A triple bottom line (TBL) reflects an organization’s social, environmental, and economic success. The term “triple bottom” was first coined in 1994 by John Elkington and is sometimes used synonymously with the phrase “People, Planet, Profit”.
In the public sector, triple bottom is the main full-cost accounting approach. In the private sector, triple bottom is the yardstick by which a corporation’s social responsibility is measured. At the private sector level, a corporation’s stakeholders, meaning all people within the corporation’s spectrum of influence, are taken into consideration on the triple bottom line. In turn, the corporation’s value to society and the environment adds to its profit — the most important bottom line in technical analysis. This is also reflected in The Dow Jones Sustainable Index, which measures the three criteria of triple bottom, placing the most importance on the economic factor first, followed by environmental.
Social (People). The first of the three bottom lines takes into account the well-being of the organization’s labor force, the manufacturers of its product, and the community around which it operates. A corporation that is considered “triple bottom” or in good triple bottom standing would not unknowingly exploit any of its employees, manufacturers or community members through unsafe or illegal business practices, like employing child laborers or dumping toxic waste.
Environmental (Planet). A triple bottom line organization would seek sustainability and minimize its ecological footprint on the planet. This means careful disposal of waste, careful energy consumption, and not manufacturing destructive matter, whether toxic waste or weapons.
Economic (Profit). Although profit is the goal shared by all corporations, a triple bottom corporation’s profit has a lasting benefit to the larger community or region. A large manufacturing plant which employs members of its own community and conducts business-to-business (B2B) practices locally, would be one example.
Businesses that specifically focus on improving the environment, such as hybrid car manufacturers, are considered to be popular investment targets by technical analysts and investors, Their popularity, however, over the long-term remains uncertain.
Non-environmental businesses that can still maintain a good triple bottom through successful corporate leadership are also targeted by investors. In turn, many businesses which have a specific B2B mandate of helping other businesses “go green” or improve their triple bottom line have been popular during the new millennium but are predicted by many technical analysts to decline in popularity over time.
