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Economy and Finance

Economy and Finance

Concept of Triple bottom line (TBL)

08 Aug 2023 Zinkpot 197
Concept of Triple bottom line (TBL)
  1. Triple bottom line (TBL) is a comprehensive accounting framework that focuses on sustainable accounting of three key categories: social, environmental, and financial factors.
  2. Businesses, non-profit organizations, and government entities use the TBL to evaluate not only their financial performance but the overall economic value they create and their social and environmental impact.
  3. TBL recommends focusing equally on the three Ps: People, Profit, and Planet.
  4. This concept was developed in 1994 by John Elkington who was an entrepreneur and author.
  5. The three aspects of TBL are: 
  6. Social sustainability: It is a part of corporate social responsibility, businesses must focus on community, social surroundings, and internal resources. This is measured by the investment made in labor compensation and the company’s profit from it.
  7. Environmental sustainability: It emphasizes business practices that cause the least damage to the environment. It requires regular analysis of various kinds of harmful effects a company can supposedly cause to the environment.
  8. Economic sustainability: The economic aspect measures the financial performance and the profitability of the business. Additionally, it measures the business’ contribution towards the overall economy and the growth of this industry.
  9. The TBL framework makes an organization realize its responsibilities towards society and ecology. It is all about accountability for the overall effect of the company’s business practices and contribution towards non-profitable aspects.
  10. Following this ideology, companies are basically redistributing their yields to those who help them i.e. nature and society. TBL aggressively promotes sustainable development.
  11. Companies that adopt sustainable methods attract both investors and customers. Cultural trends have made TBL a profitable option, owing to its positive response. Everyone wants to work with a firm that wants to preserve nature.
  12. TBL is not easy to implement. Therefore, many companies refrain from incorporating this concept into their business. Companies often neglect this concept since it hinders their profit-making strategies. Eco-friendly practices like recycling waste may cost the firm higher than normal.
  13. It is not very easy to measure the social and environmental impact of business and it requires a hefty analysis. This aspect refrains many companies to adopt this framework.
  14. Many corporates surround the globe use this ideology as a marketing strategy, which results in genuine efforts toward the betterment of society and the ecology. In other words, everyone wants to appear green as long as profits remain intact.
  15. The three elements of TBL contradict themselves. It is tough to allocate human, financial, and material resources evenly.
     

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