The promise of profit is one thing that motivates every company that opens its doors to business today. But it doesn't have to be the only thing. Because in today's interconnected world, there's much to look out for.
The type of impact your business has on the environment and among people, in general, says a lot about the business. So, while a positive "Profit" margin is good for your business, it is important to consider two other Ps; "People" and "Planet."
The Triple bottom line (3BL) model builds on the concept that businesses must be as socially and environmentally responsible as they are with their finances. This article explains how you can achieve this and why it is becoming more important today.
What is it?
The Triple bottom line is an economic framework that promotes social, environmental, and financial responsibility among organizations. It demands that businesses commit to the people and communities that sustain them. It also demands that they desist from engaging in activities that harm the environment.
It is premised on three components: profit, people, and planet (3Ps)—all of which must receive equal consideration for you to strike a balance. So a business must not make money at the expense of the people concerned with it and at the risk of negatively impacting the environment.
The three Ps represent financial, social, and environmental sustainability factors for which a business must be responsible. They are discussed below.
Profit
Every business aims to be profitable for its shareholders. While this profit is mostly measured in tangible terms and positive margins, there's often more to it. The company must also be self-sustainable and capable of meeting its growth and development goals. It must meet the demands of its lenders, suppliers, and employees in the most ethical and financially responsible means.
People
People include the company's employees, vendors/suppliers, customers, and other shareholders affected by its operations. It has to do with a company's social responsibility for everyone it is involved with. A company's social responsibility also includes the measures taken to connect itself with its community.
These measures include creating a healthy and rewarding work environment for employees and suppliers and a satisfactory customer experience. Others include community-centered initiatives, welfare programs, etc.
Planet
Planet, in this context, refers to a company's environmental impact and what measures it takes to minimize the impact. It seeks to incorporate eco-friendly and sustainable development practices into a company's daily operations. It could be the emphasis on using safer, greener energy or a cutback on greenhouse gas emissions and fossil fuel consumption. The aim is to reduce environmental damage and create a more eco-friendly workspace.
When do we use it?
The 3BL model provides reasonable value to businesses and organizations that aim to:
Improve their environmental impact situation
Companies can commit to adopting more eco-friendly practices in their daily operations, using the 3BL model as a framework. They can cut down on their emissions and use safer energy sources.
Improve workers-management relationships
One way to gain the trust and loyalty of your workers is to improve their working conditions and care more about their welfare. This can become a big morale booster for them and result in a healthier work environment.
Gain a competitive advantage
Your business's competitive advantage can come from adherence to standard practices in eco-friendly operations. It can also come from a dedicated staff and a well-oiled value-chain system. These can be obtained by using the 3BL model.
Promote community interactions
You owe it to your customers (and other stakeholders in your business) to meet their needs and even more. The 3BL model teaches us to build relationships beyond the boardrooms and the factory floors.
What business questions is it helping us to answer?
Below is a list of questions that the 3BL model helps us answer:
How can I become more environmentally responsible?
The 3BL model encourages us to be more mindful of our environment. It provides a framework for adopting more environmentally-conscious practices that'll secure the future of our ecosystem.
How can I become more socially responsible?
The 3BL model shifts the sole emphasis from financial reward to more socially-conscious measures. It looks at the business from the perspective of its staff, customers, and other support systems.
How can I create a balanced work system?
Using the 3BL model requires finding common ground in your quest to make monetary and non-monetary gains. This means you'll create a rewarding system for your investors, staff, customers, and community.
How do we use it?
Sort the organization's bottom line into three separate groups: social, economic, and environmental measures. Let these three categories represent the measures you plan to achieve responsibility in the three areas.
Social measures
Examine the organization's social responsibility initiatives and the impact made in its community.
Develop more community-driven programs to create value for the locals in your business's host community.
Economic measures
Adopt fiscal responsibility strategies.
Carry out regular profitability analysis using financial KPIs.
Adopt best practices in staff remuneration.
Environmental measures
Find out how much renewable and nonrenewable resources are expended.
Find out safer and greener energy sources.
Practical Example
A paper mill makes the following commitments as part of its resolve to use the Triple bottom framework in its everyday operations.
People
Increase funding to worker welfare programs.
Provide more worker safety equipment.
Encourage increased patronage of support businesses.
Profit
Expand operations into newer markets.
Increase production capacity.
Adopt more sales and marketing platforms.
Planet
Reduce emissions by 20%.
Use cleaner energy sources.
Plant more trees to balance deforestation.
Advantages
It promotes increased transparency and accountability
With the 3BL model, your company's performance will be scrutinized in line with global standard practices. This way, everyone involved can appreciate your commitment to the goals you outline.
It creates healthy workplace environments
Using the 3BL framework demands taking responsibility for the welfare of all your internal stakeholders. This results in improved working conditions for staff, suppliers, etc.
It promotes environmental sustainability
One of the goals of this model is to create a greener and safer environment for everyone.
It produces long-term benefits
The positive results that derive from using this model have long-lasting impacts. It builds sustainable human relationships and paves the way for healthy future workplace experiences.
Disadvantages
It can create conflicting interests
If your company engages in activities that impact the environment (by design), it may be difficult to subscribe to this model. Most exploration companies face this problem.
It may pose serious financial implications
The greener path is not always the easier path, so it'll sometimes come with a steep price. And if you don't have the resources to deploy alternative systems, you'd be unable to make any real changes.
It may throw up the fear of the unknown
Most people are used to doing things the usual way, so that change might be difficult for them. Therefore, start by educating such persons about the gains of using the 3BL model so they can warm up to it.
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