.


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