Enter the Triple Bottom Line - John Elkington

1 Chapter 1 Enter the Triple Bottom LineJohn ElkingtonIn 1994, the author coined the term Triple Bottom reflects on what gothim to that point, what has happened since and where the agenda may now late 1990s saw the term Triple Bottom line take off. Based on the resultsof a survey of international experts in corporate social responsibility (CSR) andsustainable development (SD), Figure spotlights the growth trend over thetwo years from 1999 to 2001. As originator of the term, I have often been askedhow it was conceived and born. As far as I can remember and memory is anotoriously fallible thing there was no single eureka!moment. Instead, in 1994we had been looking for new language to express what we saw as an inevitableexpansion of the environmental agenda that SustainAbility (founded in 1987)had mainly focused upon to that felt that the social and economic dimensions of the agenda which hadalready been flagged in 1987 s Brundtland Report (UNWCED, 1987) wouldhave to be addressed in a more integrated way if real environmental progresswas to be made.

2 Because SustainAbility mainly works, by choice, with business,we felt that the language would have to resonate with business brains. By way ofbackground, I had already coined several other terms that had gone into thelanguage, including environmental excellence (1984) and green consumer (1986). The first was targeted at business professionals in the wake of 1982 sbest-selling management book In Search of Excellence(Peters and Waterman,1982), which failed to mention the environment even once. The aim of thesecond was to help mobilize consumers to put pressure on business aboutenvironmental issues. This cause was aided enormously by the runaway successof our book The Green Consumer Guide,which sold nearly 1 million copies in itsvarious editions ( Elkington and Hailes, 1988).

3 ES_TBL_7/1 17/8/04 7:40 pm Page 1 But back to the Triple Bottom line (often abbreviated to TBL). Like PaulMcCartney waking up with Yesterdayplaying in his brain and initially believingthat he was humming someone else s tune, when the three words finally came tome I was totally convinced that someone must have used them before. But anextensive search suggested otherwise. The next step was whether we shouldtake steps to trademark or otherwise protect the language, as most mainstreamconsultancies would have done. Counter-intuitively, perhaps, we decided to doexactly the reverse, ensuring that no one could protect it. We began using theterm in public, with early launch platforms, including an article in the CaliforniaManagement Reviewon win win win business strategies ( Elkington , 1994),SustainAbility s 1996 report Engaging Stakeholdersand my 1997 book Cannibalswith Forks: The Triple Bottom line of 21st Century Business( Elkington , 1997).

4 In1995, we also developed the 3P formulation, people, planet and profits , lateradopted by Shell for its first Shell Reportand now widely used in The Netherlandsas the the following sections we will look at the drivers of the TBL agenda, atthe waves and downwaves in societal pressures on business, at the characteristicsof a number of different business models, and at the emerging roles :DOES ITALLADDUP?Source: Environics InternationalFigure The Triple Bottom line takes off80706050403020100 Eco-efficiency199719992001 CSR and SD frameworks (frequency of mentions, 1997 2001) Triple Bottom lineCorporate social reportingGreening supply chainsVirtual zero discharge/impactEcological footprintDematerialization factorsIndustrial ecologyES_TBL_7/1 17/8/04 7.

5 40 pm Page 2 Seven driversIn the simplest terms, the TBL agenda focuses corporations not just on theeconomic value that they add, but also on the environmental and social valuethat they add or its dependence on seven closely linked revolutions (see Figure ), thesustainable capitalism transition will be one of the most complex our specieshas ever had to negotiate ( Elkington , 1997). As we move into the thirdmillennium, we are embarking on a global cultural revolution. Business, muchmore than governments or non-governmental organizations (NGOs), will be inthe driving seat. Paradoxically, this will not make the transition any easier forbusiness people. For many it will prove gruelling, if not Paradigm New Paradigm1 MarketsCompliance Competition2 ValuesHard Soft3 TransparencyClosed Open4 Life-cycle technologyProduct Function5 PartnershipsSubversion Symbiosis6 TimeWider Longer7 Corporate governanceExclusive InclusiveFigure Seven sustainability revolutionsMarketsRevolution 1 will be driven by competition, largely through markets.

6 For theforeseeable future, business will operate in markets that are more open tocompetition, both domestic and international, than at any other time in livingmemory. The resulting economic earthquakes will transform our an earthquake hits a city built on sandy or wet soils, the ground canbecome thixotropic : in effect, it turns to jelly. Entire buildings can disappearinto the resulting quicksands. In the emerging world order, entire markets willalso go thixotropic, swallowing entire companies, even industries. Learning tospot the market conditions and factors that can trigger this process will be a keyto future business survival, let alone this extraordinary environment, growing numbers of companies arealready finding themselves challenged by customers and the financial marketsabout aspects of their TBL commitments and performance.

7 Furthermore,although we will undoubtedly see continuing cycles based on wider economic,social and political trends, this pressure can only grow over the long term. As aresult, business will shift to a new approach, using TBL thinking and accountingto build the business case for action and THETRIPLEBOTTOMLINE3ES_TBL_7/1 17/8/04 7:40 pm Page 3 ValuesRevolution 2 is driven by the worldwide shift in human and societal values. Mostbusiness people, indeed most people, take values as a given, if they think aboutthem at all. Yet, our values are the product of the most powerful programmingthat each of us has ever been exposed to. When they change, as they seem to dowith every succeeding generation, entire societies can go thixotropic.

8 Companiesthat have felt themselves standing on solid ground for decades suddenly findthat the world as they knew it is being turned upside down and inside Mrs Aquino s peaceful revolution in the Philippines? Or theextraordinary changes in Eastern Europe in 1989? Recall the experiences ofShell during the Brent Spar and Nigerian controversies, with the giant oilcompany later announcing that it would, in future, consult NGOs on such issuesas environment and human rights before deciding on development options?Think, too, of Texaco. The US oil company paid US$176 million in an out-of-court settlement in the hope that it would bury the controversy about its poorrecord in integrating ethnic minorities.

9 Now, with the dawn of the 21st century,we have a new roll-call of companies that have crashed and burned because ofvalues-based crises, among them Enron and Arthur 3 is well under way, is being fuelled by growing internationaltransparency and will accelerate. As a result, business will find its thinking,priorities, commitments and activities under increasingly intense scrutinyworldwide. Some forms of disclosure will be voluntary, but others will evolvewith little direct involvement from most companies. In many respects, thetransparency revolution is now out of control . Even China is being forced toopen up by such factors as the global SARS epidemic that it helped to opening up process is itself being driven by the coming together ofnew value systems and radically different information technologies, fromsatellite television to the internet.

10 The collapse of many forms of traditionalauthority also means that a wide range of different stakeholders increasinglydemand information on what business is going and planning to do. Increasingly,too, they are using that information to compare, benchmark and rank theperformance of competing companies. The 2001 inauguration of the GlobalReporting Initiative (GRI), built on TBL foundations, is one of the mostpowerful symbols of this technologyRevolution 4 is driven by and in turn is driving the transparency are being challenged about the TBL implications either of industrial4 THETRIPLEBOTTOMLINE:DOES ITALLADDUP?ES_TBL_7/1 17/8/04 7:40 pm Page 4or agricultural activities far back down the supply chain or about the implicationsof their products in transit, in use and increasingly after their useful life hasended.