How do we measure sustainability? One way to do this from a business perspective is to use the Triple Bottom Line, or TBL. This idea is discussed in an article published by economic analysts, Slaper and Hall, from the Indiana University Kelley School of Business. The TBL allows one to measure not only economic growth, but also environmental impact and social impact. I have heard these three areas referred to as the 3 P’s: profit, planet, and people. We are accustomed to measuring financial gain, but measuring environmental and social impacts is less clear. The latter two areas have been regarded more qualitatively than quantitatively.
Slaper and Hall state that the first obstacle to measuring TBL is what unit to use. Effects on planet and people are difficult to measure with monetary value. Another option would be to design an index to allow businesses to compare their performance to a national standard.
In an index system, each of the 3 P’s can be measured differently, as can the sub-components of each P. Profits would continue to be measured in dollars. Environmental impacts could be measured in terms of concentration of specific pollutants, amount of electricity used, amount of fuel used, and amount of solid waste produced or recovered. Social measures would vary greatly by company. Some companies might measure health, income, or level of education for employees or for the community.
The next step is to analyze the data and determine what actions to take. This involves collaboration between all the stakeholders. It would be difficult to address all the subcategories of the 3 P’s, so stakeholders would have to narrow their focus by prioritizing the subcategories. This focus might be dynamic – changing over time.
A few challenges of a TBL index are that some of the ratings would be based on an evaluator’s opinion, not numerical data. There would be questions about the importance of each of the 3 P’s and the categories in each. However, the benefits of an index system are that it allows flexibility based on the data available for a particular business or project.
According to Slaper and Hall, using the Triple Bottom Line can help a business to be more financially profitable over the long term. Simple steps like reducing energy consumption and waste production are very tangible and have financial benefits. An example of this would be building a LEED certified building that saves on energy costs for heating and cooling and conserves water. These savings add up over time. While the environmental and social factors might seem separate from financial decisions at the present moment, they will have significant impacts on future profit. As consumers become more educated, they will be more likely to support businesses that see themselves as part of a community – a community which includes the environment we all share and the people with whom we share it.