Understanding Triple Bottom line an accounting framework coined by Sir.John Elkington.

Triple Bottom Line & Sustainability 

25 years ago, John Elkington coined the “Triple Bottom Line” of People, Planet and Profit (also known as the 3Ps, TBL or 3BL). Up to today, it is still gaining popularity and it has become part of everyday business language.

This was something new to me. I had never heard this term before.

My questions were, how an accounting framework would have a connection with sustainability.

I tried to research, ask my parents who are both MBAs to simplify and help me understand this concept.

I have researched the topic and these are my findings:

 The triple bottom line is a business concept that posits firms should commit to measuring their social and environmental impact—in addition to their financial performance—rather than solely focusing on generating profit, or the standard “bottom line.” It can be broken down into “three Ps”: profit, people, and the planet.

In economics, the triple bottom line (TBL) maintains that companies should commit to focusing as much on social and environmental concerns as they do on profits. TBL theory posits that instead of one bottom line, there should be three: profit, people, and the planet. 

In 1994, John Elkington—the famed British management consultant and sustainability guru—coined the phrase "triple bottom line" as his way of measuring performance in corporate America. The idea was that a company can be managed in a way that not only makes money but which also improves people's lives and the well-being of the planet.¹

The concept behind the triple bottom line is that companies should focus as much on social and environmental issues as they do on profits.

• The TBL consists of three elements: profit, people, and the planet.
• The triple bottom line aims to measure the financial, social, and environmental performance of a company over time.
• TBL theory holds that if a firm looks at profits only, ignoring people and the planet, it cannot account for the full cost of doing business.

 In finance, when speaking of a company's bottom line, we usually mean its profits. Elkington's TBL framework advances the goal of sustainability in business practices, in which companies look beyond profits to include social and environmental issues to measure the full cost of doing business. 

Ignoring the TBL Framework

There can be dire repercussions when companies ignore the TBL in the name of profits. Three well-known examples of this are:

• Destruction of the rainforest
• Exploitation of labour
• Damage to the ozone layer

Consider a clothing manufacturer whose best way to maximize profits might be to hire the least expensive labour 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 labourers, and harm to the natural environment and the people who live in that environment

 LEGO

The 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 2030.⁵

Bibliography

https://online.hbs.edu/blog/post/what-is-the-triple-bottom-line

https://www.forbes.com/sites/jeroenkraaijenbrink/2019/12/10/what-the-3ps-of-the-triple-bottom-line-really-mean/?sh=1aa29ea85143

https://www.investopedia.com/terms/t/triple-bottom-line.asp#:~:text=In%20economics%2C%20the%20triple%20bottom,%2C%20people%2C%20and%20the%20planet.