What’s the most common definition of a “bottom line?” For a business, whether it’s a service-based business or a product-based business, whether it’s B2C (business to consumer) or B2B (business to business), the bottom line is profits. It’s what we’ve been taught to focus on. A business is successful if they’re profitable. It’s the only measure of success and the only measure of growth.
That’s undeniably short-sighted.
The impact a company has can also be considered a bottom line. It’s a measurement of success and if you talk to any consumer or other business owner, you’d likely get agreement. The impact that a company has on the people and places around them is a component of success. More and better impact can also be considered a measurement of growth. Measuring impact is a bit trickier than measuring profit, but it can be done.
But what about impact? That should be further divided into sub-categories, correct? You can impact society, community, your consumers and even your employees, right? So that might be simply called “people.” A company can have an impact, positive or negative, on people.
What else can a company impact?
Every action taken within a company also has an impact on the environment. From how manufacturing processes are managed to distribution, it all has an effect on the environment. Oceans, soil, water supply, air quality, landfills, and much more are part of this impact, and the impact is global. We no longer live in small centralized communities. Today someone in Hungary can do business with someone in Brazil. We’re global and our impact is global. What happens to the water supply in Australia has an impact on the climate and water supply around the world. We can call this second area of impact, “planet.”
The Triple Bottom Line
The triple bottom line is an approach where companies embrace people, planet, and profit into their decision making. They assess and analyze every action they take, every policy they make, and their underlying goals based on how the action impacts, people, planet, and of course profits.
They’re not mutually exclusive
The old way of thinking tells us that you cannot make environmentally sound changes to a company without it costing a ton of money and having a negative impact on profits. In my experience this isn’t true. It’s short sighted. While in some cases the expense of rolling out a new initiative may seem negative, the long-term impact is a much different story. It’s akin to a household installing solar panels. The initial output may be significant, but over the next 10-20 years, the savings is exponentially larger than the initial expense and the impact on people and planet is positive. Companies that can shift and embrace the same mindset have a brighter future than those who stay stuck in old paradigms of profit only.