Since the beginning of the Industrial Revolution, firms and industries around the world have been actively involved in depleting resources and polluting the environment while aiming to maximise their profits. Today, various economic stakeholders have recognised the need to change these practices to ensure environmental preservation and social welfare in the long run. A relatively simple method to understand how a firm can be sustainable in the long run is using the Triple Line Framework, sometimes known as the Triple "Bottom" Line Framework.
The Triple Line Framework
British consultant John Elkington was the first person to recognise the importance of sustainability in the business world; thus, it is fitting that he was the one to create this framework to act as a method of evaluating business performance. The Triple Bottom Line Framework states that it is important that a business pays sufficient attention to social and environmental causes along with its primary aim of earning profits. The Triple Line Framework is often split up into three Ps: Planet, Profit, and People. These three segments are also in line with the ESG integration that we spoke about in our Sustainable Investment article.
Understanding the three Ps
People
When talking about "People", the Triple Bottom Line focuses on the social welfare of the company and how it treats both its employees and the people in society. These people are known as the economic stakeholders and include the government, consumers, shareholders, managers, and employees. While many people regard shareholders as the main stakeholders in the business and believe that ensuring their returns increase is the firm's primary aim, this is not true. Yes, it is important for more people to invest in your business, but only placing emphasis on their importance relative to that of other stakeholders is not right. Businesses must ensure that they are ethical while treating their labour (by maintaining safety requirements in factories), employing workers (by not taking racial factors into consideration), and even maintaining motivation and a positive atmosphere at the workplace.
Planet
The second segment of the triple bottom line is our planet. In recent years, carbon emissions due to business production have ben rising significantly and this has caused the atmospheric concentration of harmful gases, such. as carbon monoxide and sulfur dioxide to increase. However, many government around the world are now realising the importance of sustainability and are making plans to provide support for sustainable production and consumption. Some have done this in the from of subsidies on renewable energy, others by placing carbon taxes to incentivise firms to use other methods, and some have even given consumer subsidies for purchasing electrical vehicles.
Profit
This is the final and most obvious factor in the framework. The primary goal of most businesses around the globe is to minimise costs and maximise profits. It is critical to understand that a business should not try to focus on sustainability by simply being socially ethical and not harming the environment, they must ensure that this is happening while business growth is being benefitted in the long term. Research has shown that being sustainable can give businesses the upper hand in the competitive market as well, as shareholders are now paying much more attention to ESG integration and consumers themselves are likely to be willing to pay higher prices for goods that are environmentally friendly.
The example of Starbucks
Starbucks is a business that has been committed to adhering to the Triple Bottom Line Framework ever since it was founded. The company provides environmentally friendly straws, cups, and napkins, it creates a warm and welcoming atmosphere for customers, and the business has even employed thousands of veterans since 2013; it also pledges to employ 5000 more.
Sustainability is a cause that is relevant now more than ever! Small changes can provide us with large results in the future. Don't be afraid to initiate the change at your business by spreading awareness. Stay Sustainable!
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