The triple bottom line (TBL) is a system for evaluating business performance in terms of three broad categories of criteria: economic, social, and environmental (or 'profit, people, and planet'). This contrasts with the conventional measures of business performance, which focus solely or mostly on profitability and return to shareholders and often pay little or no attention to the social and environmental effects of their activities other than what is required by law.
In this context, 'economic' refers to the traditional financial bottom line (i.e., profitability) but goes beyond mere financial gains and also includes earning the profits both ethically and responsibly. 'Social' refers to a business's effects on the broader community, including employees, customers, neighbors and the region or country as a whole. 'Environmental' refers to efforts and successes regarding greenhouse gas emissions, sustainable resource use and waste management.
The triple bottom line differs from traditional 'corporate social responsibility' (CSR) in that it aims to fundamentally shift how businesses define and measure success and provides a more comprehensive, more measurable, and more integrated approach to business responsibility. For example, it provides a more structured and more consistent framework with specific metrics for measuring performance across economic, social, and environmental aspects, whereas traditional corporate social responsibility is less structured and more focused on voluntary initiatives and without standardized measurement.
Advocates of the triple bottom line approach claim that it, in addition to benefiting a society or the world as a whole, can also benefit businesses that implement it. One reason is that it can result in increased employee satisfaction and retention and thus increased productivity and increased profitability. Another is that it can attract the attention of socially and environmentally conscious customers and investors.
However, adopting a triple bottom line approach is not necessarily easy. One reason is the difficulty in measuring the social and environmental effects of some business activities. Another is that it can lead to higher costs and thus reduced sales. In addition, it can distract management from its core competencies.
The number of companies implementing triple bottom line practices is small but growing. Those most likely to adopt it include those in the consumer, retail, food and beverage, technology, energy and transportation fields. However, the degree of implementation and its effectiveness can vary according to the specific company and industry.