Triple Bottom Line

What is the 'Triple Bottom Line'

A phrase coined in 1994 by John Elkington and later used in his 1997 book "Cannibals With Forks: The Triple Bottom Line Of 21st Century Business" describing the separate financial, social and environmental "bottom lines" of companies. A triple bottom line measures the company's economic value, "people account" – which measures the company's degree of social responsibility and the company's "planet account" – which measures the company's environmental responsibility. Elkington argued that companies should prepare three bottom lines – the triple bottom line – instead of focusing solely on its finances, thereby giving consideration to the company's social, economic and environmental impact.

Also called "TBL," "3BL," "People, Planet, Profit" and "The Three Pillars."

BREAKING DOWN 'Triple Bottom Line'

Elkington's triple bottom line is intended to advance the goal of sustainability in business practices. The three measures include: profit (the economic value created by the company, or the economic benefit to the surrounding community and society), people (the fair and favorable business practices regarding labor and the community in which the company conducts its business) and planet (the use of sustainable environmental practices and the reduction of environment impact).

A challenge with the triple bottom line is that it is difficult to compare the people and planet accounts in terms of cash – the way the profit account is measured. As such, the three separate accounts cannot be added or combined, and must be considered separately.

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