Business Ethics: Triple Bottom Line

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Table of Contents

Introduction
Discussion
Conclusion
References

Introduction

Historically, most businesses primarily focused on the profits they gain from the industry without considering how they impact the surroundings. However, with time businesses started seeing the connection between organizational success, environmental health, and social well-being. Recently companies want a well-rounded perspective of their operations and how they relate to the environment. Businesses have started to implement business models that help to analyze their operations’ impacts. Companies are using the Triple Bottom Line (TBL) model to ensure sustainable and ethical commitments to CSR initiatives, which has various advantages despite having multiple drawbacks.

Discussion

The TBL approach is a triad of stewardship of the environment, profit, and social responsibility, which are now part of the expanded capacity of corporate concerns. TBL is a derivative of sustainability commonly referred to as meeting the present day’s needs without compromising future generations’ capability to meet their needs. The TBL dimensions, which are (3p’s) people, profits, and planets, are powerful tools that support sustainability; hence companies adopting the model to ensure sustainability (Boubaker, & Cumming, 2018). The 3Ps of TBL are unified with a focus on the positioning and success of optimal sustainability.

To begin with, people or social sustainability is a part of corporate social responsibility, and organizations must consider their social surroundings, community, and sources. Secondly, profits or economic sustainability measure a business’s profitability and financial performance by supporting innovation, creating wealth, creating employment, and paying taxes. Lastly, the planet or Environmental sustainability accentuates business practices that cause the slightest harm to the environment (Hourneaux et al., 2018). Due to information sharing on social media, consumers demand culpability and transparency from firms. Through the brand, loyal customers reward their positive impacts while boycotting products from organizations that are not eco-friendly.

Adopting the TBL has a significant positive impact on the world because companies can focus on how the business affects people instead of focusing only on profits. Secondly, Companies have a more fabulous humanitarian presence, encouraging employee retention and reducing abrasion (“Pros and Cons of the Triple Bottom Line,” 2019). There are various disadvantages to adopting the TBL model. For example, it can be challenging to move from one plan to another quickly, switching mechanisms between priorities. The cost of operations also increases due to the need to find alternative products and processes to increase profits.

By adopting the TBL model, companies may gain benefits like making it a better investment scheme for investors due to transparency in ESG performance and scores. Additionally, it minimizes regulatory compliance and supremacy risk when the company receives zero penalties for non-compliance reporting on ESG issues. Moreover, it improves its performance when a company attends to all other factors and not profits alone (Pimplapure et al., 2020). It toughens the company’s supply chain because it is less exposed to the effects of business disruption. Lastly, a company maintains its culture through employee attraction and retention, benefiting from a diverse and inclusive workforce.

A balanced scorecard is an organizational system that reviews internal business processes and external outcomes to improve planned performance and outcomes unceasingly. In addition, it assists a company in measuring TBL performance. This happens when a scorecard entirely provides information about the firm when inspecting company objectives. The scorecard analyzes and compiles data from past versions enabling the management to implement goals and make plans for improvement after identifying their inefficiencies (Kaplan & McMillan, 2020). The company conveys tasks and projects to various areas of the organization to enhance financial and operational efficiencies, enlightening the company’s bottom line.

Conclusion

In conclusion, the TBL model captures the essence of sustainability by measuring the impact of company activities on the surroundings. Companies are adopting the TBL model because of its advantages like having a more significant positive impact on the world and outstanding humanitarian presence. However, they are also experiencing disadvantages like difficulty switching mechanisms between priorities and increased cost of operations. The balanced scorecard can help managers measure their TBL performance. This allows all companies to make adjustments that ensure sustainability and make all business processes less hazardous to the people, profits, and planet.

References

Boubaker, S., & Cumming, D. (2018). Research Handbook of investigating in the triple bottom line. Edward Elgar.

Hourneaux, F., Gabriel, M., & Gallardo-Vázquez, D. (2018). Triple bottom line and sustainable performance measurement in industrial companies. Revista De Gestão, 25(4), 413-429. Web.

Kaplan, R., & McMillan, D. (2020). Updating the balanced scorecard for Triple Bottom Line strategies. Web.

Pimplapure, V., Kulkarni, P., & Pachpor, P. (2020). Triple Bottom Line (TBL). Palarch’S Journal of Archaeology of Egypt/Egyptology, 17(8), 1231-1237. Web.

Pros and cons of the Triple Bottom Line — Sustained kitchen. Sustained Kitchen. (2019). Web.

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Business Ethics: Triple Bottom Line

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