Triple Bottom Line

DEFINITION of '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.

RELATED TERMS
  1. Green Economics

    Green economic theories encompass a wide range of ideas all dealing ...
  2. Corporate Accountability

    The performance of a publicly traded company in non-financial ...
  3. Green Fund

    A mutual fund or other investment vehicle that will only invest ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects ...
  5. Heterodox Economics

    The analysis and study of economic principles considered outside ...
  6. Macroeconomics

    The field of economics that studies the behavior of the aggregate ...
Related Articles
  1. Markets

    Impact Investing: The Ethical Choice

    This new wave in ethical investing is taking a new approach. Find out how it differs from its predecessors.
  2. Mutual Funds & ETFs

    Socially Responsible Mutual Funds

    It is possible to avoid unethical investments and still profit from mutual funds. Find out how!
  3. Economics

    What Does It Mean To Be Green?

    Green investing is the new buzz word for companies and investors. Find out what it means.
  4. Personal Finance

    Forget Green Stocks, "Green" Will Do

    More and more companies are "going green", but that term, in itself, can be subjective.
  5. Entrepreneurship

    Can Business Evolve In A Green World?

    Learn how global warming is starting to heat up America's corporate climate.
  6. Fundamental Analysis

    The 3 Best Investments When Bull Markets Slow Down

    Find out why no bull market lasts forever, and why investors should shift their assets away from growth and toward dividends when stocks slow down.
  7. Economics

    Industries That Thrive On Recession

    Recessions are not equally hard on everyone. In fact, there are some industries that even flourish amid the adversity.
  8. Executive Compensation

    How Restricted Stocks and RSUs Are Taxed

    Many firms pay a portion of their employees’ compensation in the form of restricted stock or restricted stock units.
  9. Economics

    Economist Guide: 3 Lessons Adam Smith Teaches Us

    Learn three critical lessons about economics from 18th century philosopher Adam Smith, considered by many to be the father of economics.
  10. Fundamental Analysis

    How Globalization Affects Developed Countries

    The increase in communications technology has companies competing in a global market.
RELATED FAQS
  1. How can a business set social responsibility goals?

    A business can set social responsibility goals through the use of a triple bottom line approach to operating. When it comes ... Read Full Answer >>
  2. What's the difference between microeconomics and macroeconomics?

    Microeconomics is generally the study of individuals and business decisions, macroeconomics looks at higher up country and ... Read Full Answer >>
  3. How do you make working capital adjustments in transfer pricing?

    Transfer pricing refers to prices that a multinational company or group charges a second party operating in a different tax ... Read Full Answer >>
  4. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  5. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  6. What is the difference between JIT (just in time) and CMI (customer managed inventory)?

    Just-in-time (JIT) inventory management focuses solely on the need to replenish inventory only when it is required, reducing ... Read Full Answer >>
Hot Definitions
  1. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  2. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
Trading Center