During one of the classes on Social Enterprise (Tues Nov 13), the term “Triple Bottom Line” came up and I wasn’t aware of what this meant, so I looked it up.

The triple bottom line consists of three P’s: profit, people, and planet. Examining a company’s “Triple Bottom Line” helps measure and understand the financial (or economic), social, and environmental performance and successes. Doing equally well in all these three aspects means that there is a balance in the priorities of the business. The Triple Bottom Line analysis gained popularity when the population became more aware and concerned with climate change, corporate social responsibility, and fair trade. Businesses couldn’t just be concerned with monetary profits.

[Image source]The People/Social aspect pertains to fair labour practices and fair trade. Being successful in this aspect would mean that your employees are rightfully compensated, are not exploited, have a safe working environment, and have reasonable working hours. In addition, this aspect would also concern the community the business operates in, whether its able to aid in the growth in the community or is able to  contribute to the safety of the community.

The Planet/Environmental aspect evaluates the company’s environmentally sustainable practices like waste management, efficient resource use, recycling and the like. Another important factor to examine under this aspect is the ecological footprint or the carbon footprint of the company.

The Profit/Economic aspect is straightforward and concise, the difference between Revenue and Cost. It also covers strategies on how to lower costs as well as the fiscal growth plan of the company.

A challenge this poses is that there is no concrete or definite way to measure the performance in the People and Planet aspect, whereas the Profit aspect can be calculated in terms of cash.

Sources: http://www.economist.com/node/14301663