how to measure the triple bottom line
companies may need to get creative when measuring the triple bottom line traditional accounting rules provide very strong guidance on how a company must record its accounting profit alternatively there may be minimal to no structure in place on how a company must measure its triple bottom line especially considering there may be no external reporting requirement to do so a company will still usually report company wide net income as part of its triple bottom line for this reason profit is the easiest component of triple bottom line to report as it already has strong guidance however it may also report or call out several other profitability or financial metrics such as also referred to as social measures or social metrics the people component of triple bottom line may contain financial or non financial measurements again some may be stipulated by generally accepted accounting principles gaap or other reporting rules while others may be internally sourced data examples of measurements of people include perhaps the most difficult triple bottom line component to measure is planet as a company may need to know its existing impact as well as its eco friendly impact measuring impacts to the planet may require the most expertise or effort however there are very common environmental measurements such as to promote each category as being equally important to one another a true triple bottom report will have a consistent number of measurements for profit people and planet advantages and disadvantages of the triple bottom linethe obvious reason to apply the triple bottom line is to have a greater positive impact on the world instead of focusing on paper profit companies can quantifiably determine how the business is favorably changing the world and the people it engages with having a greater philanthropic presence may encourage employee retention and decrease attrition workers may be more likely to commit to a company if its environmental impacts are communicated in addition favorable working conditions including competitive wages training and time off to volunteer may keep employees around this may reduce recruiting training onboarding and general costs of new employees a greater triple bottom line plan may also entice customers and consciously capitalistic investors interested in prioritizing certain non financial metrics over financial metrics some customers may be torn between two similar products the deciding factor may be the esg prioritization of the companies in addition investors may actively seek to put their money into a company that has social and environmental plans last triple bottom line strategies may result in increased long term profitability though short term costs may increase a company may become more efficient in the long run consider a company converting its fleet to electric vehicles short term this will be a massive capital investment in the long term the company may reap the benefit of lower energy costs less maintenance or better equipment durability a key challenge of the triple bottom line is the difficulty of measuring certain social and environmental bottom lines 2 profitability is inherently quantitative so it is easy to measure however consider the example of attempting to evaluate the economic impact of preventing an oil spill a company may easily be able identify the input costs but it may be more difficult to pinpoint non financial inputs or outcomes it can also be difficult to switch gears between priorities that are seemingly antithetical such as maximizing individual financial returns while also doing the greatest good for society some companies might struggle to balance deploying money and other resources such as human capital to all three bottom lines without favoring one at the expense of another in addition electing to prioritize the triple bottom line will likely be more expensive consider a clothing manufacturer whose best way to maximize profits might be to hire the least expensive labor possible and to dispose of manufacturing waste in the cheapest way possible these practices might well result in the greatest possible profits for the company but at the expense of miserable working and living conditions for laborers and harm to the natural environment and the people who live in that environment aims to have positive impact on the worldmay boost employee retention as workers may appreciate favorable working conditionsmay result in greater external funds from investors seeking esg investmentsmay result in greater sales from customers seeking to support esg companiesmay result in long term efficiencies that reduce costs in the long runmay be more difficult to assess non financial inputs or outputslack of comparability across impact groups i e companies may need to choose one bottom line over the other may result in competing strategies making it difficult to easily pivot from one plan to anotherwill likely increase the cost of operations due to needing to find alternative products or processesexamples of companies that subscribe to tbl or similar conceptstoday the corporate world is more conscious than ever of its social and environmental responsibility companies are increasingly adopting or ramping up their social programs consumers want companies to be transparent about their practices and to be considerate of all stakeholders many consumers are willing to pay more for clothing and other products if it means that workers are paid a living wage and the environment is being respected in the production process the number of firms of all types and sizes both publicly and privately held that subscribe to the triple bottom line concept or something similar is staggering here are a handful of these companies ben jerry s is the ice cream company that made conscious capitalism central to its strategy as stated on its website ben jerry s is founded on and dedicated to a sustainable corporate concept of linked prosperity 3 the company opposes the use of recombinant bovine growth hormone rbgh and genetically modified organisms gmos and fosters myriad values such as fair trade and climate justice 4the lego group privately held billund denmark has formed partnerships with organizations like the nongovernmental organization ngo world wildlife fund in addition lego has made a commitment to reducing its carbon footprint and is working towards 100 renewable energy capacity by 2030 5in addition to partnering with the world wildlife fund the lego group has also pledged to transition to renewable bioplastics the first plant derived set of lego toys was launched in 2019 6mars incorporated privately held mclean va has a sustainable cocoa initiative called cocoa for generations it requires cocoa farmers to be fair trade certified to ensure they follow a code of fair treatment to workers providing labor in exchange for certification mars provides productivity technology and buys cocoa at premium prices 7starbucks corporation sbux has been socially and environmentally focused since its inception in 1971 the company has hired more than 30 000 veterans since 2013 and is committed to hiring 5 000 more per year going forward 89