Businesses exist to make money, theres no question about that. However, lots of businesses are increasingly changing their motivations so that instead of just focusing on maximizing their profits, they are putting vast resources towards ensuring that they make a real difference in peoples lives. These companies are guided by the concept of triple bottom line.
Traditionally, the term bottom line has been used to refer to the net profit that a company generates, but the concept of triple bottom line challenges the assumption that profitability is the only important thing when running a company. Apart from Profit, the triple bottom line adds Planet and People to the list of things that businesses ought to be concerned about. That means that companies should pursue profits, but they should also take steps to ensure that their activities are beneficial and not detrimental to the people (the society) and the planet (the environment).
The three Ps of the triple bottom line system
The first P stands for People. These are the individuals whose lives are influenced in one way or the other by the activities of a business. They could be the office employees of the company, labourers in a factory, members of the community around where the business is located, or even the customer who use the companys products. To assess the performance of a company on the “People” part of the triple bottom line, you have to ask “How does the society benefit from the activities of the company?” A company that follows the triple bottom line system should pay fair wages to its employees, put measures in place to ensure that their factory workers are guaranteed humane working conditions, and make sure that it doesnt profit from child labour.
Companies can also benefit people by giving back to the communities that support them. They can do this by providing scholarships for students, supporting small businesses in the community, providing amenities for public use, or supporting social enterprise. You can read more about the ways in which businesses can give back to communities on Purple Ocean.
The second P stands for Planet, meaning the environment. Businesses (particularly manufacturers) source their raw materials from the environment, and they dump their waste products back into the environment. Companies use machines that burn fossil fuel and contribute to global warming. Most people care about global warming, climate change, clean air and water, wildlife, and the aesthetic value of the environment, so they want to see companies lessen their ecological footprint. Triple bottom line companies should reduce the waste that they produce, reduce their carbon emissions, invest in energy sources that are renewable, and follow all environmental regulations to prevent disasters. Some companies have been able to meet their environmental responsibility by going green, and by increasing their sustainability.
The third P is, of course, Profit. Like all other companies, triple bottom line companies are at liberty to pursue profit, but they are keen to ensure that its not at the expense of the people or the planet. Some companies have tried to reduce their ecological footprint to zero, but the fact remains that for most industries, production and profitability come at a certain cost to the environment. The best that most companies can do is try to find a balance between creating profits and reducing human and environmental impacts to levels that are conscionable.
How businesses benefit from the Triple Bottom Line
There is an increase in awareness among the public on many issues, including environmental conservation, the rights of workers, and corporate greed. Consumers are now keener to find out if their favourite companies and businesses have a conscience. No one wants to spend money on products or services from an evil corporation. Even talented employees are trying to avoid working for companies that have bad reputations. This is a major challenge for businesses, but within that challenge lies an opportunity. If a company adheres to the principles of the triple bottom line, people are going to notice that it is making an effort, and consumers will reward it over its competitors. More and more customers are making conscious decisions to support companies because of their stellar environmental records, their fair labour practices, or their contributions to the welfare of the community.