The Triple Bottom Line: redefined
Many definitions of sustainability refer to the triple bottom line like a stool with three legs. Each leg represents the environment, society and the economy. The exercise of removing one leg at a time shows a hierarchy of importance.
The realistic definition of the triple bottom line
Let’s take away the economy first. What will happen to society and environment? The environment will be fine, while society will enter into chaos at first, remembering the economy is a man-made construct designed to deliver goods from the environment to society. How will society access food and materials for life? With great difficulty! It will continue to exist, albeit in a state of confusion and hardship.
Alternatively, let’s remove society. Obviously, the economy will disappear, although the environment will be fine.
Lastly, let’s remove the environment. Society would struggle to survive without access to food, water or clean air. The lack of goods to trade would destroy the economy as the market relies on the environment to provide resources.
The lived reality of sustainability
Sustainability is often explained using this image:
The economy, with its businesses and markets, are situated within our society, which itself is situated within the environment. This shows society and the economy completely reliant on a healthy environment.
The three pillars of sustainability are in fact layers within an encompassing egg. Not individual legs of a stool, but intertwined elements.
The Circular Economy
Nature works in cycles that endure. For the relationship between the environment, society and the economy to endure, the circular economy has emerged as a system that uses and creates materials that flow in the economy without the need to extract from or pollute the environment.
Understanding our true reliances and placing the appropriate values in the correct places will purposefully guide our decisions and actions.
What does all this mean to my business?
One of the most important tasks for business managers is the work of forward scanning. This entails risk analysis and keeping up to date with trends in consumer demand, regulatory changes, financial institutional requirements and resource availability. Of course there are more indicators to consider. Here we are focused on those that are relevant to sustainability.
It is clear consumers are seeking transparency from businesses, particularly millennials, who want to see that their purchases are not impacting negatively in any way.
Regulatory changes are adapting to both climate risk and resource availability, such as water supply, plus supply chain transparency to ensure human rights abuse is exposed.
Financial institutions are now factoring in climate risk when engaging with businesses seeking insurance and investment.
Resource availability for renewable materials is reducing across a wide range of commodities as natural processes degrade with loss of biodiversity, while non-renewable resources with finite availability, mostly requiring extraction are reducing as demand increases for finite supplies. As extraction costs increase, this must be either absorbed or added to pricing. This may not be an option during difficult times.
Sustainability shows the way to business endurance
Sustainability is another word for enduring. To endure means to have internal systems in place that work with external systems. No business entity exists in isolation. The management of staff, intellectual knowledge and IP, materials and customers are the main functions of a business.
Attracting and maintaining high quality staff is increasingly dependant on the culture of a company, with sustainability a major factor.
Material flows require mindful management to operate and maximum efficiency and least waste production, with unavoidable waste redirected into the circular economy.
Articulating a company’s sustainability with key stakeholders, plus other stakeholders including staff and community. Sustainability reporting has been subject to greenwashing in the past, although this practice is no longer acceptable and will result in the opposite of brand trust when attempted.