The past year has shown that change is all around us. Decisions and practices that are made by businesses can have wide-ranging impacts, felt across the world.
With these unprecedented events, we’re encouraged to examine what we can do to prevent similar occurrences from happening again. It’s become clear that the traditional, wealth-focused way of doing things is not sustainable. Many organizations now know that success is not reflected as simple profits and losses, but rather represented through positive impacts to its stakeholders and the wider community.
The Triple Bottom Line
First coined by author John Elkington in 1994, the “triple bottom line” provides a regenerative and holistic business model that accounts for the Three P’s: people, planet, and profit. Acting as a roadmap for businesses over the long-term, the triple bottom line shifts from the idea that operating sustainably requires a trade-off from maintaining profitability.
As we can see from current trends, the triple bottom line is a business concept that is here to stay. Certified B-Corporations are a group of companies that balance social purpose with profit, disclosing their impacts on workers, customers, suppliers, community, and the environment. Currently, big names such as Ben & Jerry’s, bdc, and Danone North America are certified as B-Corporations. ESG (environmental, social, and governance) indices, like GRI and the Dow Jones Sustainability Index, are widely-used as a way to provide basic transparency to shareholders. Standards previously on the fringes of the industry are now mainstream and expected by stakeholders.
The Economic Value of Sustainability
While operating sustainably may require an initial investment, the strategies that are developed prioritizing the triple bottom line can generate long-term profits and a unique competitive advantage. According to McKinsey, companies with high ESG ratings are shown to consistently outperform the market both medium and long-term. Increasingly, customers are also demanding that companies prioritize sustainability and social causes.
As a starting point, the triple bottom line encourages us to rethink capitalism and prioritize innovation. Prioritizing people, planet, and profit challenges companies to differentiate their services from their competitors and others in the industry. As with all forward-thinking companies, unique business models can ensure longevity of the company and success for years to come.