This month we watched hotels, restaurants and other non-essential businesses close their doors and lay off staff. Business owners must now analyze how the global pandemic disrupted “business as usual” to create space for systematic change in the operation of companies. When the economy resumes, businesses have a unique opportunity to evaluate operations and pivot to a triple bottom line approach. Because when companies value people, planet, and prosperity over profit alone, we all win.
After working as the Marketing Director for the only bank in the Southeastern United States that operated with a triple bottom line, I can attest that companies that are purpose-driven gain more trust and lasting brand supporters in their industry than any other.
The Triple Bottom Line
The triple bottom line (TBL) was coined in 1994 by John Elkington and is a framework or theory that recommends that companies commit to focusing on social and environmental concerns just as they do on profits. The idea was that a company can be managed in a way that not only earns financial profits but which also improves people’s lives and the planet.
If a company focuses on finances only and does notexamine how it interacts socially, that company cannot see the whole picture, and thus cannot account for the full cost of doing business. A wholistic approach is essential to running a business when you want to increase your consumer base and your profit.
People + Planet is the same as Social + Environmental Resiliency
Photo by Carl Heyerdahl on Unsplash
Companies should be working in tandem in three areas:
- Prosperity: The traditional measure of corporate profit
- People: Measures how socially responsible an organization is
- The Planet: Measures how environmentally responsible an organization is
By focusing on these three interdependant elements, triple-bottom-line reporting can be an important tool to support a firm’s sustainability goals.
A Company Will Be Non-Existent Tomorrow if the Triple Bottom Line isn’t Baked into the DNA of the Company
What’s Holding You Back?
Sure, it can be challenging to switch gears between priorities that maximize financial returns while also doing the greatest good for society. For example, it’s hard to justify the cost of implementing a living wage to all employees in the short term, but when you take a step back and give it a chance to marinate, you’ll see that the benefits far outweigh the initial cost. You’ll find that employee turnover will lower, causing the company to save money on recruiting, onboarding and training new talent. According to a benchmark report from SHRM, the average cost per hire across organizations and industries is well over $4k.
More than ever before, board directors and CEOs find themselves with a unique platform and an expectation from growing numbers of employees and consumers to shape societal discourse, going beyond traditionally defined Corporate Social Responsibility.
When you share how potential investors view CSR, your board of directors and shareholders will likely react favorably to the triple bottom line principle. In an article in Corporate Board Member, they report that “there is a growing number of socially conscious investors who see positive environmental, social, and governance issues as critical for investing, in addition to meeting financial performance goals. Today’s investors are not only avoiding putting their money into industries that do not align with their values (fossil fuels) but are also using their influence to push for positive corporate change with a broader scope of social impact.”
Change Your Business For Good
Easy wins to get started on your purpose-driven pivot.
The University of Scranton recommends evaluating your business’s initial triple bottom line with the following measures:
- Average incomes
- Local Supply Chain
- Revenue by sector
- Greenhouse gas emissions
- Amount of waste generated
- Use of post-consumer, recycled material
- Water and electricity consumption
- Fossil fuel consumption
- Waste management
- Company-wide community volunteer hours
- Employee healthcare
- Diversity & inclusion
- Job growth rate
Greenwashing is not acceptable: Companies need to build and maintain trust with all stakeholders
Photo by David Travis on Unsplash
Measure What Matters
Of the three branches of the triple bottom line, only one is easily measured, which is one of the leading complaints about this approach. Profits are measured in dollars, but how do you measure social capital? Or the environmental impact? Plus, consumers in post-pandemic will not be looking at your profit line, but rather your commitment to your stakeholders.
There are two globally accepted standards for the measurement that encapsulate the three categories – The B Impact Assessment (BIA) and the Sustainable Development Goal Action Manager (SDG AM). Both assessments are created by B Lab, both share fifty percent of the same questions and aggregate the answers into each other. Both of these assessments are very credible, but I’m more familiar with the BIA, so that’s what I’ll touch on.
In an interview with Fast Company, Andrew Kassoy, co-founder of B Lab stated “I think one of the greatest hurdles is knowing where to start. There are so many ways a company can make an impact and so little direction on how to measure and manage social and environmental performance. However, with bimpactassessment.net, we hope to encourage all businesses to measure what matters using the free and confidential B Impact Assessment.”
The BIA was created in 2006 as a DIY tool for measuring company impact in five categories: workers, governance, community, environment, and suppliers. Today, over 70,000 companies use this tool to benchmark and track performance. Businesses that have already adopted the triple bottom line and are ready to take things to the next level may want to consider becoming a Certified B Corporation.
You answer a series of questions to evaluate your company and learn ways you can improve. It will also reveal how your company stacks up against the competition. You can take your score in each of the five categories and compare them to other Certified B Corporations, like Patagonia or Ben & Jerry’s.
To qualify for B Corporation certification, your organization needs to score at least 80 out of 200 points on the B Impact Assessment. The information is self-reported, but each year, B Lab randomly selects 10% of its certified companies for onsite reviews. Over 3,285 companies in 150 industries and 71 countries have achieved certification as a B Corporation.
Companies making decisions to benefit not only their shareholders, but also their employees, customers, suppliers, and the community more broadly will over the longer term maximize both stakeholder and shareholder value. This is the triple bottom line, and this is what consumers are expecting from companies in our “new normal”.
As the Founder and CEO of World For Good, Jennifer Moreau-Chick helps readers learn about how to elevate social and environmental sustainability in the business community so companies can differentiate themselves from their competitors. She has been featured in Conscious Company Magazine as a leader in social impact and has worked as a Marketing Director for 3 certified B Corporations for the past four years. Visit her blog here.