Understanding the Meaning of the Triple-Bottom-Line

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Spring 2011; Source: Indiana Business Review | Don’t you wish you knew what all the buzzwords in our field really meant?  Wouldn’t it be more fun to nod knowingly instead of trying to sufficiently blank about the terminology?  The language is heard over and over again, but with more repetition, there is less and less clarity and definition (think of “social innovation” for example).

This Indiana Business Reviewarticle gives a succinct and cogent definition and analysis to the oft-heard “triple bottom line” concept with a strong nonprofit and government twist.  The authors say that TBL is “an accounting framework that incorporates three dimensions of performance: social, environmental and financial.”  They also refer to TBL as “the three Ps: people, planet and profits.” 

The definitional challenge they raise is not in articulating the components of TBL, but in its measurement, particularly finding a common unit of measurement.  Money doesn’t work well for the categories outside of profits, since it is difficult to come up with a dollar valuation for environmental improvement or degradation, for example, that makes sense.  An alternative approach would be to use an index of these factors for measuring against other companies or other benchmarks, which appears to be the authors’ preference. 

They also suggest alternatives to TBL, including the Genuine Progress Indicator (GPI) (based on 25 economic, social, and environmental factors converted and added up into a single dollar-denominated number) and a distinctive 42-variable approach generated by the State of Minnesota.  No matter which model or measures or adopted, the importance of the TBL concept is that it can be applied to specific projects as well as broad-scale policies, individual communities as well as larger geographies of states, regions, and the nation. 

The nonprofit implications are obvious.  As partners with governments and businesses, nonprofits can bring TBL concepts into the design and evaluation of specific initiatives or larger policies.  Models for this include regional public-private collaborations such the Wealth Creation in Rural Communities Initiative, Greenworks Philadelphia (PDF), the City of Grand Rapids triple bottom line indicator report (PDF), and Cleveland’s triple bottom line initiative

No one in the nonprofit sector should imagine that announcing support for triple-bottom-line approaches works some sort of automatic magic.  But as proponents of the “people” and “planet” parts of the 3Ps formulation, nonprofits possess some latent leverage they can use to influence and potentially shape the actions of governments and corporations in the public arena.—Rick Cohen