Triple bottom line refers to the idea that companies should focus on impact on society and the environment, as well as profits

Triple bottom line measurements are used when companies design a sustainable business – one that makes money but does not hurt our future.

Traditionally, companies have focused mainly on making more profit each year. The premise of sustainable finance is that owners, investors, and consumers don’t care only about profits these days. They also care about people and the planet. Triple bottom line is sometimes broken down into three Ps — profit, people and the planet.

A company can help people with fair hiring practices and by ensuring that the firm’s work doesn’t hurt communities by damaging land or disrupting housing in a neighbourhood.

How can businesses make a big difference to climate change?

All businesses can help the planet by reducing their carbon footprint.

Companies of all sizes, but especially large corporations, have been heavily polluting the environment and hurting the climate for more than 200 years. Businesses are the key to many positive changes that must take place this decade and beyond. Adjustments like investing in renewable energy, cutting down on energy consumption or streamlining shipping practices make a big difference when thousands of companies are involved.

Companies that are already on the forefront in terms of climate action innovation will have an easier time following regulations set out by new legislation, such as the EU Climate Law, outlined in the European Green Deal. These companies won’t be hit by a potential carbon tax as a company reliant on fossil fuels might be.

There is also a benefit to being an early green investor, as it is often profitable to be in at the start of any relevant trend. And green finance is growing.

What is ESG?

Socially responsible businesses often follow ESG criteria — which stands for environmental, social and governance — when creating new triple bottom line plans.

ESG criteria are used to determine whether companies promote social values, such as human rights and gender equality. Banks, investors and companies need a practical way of measuring sustainability. They need to know whether a company or a project is worth financing. ESG helps them make better investment decisions.

The environmental part of ESG refers to conservation and climate action. The social part refers to issues of inequality, inclusiveness and working conditions. Governance refers to the idea that social and environmental considerations need to be included in the decision-making process at the highest levels of a company or public institution.

ESG criteria, like the triple bottom line, ask everyone to think of impact beyond just profits before investing money or creating a company.