The theory of triple bottom line is that companies have a three-fold obligation leading to business sustainability: people, planet and profit. Here, businesses are responsible to people; they must incorporate positive business practices that help the people who work there, as well as shareholders, and those residing in the communities that the business and potential branches are located.
Companies are responsible to the people directly. They must use fair labor practices, not use child labor, give standard salaries and give back to the community in various ways, all the while maintaining their business sustainability .
The second obligation, planet, refers to a company utilizing positive environmental practices. Businesses should not engage in ecologically damaging practices such as massive polluting or creating products that can be harmful to the planet, i.e. dangerous metals or toxic chemicals. Whereas the first obligation is essentially to the planet’s occupants, this obligation refers to the planet itself in that companies should use renewable energy, reduce waste, and determine how to be environmentally responsible while maintaining a company’s business sustainability .
The third obligation is profit, but this is a different kind of profit than one’s accountant would be familiar with. Rather, this obligation refers to how society profits, or benefits, from the company’s green conduct. There have to be social benefits to a company’s profit instead of simply higher revenue.
The company’s methods must be environmental sustainable and socially responsible in addition to being financially sound – this combination is the kind of profit that advocates of triple bottom line refer to. Money still matters, but here it’s only one factor, and not the only one that will lead to a company’s business sustainability in the long run.
Understandably, members of green parties, in addition to those who are simply pro-environment, advocate of triple bottom line theory. They understand that triple bottom line corporations focus on how they affect environmental and social values within societies and that fiscal value should be only one factor in their behaviors.
Here, businesses behave environmentally responsibly, industries conform to these changing standards, and both people and the planet thrive. The profit, both real and fiscal, is realized in new innovations, new markets, and a new way of thinking.
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