Triple Bottom Line Accounting
By: Reneé Blanchard
Sustainability as a Business Model: Triple Bottom Line Accounting
Moving forward aligned with moral values is incredibly important to the next generation of business owners, myself included. Before opening the shop, I worked with larger companies to eliminate toxic chemicals from their products and power their production with greener energy. That desire to see a more sustainable and equitable marketplace didn’t go away when I opened my little shop.
While most business owners my age and younger are deeply committed to creating a better way to business, when I have sought assistance from business advisors or organizations dedicated to helping businesses like mine, the impact piece hasn’t been taken as seriously as the financial part. I’m often accused of having a “passion project” and told “this just doesn’t make sense.” Big corporations like Ben & Jerrys, IKEA, and Patagonia have all created very successful business models that take into account their full impact on finances, social justice, and the environment.
Our changing climate is real and threatening our homes, our families, future generations and all the things we love, like our eco-system, coffee, chocolate, and our health. We are beyond capacity as a planet and there is no Planet B. As we watch our cities flood over and over again with increasing severity and frequency, we have no option but to take into account how our business impacts the world from the environment to our most vulnerable customers. If our customers aren’t happy, healthy and making a good living, they can’t support our work. It is with all of this in mind that I want to talk about triple bottom line accounting.
Here are the three (triple) bottom lines we are looking at:
Profit = The traditional measure of profit found at the bottom of your P&L
People = Measures how socially responsible a company is through their practices, logistics, and supply chain
Environment = Measures how environmentally sustainable the company is through its impact on the planet including energy usage, waste, and the scale of relationship with vendors whose practices impact the planet
WIthin a triple bottom line accounting approach, our profits include money left over after expenses but also include our positive impacts on the world around us. The reality is that the triple bottom line accounting approach to business is a logical business move and growing in popularity. The triple bottom line theory says that in order to understand the full impact of our business we must include social and environment impacts, inherent in this idea is that understanding our social and environmental impacts are not charity, but another cost of doing business.
Below I list out a clear strategy on how to get started with implementing and experimenting with a creating a more sustainable business model and moving towards a triple bottom line approach.
(1) Understand what issues are important:
Such as greenhouse gas emissions which can measured through energy usage of your building and how your products are made as well as how often and far your staff travels in vehicles that have high or zero emissions, like planes, individual cars, or by bike. Other important issues include paying a liveable wage, supporting your community’s most vulnerable populations, and reducing waste.
Make a list of all the issues that contribute to the social and environmental impact of your business
Prioritize the issues you want to start with and don’t dismiss the hard ones just because they are hard to track. You solve problems for a living and you can do hard things.
(2) Track your impact:
Create a way to track the issues you have listed. You can’t change what you don’t know
(3) Evaluate your data:
Where can you reduce your harmful impact and increase your positive impact
We do this each year and month when we review our business financial statements, where can we cut, where can we spend more to have the biggest impact. Use that strategy here as well.
(4) Transparency:
Share this information with your greatest stakeholders, your employees, executives, and customers.
Ask for feedback. Are you tracking the right data? Do you have the right assumptions?
(5) Do better:
Set goals on how to reduce your harmful impact and increase your positive impact
Reneé has worked with this strategy in her own business and within her non-profit experience and is available to help your business. Email her at churchalleycoffeebar at gmail.com to get started!
