Ask the Expert… What is the Triple Bottom Line?

Businesses have traditionally looked solely at their profitability to determine how well they are performing; however, with growing public awareness of key social and environmental issues, more and more businesses are turning to CSR to focus on growing their triple bottom line instead.

You may have heard of the triple bottom line before, but weren’t clear on what it stands for. Simply put, the triple bottom line concept evaluates your business by looking at three key categories, commonly known as the “three P’s”: people, planet and profit.

People

People measures how socially responsible the business is, considers all stakeholders including shareholders, employees, customers, vendors and the communities in which the business operates.

Planet

Planet measures the impact the business has on the environment and usually focuses on how the it can reduce its carbon footprint through more sustainable business practices.

Profit

Profit measures the profitability of the business, typically using traditional financial performance measures.

By evaluating your business using the “three P’s”, you can measure your social and economic impacts and build a more comprehensive understanding of how you can take steps to improve your triple bottom line in the process.

Article written by Ellen Tran, CPA, CA.