By Arnold Macalintal
Yes, businesses can do good while also maintaining a healthy balance sheet and income statement. That’s the premise behind a triple bottom line approach, also known in some circles as TBL, or 3BL. The intent isn’t just to meet the company’s financial bottom line—it’s to focus on two others as well: social and environmental impact. The idea is to give equal consideration to the importance of people, planet and profit for the overall betterment of the business. These three areas are known as the pillars, or stakeholders, of the triple bottom line approach.
To quote Forbes Magazine, “Businesses that write the triple bottom line into their business plans seek to increase benefits for all three stakeholders without exploiting or endangering any.”
Let’s take a closer look at each pillar.
When focusing on this pillar, a company ensures that its practices are fair and beneficial towards labor, the community and the region in which it conducts business. This could involve, but is not limited to, providing equitable wages and affordable benefits to employees, maintaining a safe working environment, purchasing raw materials from local sources and donating to charitable organizations.
The “Planet” pillar of 3BL centers around the use of sustainable business practices so as to leave the smallest ecological footprint possible. Examples of these practices include careful management of non-renewable energy, ensuring waste is safe for the environment when disposed of, minimizing the amount of pollutants that enter the ecosystem, and using the minimum amount of land needed for operations.
Lastly, this pillar deals not just with the traditional internal profit and loss of the business employing a triple bottom line approach, but also the economic impact the business has on society. Job creation and support given to other businesses to help them succeed are just a few of the measures associated with this pillar.
Three Pillars to a Strong Company
Although, at first glance, a triple bottom line approach appears to potentially create more upfront cost, evidence continues to accumulate that it can lead to long-term profitability. Southwest Airlines, DHL and Patagonia are examples of companies that are effectively utilizing a triple bottom line approach to operate healthy businesses. Here are some ways it can be accomplished.
Socially, providing equitable wages and affordable benefits typically leads to the retention of talent and high morale, and reduces the need for future recruitment. Environmentally, ensuring that waste is disposed of in a safe manner reduces the risk of future litigation and helps burnish a business’s good image. Economically, job creation and financial support to others can help strengthen the value of a brand.
The benefit of a triple bottom line approach isn’t always dramatic or immediate, but its practice can yield many benefits over time.
Arnold Macalintal, CPA is a partner in the Food & Beverage Industry Group at Wiss & Company, LLP. If you would like to get in contact with Arnold, you may reach him at 973.994.9400 or at email@example.com.