Triple Bottom Line — the bad idea that just won’t die

I just got a bulk e-mail ad for yet another conference on so-called Triple Bottom Line Investing. Triple Bottom Line Investing is just one more incarnation of the more general “Triple Bottom Line” (or 3BL) notion.

(Wayne Norman and I wrote about the 3BL back in the April 2004 issue of Business Ethics Quarterly, pointing out problems with the concept, the lack of academic attention to those problems, and the concept’s seemingly inexorable rise in popularity. Since we began tracking usage of the term in 2002, its popularity — based on Google hits — has continuted to grow exponentially.)

The “Triple Bottom Line” is roughly the idea that corporations can, and should, measure performance not just according to the good-old-fashioned financial bottom line, but also according to two more “bottom lines,” namely the social and environmental bottom lines.

This idea is of course ridiculous. It’s ridiculous not because companies can’t or shouldn’t track performance in those areas — they can, and they should. It’s not even ridiculous because such performance can’t be quantified — many environmental and social impacts can be measured, and companies’ performance on various measures can be tracked from year to year.

No, the problem with the 3BL is that it’s a terribly misleading metaphor. It’s an accounting metaphor, used in domains that don’t satisfy some of the basic assumptions that make financial accounting work. (In my Critical Thinking class, this is what we call the “False Analogy” fallacy.)
In particular, the 3BL implies two things beyond the idea of measuring and tracking social & environmental performance.

  1. 3BL assumes that social and environmental plusses & minuses of different kinds can be totalled up, the same way income & expenditures can. This, of course, is false. It is practially difficult, and indeed probably conceptually impossible.
  2. 3BL implies that the social & environmental “bottom lines” generated for one company will be amenable to comparison with the social & environmental “bottom lines” of other companies. This, too, is false. Without accounting’s “common unit of measure” assumption, comparisons across companies are impossible.

I’ve had the opportunity to talk to a couple of 3BL consultants (consultants who help companies implement a 3BL system/strategy/whatever). Both caved in almost immediately when pressed on the meaningfulness of the term. One admitted that it was “just a metaphor,” and that of course her practice didn’t actually calculate social & environmental “bottom lines.” The other consultant I talked to reassured me that costing out (i.e., putting dollar figures on) social & environmental impacts was relatively straightforward — in other words, he admitted that his group doesn’t actually believe in three bottom, lines, but rather in 2 additional sets of factors (social & environmental impact) that can be bundled into the one, traditional, financial bottom line.

In sum: tracking and reporting on social & environmental performance is a good trend. Thinking that managing such matters can be reduced to a form of accountancy both understates the complexity of social and environmental performace, and overstates the reach of the field of accounting.

6 comments so far

  1. […] This post was mentioned on Twitter by Harold Jarche, J Christian-Carter. J Christian-Carter said: A false analogy> RT @hjarche: Triple Bottom Line: the bad idea that just won't die […]

  2. […] Triple Bottom Line: the bad idea that just won’t die This idea is of course ridiculous. It’s ridiculous not because companies can’t or shouldn’t track performance in those areas — they can, and they should. It’s not even ridiculous because such performance can’t be quantified — many environmental and social impacts can be measured, and companies’ performance on various measures can be tracked from year to year. […]

  3. Sofia Bustamante on

    Hi Chris,

    It is great to read your post. I agree wholeheartedly. It at least multiplies and is not addative.It is refreshing to see this picked up so well.

    Against popular sentiment – I was explaining this to some young people using maths! There are young people that are not scholarly and not particularly clued up on sustainability. Asking them what happens when you multiply any thing by zero.. they got straight away that you get zero – and that therefore using the addative format that is TBL is part of the delusion that we can separate out our impact and box it off.

    xS + yE + zF = Impact where S= social E = environmental and F=financial (This is just not true to life, that if you neglect either the S or E or F, you will just have a little less impact overall.

    ie. (xS)*(yE)*(zE)= Impact. This is more true to life. It is systemic — it says that social, financial and environmental systems interact and affect each other. It is still a simplification and just an idea but you don’t need a maths certificate to see that if either x or y or z are very very small or zero.. they would impacts the whole.

    Thank you!

    • Chris MacDonald on


      Glad you found this useful. The 3BL approach itself doesn’t seem to imply any particular way of relating x, y, and z — addition, multiplication or otherwise. But it’s a good question.

      Even more fundamental, I think, is that there’s no method of arriving at x, y, and z, since there just is no common unit of measure for social and environmental issues. It’s like trying to add “5 cm” plus “10 kg.” There simply is no answer to a math question like that, i.e., no bottom line at all.


  4. Phil Carver on

    Hi there I am a bit late on the scene regards TBL – but here goes – if we move beyond accounting processes and into say national or even global policy development and consider the carbon credits model (which allows for business’s to be business’s in themselves while acknowledging their short comings and providing them with a tool to ultimately cancel out their negative behavior for global benefit supposedly) then with TBL national policies in place etc the net result will beneficial. A corporate that can’t make it happen can “sponsor” a third party can….

    It becomes a facilitation process to reach the impossible – agreement between Republicans, Democrats and Greens… but if we can’t always get 3 out of 3 then 2 out of 3 aint bad…

    • Chris MacDonald on


      Thanks for your comment. But I’m not sure what the connection is to the TBL. The TBL isn’t just about counting carbon, but arriving at an environmental (and social) “bottom line” — an overall evaluation of performance along that dimension. So, can you clarify?


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