Triple Bottom Line is an accounting concept introduced to the business industry. It is important to identify the advantage of the triple bottom line concept for any organization to realize why they should start accounting based on this concept. The advantages of the triple bottom line concept can be identified both from the organization’s perspective as well as from a social perspective.
This accounting concept was introduced by John Elkington in 1994. This was introduced as a method of accounting for all the social and environmental elements of the organizations. Under the concept of the triple bottom line, three concepts know as 3Ps can be identified.
- Profit
- People
- Planet
Based on the triple bottom line concept, the organizations should earn their profit, increase the living condition of humans, and preserve the environment by creating a better world for future generations.
The advantages of the triple bottom line concept can be illustrated as below.
- Encourage businesses to think beyond the traditional competitive advantage and strategic capabilities concept and expand their performance measuring systems – Rather than sticking to the traditional sustainability concepts, the organization can concentrate every activity done by the organization an account for those activities.
- Encourage Corporate Social Responsibility reporting – The organizations engage in various Corporate Social responsibility programs. These are done to improve the lifestyle of the people in rural areas or to minimize environmental pollution. Accounting for Corporate Social Responsibility programs will motivate the organizations to engage in more activities as it affects the organizations favorably in measuring organizational growth under the triple bottom line accounting method.
- Use as a measurement of achieving environmental sustainability – Achieving environmental sustainability is one goal of the triple bottom line. The organizations are encouraged to support reforestation, protecting wildlife, reduce carbon footprints, and minimizing the disposal of factory waste to the environment. Apart from that, organizations should initiate in preserving scarce natural resources and save them for future generations’ use.
- Help the organizations to face the competition – Accounting based on the triple bottom line concept helps the organizations to present their contribution towards the social and environmental sustainability and it can attract more stakeholders for the organization. It helps the organization to face the competition well and survive in the industry without any issue.
- Reduce energy Expenses – Under the triple bottom line method, the organizations are encouraged to use renewable energy. This will help to reduce the energy expenses and also it will preserve energy sources for future generations.
- Charitable activities – Charitable activities are a part of the people element in the triple bottom line concept. Helping the education of children, vocational training sessions, programs for specially-abled people are few charitable activities that can be performed by the organizations to improve the living condition of the society.
- Employee Retention – When the organization is conducting a triple bottom line accounting method, the employees of the organization are also will be treated well. This will encourage employees to continue to work with the organization. Apart from that, the employees will be motivated to work in an organization that does its share to improve the social and cultural sustainability apart from earning profits.
The above-stated advantages of the triple bottom line concept help the organizations to identify why that should implement such a method in their organizations. Since the concept is still growing in the business industry, the advantages of the triple bottom line method can be used to encourage organizations to switch to green, carbon-free production. Apart from that, they should be encouraged to manage their factory waste and use the waste for something useful after the recycling process. These identified advantages of the triple bottom line will help the world to be a more sustainable place.