This blog attempts to shift the paradigm of thinking from a single bottom line to triple bottom lines.
Too many businesses focus on making money at the expense of other areas of importance. The graphic here attempts to show a more balanced view of bottom line impacts and associated metrics. Rather than focus on the almighty dollar, a balanced focus is advocated which include Economic, Social and Environmental.
This concept was primarily triggered by an article in December 2011 Forbes. The front cover focused on Jacqueline Novogratz of the Acumen Fund. The section of Impact 30 has been compiled into a Mindjet interactive format and word document with information on the 30 funds. These are available at these links:
(Note the Mindjet Interactive Player uses Adobe PDF Reader which may not be available on some browsers or smart phones, therefore a word document export from Mindjet in PDF format is provided for access to the links to the IMPACT 30 related companies.)
After writing this blog, I discovered that GCS Service-Learning was also using a
similiar triad to represent Triple Bottom Line as People-Planet-Profit (PPP).
Where ever I have used Social-Environmential-Economic (SEE) then PPP is
equilivant, see diagrams.
An interesting presentation at TEDxPhilly by Jay Coen Gilbert on the
bcorporation website (IMPACT 8) discusses the Shareholder vs Stakeholder viewpoints as shown in graphic at left. Anyone interested in the concepts of this should view the video.
Jacqueline Novogratz of Acumen Fund: “My biggest concern is that the proposition for impact investing ends up being more about the potential financial returns on capital than about why the capital is being invested in the first place. The risk is that the focus is more on financial return as an end in itself rather than as a tool and a means to solve big intractable social problems. Right now the debate is often framed by the financial return an organization can make rather than by the goals of that organization and the best capital structures to realize those goals. I think the debate would be more effective if we framed it around the latter.”
Update 4/7/13: Jacqueline Novogratz has an excellent book on their work "The Blue Sweater", I highly recommend it. Acumen Video.
Iftekhar Enayetullah of Waste Concern: “I find that the perspectives funders have on these issues really vary. There is a fundamental difference between dealing with donors and dealing with investors. When we are dealing with UNDP [the United Nations Development Programme] or UNICEF [the United Nations Children’s Fund], they look first at the development impact of the project. When we sit down and negotiate with them, before they look into the financials they first want to look into the development impact, such as whether the project is fulfilling the United Nations’ Millennium Development Goals. Once it is clear that the project meets the development goal, then they look into the financing issues. But their entry point is development impact. When we discuss the same proposal with investors, they will first want to dive into the numbers and the business plan. They want to understand how long the payback is, whether my assumptions are right, and what risk mitigation plans we have looked into for the project. If the project involves carbon credits, they will want to know what our plans are if the Kyoto Protocol falls apart. It’s only after looking at these financial issues that they want to look at the project’s social and environmental benefits. So there is a basic difference in the way each type of funder approaches these investments, and we have to take a different approach when we discuss the same project with different investors.”
Asad Mahmood of Deutsche Bank: “What distinguishes social finance from regular finance is two additional risks. One is the risk of failing to innovate— failing to push the envelope to meet the needs of the client and integrating the social impact into the business. It can’t be an afterthought—“We’ll make money and then contribute some of it to improve people’s welfare or set up a foundation”; that is not, in my mind, a social business. By labeling that a social business, we create a risk to the fundamentals of how this industry needs to develop. If our focus becomes making money and giving it away afterward, then we are not achieving the potential. The social and financial aspects have to be intertwined, like DNA. If we don’t focus on the customer and if we don’t innovate to meet and service the needs of the customer, then we will create a bigger risk in the sector because the expectations of the sector are far different than a normal business. It’s important to distinguish these risks from normal business risks. They are far more exaggerated for social enterprises because we have positioned this sector as being beneficial to the poor and beneficial to society. To me, one of the greatest risks in the sector is that it pumps up all its potentiality and then fails to focus on the customer, thereby creating no loyalty to the business and none of the social outcomes that were promised. How do we define the social finance industry? How do we avoid making it so commercial that the customer and the social service become secondary? That to me is a primary risk."
These three panelists give clarification to the Triple Bottom Line concept and hopefully emphasize in the reader’s mind the importance of the balanced concept depicted in the diagram above.
A regional approach to sustainability is an objective of the Piedmont Triad Sustainable Communities Regional Planning Project. In their Overview PDF document the “What is a Sustainable Region?” visual a Venn diagram identifies the Triple Bottom Lines as Social, Environmential and Economic Equity. It identifies a Sustainable Region as "An urban, suburban or rural community that has more housing and transporation choices, is closer to jobs, shops and schools, is more energy independent and helps protect clean air and water."
The August 2010 blog
"Design Funnel ... Fish-Hook-Fry Metaphors ...." discusses an approach which starts with a wide funnel with many options and narrows to Goals, Solutions, Products or Services. When the design process focuses on a balanced Tripple Bottom Line the typical emphasis on almighty dollar is enhanced to include the social and environmental aspects.
The graphic "another way of visualizing" extracted from
The Center for Creativity Economy gives an alternate concept of the design funnel showing breadth versus time.
In the November 2011 blog I-STEAM PIE Engine connects future economy to jobs … I-STEAMSS was introduced which reflects Innovation, Science, Technology, Engineering, Arts, Math and Social Studies. I now promote the I-STEAMSS concept, in fact this blog brings strength to the Social aspect.
Hopefully this blog will give the reader a new set of eyes of “New Ways of Thinking Inside and Outside the Box” and enable a more comprehensive understanding of how a balanced Triple Bottom Line is “A Better Way” toward a healthy paradigm. Feedback is welcomed.
“lhb: Quality comes from Ownership with Integrity and appropriate Resources in a healthy Paradigm”
