Thematic Areas
Sustainability has been an often mentioned goal of
businesses, nonprofits and governments in the past decade, yet measuring the
degree to which an organization is being sustainable or pursuing sustainable
growth can be difficult.
The TBL (The Triple Bottom Line) is an accounting
framework that incorporates three dimensions of performance: social, environmental
and financial. This differs from traditional reporting frameworks as it
includes ecological (or environmental) and social measures that can be
difficult to assign appropriate means of measurement. The TBL dimensions are
also commonly called the three Ps: people, planet and profits. We will refer to
these as the 3Ps.
Economic
Measures
Economic variables ought to be variables that deal with the
bottom line and the flow of money. It could look at income or expenditures,
taxes, business climate factors, employment, and business diversity factors.
Specific examples include:
- Personal income
- Cost of underemployment
- Establishment churn
- Establishment sizes
- Job growth
- Employment distribution by sector
- Percentage of firms in each sector
- Revenue by sector contributing to gross state product
Environmental
Measures
Environmental variables should represent measurements of
natural resources and reflect potential influences to its viability. It could
incorporate air and water quality, energy consumption, natural resources, solid
and toxic waste, and land use/land cover. Ideally, having long-range trends
available for each of the environmental variables would help organizations
identify the impacts a project or policy would have on the area. Specific
examples include:
- Sulfur dioxide concentration
- Concentration of nitrogen oxides
- Selected priority pollutants
- Excessive nutrients
- Electricity consumption
- Fossil fuel consumption
- Solid waste management
- Hazardous waste management
- Change in land use/land cover
Social Measures
Social variables refer to social dimensions of a community
or region and could include measurements of education, equity and access to
social resources, health and well-being, quality of life, and social capital.
The examples listed below are a small snippet of potential variables:
- Unemployment rate
- Female labor force participation rate
- Median household income
- Relative poverty
- Percentage of population with a post-secondary degree or certificate
- Average commute time
- Violent crimes per capita
- Health-adjusted life expectancy
Data for many of these measures are collected at the state
and national levels, but are also available at the local or community level.
Many are appropriate for a community to use when constructing a TBL. However,
as the geographic scope and the nature of the project narrow, the set of
appropriate measures can change. For local or community-based projects, the TBL
measures of success are best determined locally.
The Triple Bottom Line concept developed by John Elkington
has changed the way businesses, nonprofits and governments measure
sustainability and the performance of projects or policies. Beyond the
foundation of measuring sustainability on three fronts—people, planet and
profits—the flexibility of the TBL allows organizations to apply the concept in
a manner suitable to their specific needs.
There are challenges to putting the TBL into practice. These
challenges include measuring each of the three categories, finding applicable
data and calculating a project or policy's contribution to sustainability.
These challenges aside, the TBL framework allows organizations to evaluate the
ramifications of their decisions from a truly long-run perspective.
(Timothy F. Slaper, Ph.D. Director of Economic Analysis, Indiana Business Research Center,
Indiana University Kelley School of Business
Tanya J. Hall, Economic
Research Analyst, Indiana Business Research Center, Indiana University
Kelley School of Business)
