The business industries are growing exponentially. The increase of technology and the growth of businesses are creating important discussion topics in the industry. Triple Bottom Line (TBL) concept is one such important topic that has been considered as useful in modern businesses.
The environmental pollution is increasing every day and the living conditions gaps between people are getting broader. These two issues can be considered as one major issue that can be seen in the current environment. Businesses are part of creating or increasing these issues in certain instances. Due to this reason, it is identified as a need to record and account for the non-financial activities of an organization to make sure the sustainability contribution of the business.
Businesses increased their attention to sustainable business concepts and concerned more about leaving a better world for future generations. As a result of these concerns, in 1994 John Elkington came up with the concept of “Triple Bottom Line”. Triple Bottom Line is a modernized concept which concentrates on three key areas. These areas can be recognized as 3Ps.
- Profit
- People
- Planet
Instead of concentrating on only the profit, the organizations are encouraged to consider the people in society and increase their living standards. Apart from that Triple Bottom Line suggests taking actions that can help to preserve the environment. This accounting method helps the organizations to make sure the sustainability in their activities and also to avoid engaging in any activities that can be harmful to humans and nature.
Profit
The organizations’ usual profit and loss calculation can be considered as the profit under the Triple Bottom Line concept. Organizations are trying all the possible business activities to maximize their financial profit. Reducing costs or increasing productivity helps any organization to achieve their financial profits.
People
In the modern business concept, organizations have an extended responsibility to increase people’s living conditions. This can be initiated by organizations in different ways. Some organizations approach employee living standards and provide benefits to increase their lives. Other organizations use the corporate social responsibility method. They identify people who are in need and identify one or a few compulsory needs of those people. They conduct a program to help those people who are in need and provide them the requirements. This is mostly done through charity organizations.
Planet
Pollution has become a serious issue in the world. Factory waste carries a major contribution to the matter of pollution. The scarcity of natural resources has become a highlighted topic and serious discussions were raised about not having sufficient natural resources for future generations. This opened the eyes of many organizations and they came up with various concepts of preserving the environment and save resources for future generations’ use.
As a part of the Triple Bottom Line concept, organizations have a responsibility to engage in sustainable activities to preserve the environment. This can be done by any organization as an individual or they can join with various environmental friendly organizations. Another major way of protecting the environment would be stopping pollution. Organizations can achieve this by reducing waste, not releasing harmful gasses, oils or any production waste to the environment and by increasing the quality of the production processes by creating a sustainable production process.
The explained above in detail are the three elements in the Triple Bottom Line accounting concept. This modern concept provides an overall idea about the business and it will help the organizational stakeholders to make better decisions about the future of the business activities. Even though there are many difficulties, organizations tend to adapt their accounting methods in line with the Triple Bottom Line concept as it can create a positive change in the business as well as in society