The entrepreneurial community has long prided itself on a working philosophy based on purpose over profits. With sustainability becoming a more prevalent part of economies as a whole, individual businesses have had to focus greater attention on striking a balance between returns to people, planet and profits.
In my own residential property management business, I have worked hard to strike a balance that I am comfortable with. The challenge of course is that often creating profits for the business while also benefitting society at large can seem at odds with each other. The concept of the Triple Bottom Line was developed in the 1990s and is aimed at helping entrepreneurs to better incorporate notions of sustainability into their everyday business practices.
The Triple Bottom Line (TBL) is an accounting framework, developed by John Elkington, aimed at helping businesses measure rather than define sustainability. Defining sustainable, purpose driven action is the easy part, coming to a conclusion regarding the level of impact that a business is having as well as the optimal balance across people, planet and profits (the three Ps), is much more difficult.
First off there is no common unit of measure across the three Ps and the triple bottom line does not try to impose one. At first glance this may seem to be a weakness of the framework, but one could also argue that by allowing for multiple measures of value across people, planet and profits, the framework is inherently flexible to the individual needs of businesses across a wide array of sectors. A for-profit company may be interested in measuring value in terms of earning per share, while a not-for-profit soup kitchen may choose to measure its productivity or value creation in terms of number of lunches served in a year. Both are acceptable measures within the TBL framework.
If measuring or creating balanced value of sustainable business practice is something you have been wanting to pay closer attention to, here are a few tips:
It is easy to mistake measurement of social impact and sustainable practice as a nice to have, but I strongly believe that it is in fact a must. First, entrepreneurs in the constant battle to scale and to attract investment would not accept a casual approach to measuring and managing the economics of their business. It is equally dangerous to do so when it comes to measuring a business’s success in achieving its social purpose and fulfilling its brand promise to its customers, employees and other stakeholders. Similarly sustainable business practices can translate into additional economic benefits for the business that help to ensure its continued viability and commitment to social good.
By defining and measuring, we commit ourselves to paying greater attention to the things that drive us and our business forward in a way that creates value for itself, for others and the wider world.
Written By: Sabine Ghali, Director at Buttonwood Property Management and an entrepreneur at heart who endeavors to help investors create real estate wealth over time in the Greater Toronto Area. Visit her at www.buttonwood.ca