Question

Explain the triple bottom line. What are its elements? What are the potential conflicts among its elements? How would you resolve the conflicts?

Answer 1

The Triple Bottom Line (TPL) is an accounting framework that evaluates a firm on three parameters i.e. social, environmental and financial. In other words this system measures the contribution of the firm towards the profitability of the shareholders, development of the economy and also in terms of social corporate responsibility, contribution to purify environment and improve the health of people. It takes into account three P's i.e. people, planet and profits.

The basic problem is measuring the three P's in a common unit. Profits can be measured in dollars. But it is difficult to measure the environmental benefits and health benefits provided by firm to people in terms of dollars. One solution is measuring the three P's with index, by assigning weights to them. But again the problem is which component should be given more weight as compared to other. We cannot decide people is more important or profit.

So, a possible solution could be analyzing the social, economic and environmental measures adopted by firm.

Social measures:

• Reduction in unemployment rate.
• Jobs provided to female population.
• Increase in household income of people.
• Reduction in poverty.
• Increase in life expectancy of people.

Environmental Measures

• Improvement in water and air quality by applying various techniques.
• Reduction in concentration of harmful gasses by using air and water treatment plants.
• Waste management techniques used.
• Electricity and Fossil Fuel Consumption.
• Development of Public Parks.

Economic Factors

• Contribution to growth of economy in terms of GDP.
• Increase in profits of shareholders.
• Generation of Employment.
• Increase in Market Share.