Triple Bottom Line


The Triple Bottom Line, What It Means for Manufacturers

The bottom line.  It has long been the measure of profitability for manufacturers around the globe, and the subject of much angst for many managers.  If your company’s bottom line is in the red, your expenses are greater than your revenues, and your board of directors or boss is requesting a meeting.  If you are in the black, revenues exceed expenses.  You are a profitable enterprise and all is right with the world. 

However, the notion of a “triple bottom line”, which promotes the importance of not only profitability, but also people and the planet, has become more widely publicized.  While accounting measures are significant and not to be discounted, a company’s focus on the environment and its employees are also becoming measures of a manufacturer’s true bottom line performance. 

Here are two examples:

·         Ben and Jerry’s, the Vermont-based ice cream maker, has built its company around the “three pillars” of the triple bottom line – people, profits and the planet.  According to a New York Times blog from April 11, 2011 (“A Scorecard for Companies with a Conscience”), “the company offered voter registration along with its ice cream, paid employees living wages and good benefits, donated 7.5 percent of its profits to charity, and bought Brazil nuts from a cooperative of indigenous Amazon farmers and brownies from a bakery famous for hiring people fresh out of prison”.  They even rejected a buyout offer from Unilever for fear that the focus would revert back to profitability at the expense of their employees and the environmental causes which the owners so openly and passionately championed.

·         Forbes Magazine profiled Jessica Alba, movie star and entrepreneur, who started a web-based business making and selling non-toxic diapers and baby products after finding products laden with chemicals when shopping for her own newborn.  Her business venture donates a portion of its proceeds to a non-profit; uses natural, sustainably harvested, organic, renewable materials in the products it produces; and utilizes a code of conduct for suppliers to ensure that they comply with social and environmental standards.  Her company has applied for “B Corp” status, which is the Good Housekeeping Seal of approval certifying that Jessica’s venture, The Honest Company, is staying true to its triple bottom line based mission. 

Are you thinking, “Well, that’s all well and good for people like Jessica Alba and those guys from Ben and Jerry’s!  How does a manufacturer create a focus on environment and employees, while still maintaining profitability?  We are barely in the black the way it is!”    Well, the good news is that building a business around the triple bottom line can not only ensure that you manage your company with a focus on the “bigger picture”, it can also make your company more money!  The key is in marketing your commitment to the three pillars of the triple bottom line. 

Social and environmental responsibility sells, particularly with the “Millennial Generation” (those in their 20’s and early 30’s).  This generation is known for its affinity to causes, and products that promote environmental and social responsibility appeal.  Looks at the enormous popularity of Tom’s, the company that proclaims their “one for one” philosophy – one needy person is helped for every one pair of shoes and eyeglasses sold.  These are not the cheapest products in the world, but they certainly sell and do so largely on the basis of their socially focused mission. 

  • So, can you adopt a mission aligned with profitability, people and the environment?  It may be easier than you think:Can you segregate part of your process and utilize environmentally conscious materials or resources instead of what you are currently using?  Think recycled pallets or the use of wind or solar energy to power your facility.
  • Can you institute a “volunteer day” for all of your employees so that they have a day with pay to give back to the community?  Or, can you donate a portion of your profits to a local charity or charities? 

While there may be a short-term cost to these actions, there is likely to be long term gain and increased profitability that results from greater loyalty and dedication from your employees, and stronger relationships with the community and your customers.  The key to success for manufacturers adopting the triple bottom line is marketing their efforts, as Tom’s does loudly and proudly on its website. 

Contact Versatech, LLC to obtain assistance with strengthening your performance against the profitability measures of the triple bottom line through our consulting and engineering services.