Thematic Areas

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)