The final awards ceremony was held for SPI clients from North Ayrshire recently to reward them for their participation and hard work. Once again these businesses...
Sustainable Business and the Triple Bottom Line – A Definition
In Scotland, almost a third of SME’s energy expenditure is wasted through resource inefficiency. SMEs consume 45% of all business energy, produce 60% of emissions and 70% of pollution. Business as Usual, is this the price of being profitable?
Billy Connolly once observed that although he didn’t believe in God, he did believe in people who believed in God. Similarly, many of the small business owners we meet tell us that although they are still undecided when it comes to climate change, they do believe that it is good practice to be sustainable and resource efficient, at least in part, to be a “good neighbour”. A commonly held belief however, is that being sustainable threatens the all important bottom line. Perhaps this assumption is no longer the case and it is unsustainable businesses who actually need to watch their bottom line.
Certainly, two of the UK’s most high profile and successful entrepreneurs, Jamie Oliver and Richard Branson, believe that sustainable business is the future for business and they have recently teamed up to promote this cause. Why? Because for Oliver and Branson, a sustainable business model not only protects the all important bottom line but actually increases profitability and connects the business to social and environmental issues. There is now a growing recognition that a sustainable business, a business that balances their “Triple Bottom Line”, means good business. But what do we mean by a “Sustainable Business” and what is the “Triple Bottom Line”?
For Jamie Oliver, the meaning of sustainable business is summed up in two words: “Future proof”. This means that a business that’s focused on the Triple Bottom Line (engaging and empowering people, using resources efficiently and responsibly and maximising profit) has a built-in resilience to future shocks and risks and is therefore a business that is sustainable in the long-term. Not only that, a sustainable business has the potential to reduce costs, increase opportunities, reduce regulatory risks and engage and empowers stakeholders. Richard Branson takes a more direct approach; “Screw business as usual” he says, a business that is not balancing the “Triple Bottom Line” of people, planet and profit is a business model that is no longer a smart investment proposition. For Branson, sustainable business is the new business model. The Financial Times defines sustainable business as “Managing the Triple Bottom Line – a process by which firms manage their financial, social and environmental risks, obligations and opportunities.” Here again sustainable business is intimately related to the Triple Bottom Line of people, planet and profit.
On 22 March 2010, the Scottish Government published the discussion paper ‘Towards a Low Carbon Economy’, which outlined the Scottish Government’s plans to move towards a low carbon economy in Scotland. The Scottish government views sustainability and sustainable, resource efficient business as a key priority in a low carbon economy, which is not only seen as a driver of social and environmental development but also as a £12billion business opportunity. According to the First Minister Alex Salmond, a low carbon economy is “The greatest opportunity to develop and maintain key competitive advantage in the long-term”. Cue “Sustainable Business”.
The Triple Bottom Line is a sustainable business concept coined by John Elkington in 1997. In his book, Cannibals with Forks: The Triple Bottom Line of 21st Century Business, he argues that the companies who want to become socially and environmentally responsible need to measure and report on not one but three separate “bottom lines”. The first measurement, the traditional profit and loss account shows the performance of a business in terms of “Profit”. The second bottom line, “People”, measures the social performance of the enterprise and the third bottom line, “Planet”, measures the environmental performance of the company. These three bottom lines, the “Three P’s” show the true cost of doing business over time. Today, Elkington’s Triple Bottom Line is seen as the new way of doing business and a major business opportunity – just ask Jamie Oliver, Richard Branson, Marks and Spencer, Unilever as well as growing band of highly profitable Scottish SMEs such as Rabbie’s Tours, Cream of Galloway and Keenan Recycling.
The question is, how can business change and adapt becoming more sustainable and maximising the opportunities of the Low Carbon Economy? Firstly the business must become resource efficient, which means improving the thermal efficiency of their premises, installing more efficient appliances such as LED lights, streamlining water consumption and reducing waste to landfill. Secondly, the business needs to engage and empower stakeholders. This is not only about getting messages out there but includes looking for blockages and involving employees and customers in resource efficiency and sustainability decision-making . Thirdly the business needs to measure and manage sustainability and embed resource efficiency into its operations, systems and culture. This means a sustainable business model has a continual improvement process built-in and it becomes future proof. Lastly, the idea of a “Sustainable Business” requires that the business has a commitment to communicate, educate and raise awareness on sustainable business practices to the outside world. By doing this, the business is reporting on its sustainability progress, no bad objective considering sustainability is the new business buzz word. Just ask Jamie Oliver and Richard Branson