Thus, TBL is sometimes used to measure performance in corporate America.
Defining Triple Bottom Line in Simple Terms
The idea behind the triple bottom line is that if a company ignores how it interacts socially and with the environment, it cannot get an accurate sense of the true cost of doing business because it isn't seeing the full scope of its actions.
Problems in Calculating TBL
One of the challenges involved in gauging a company's TBL is that it is difficult to measure.
Profits are numerical and so easy to measure, but it can be hard to measure the value of, for example, reducing greenhouse emissions or preventing an oil spill except in terms of the impact to profit.
Furthermore, as Elkington has pointed out, social and environmental responsibility can be somewhat subjective.
Some may interpret a company having a limited impact on the environment as a success, while others might want to see a company actively improving the environment.
What is TBL (Triple Bottom Line) FAQs
What does TBL stand for?
TBL stands for Triple Bottom Line.
What is the Triple Bottom Line?
The Triple Bottom Line, or TBL, refers to the theory that companies ought to operate in consideration of social and environmental consciousness as well as profit.
How is the TBL viewed?
The idea behind the triple bottom line is that if a company ignores how it interacts socially and with the environment, it cannot get an accurate sense of the true cost of doing business because it isn't seeing the full scope of its actions.
Why is the TBL hard to calculate?
When was the idea of TBL conceived?
TBL was first popularized as a theory in 1994 theory by John Elkington.
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.
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