The Triple Bottom Line in Context

The Triple Bottom Line

Sustainability guru John Elkington’s concept of a Triple Bottom Line provides the most used framework for discussing Sustainability. Elkington proposed that businesses should measure and report Return on Assets Deployed information for natural (ecological) assets deployed and for social assets deployed, as well as the usual financial assets (capital) deployed figures. The three “bottom lines” represent the business’s net effects on planet, people and profit. This is obviously a more comprehensive view. Perhaps more significant is the implication that the business should show positive results which indicate enhancement to the environment and society, beyond doing no harm.

Triple Bottom LineAndrew Savitz and Karl Weber’s book, The Triple Bottom Line, extends Elkington’s idea by representing the three “bottom lines” as intersecting circles. The areas of intersection are termed “sweet spots”, meaning synergistic opportunities. For example, when power utilization efficiency is improved, profits are improved due to lower power cost, while the environment and humanity benefit through reduced carbon dioxide emissions. So, improvements in the planet and people “bottom lines” are not necessarily at the expense of the profit “bottom line”. [1]

A Systematic Approach

Approaching the Triple Bottom Line through systematic business planning appears to me to be a clearer, more pragmatic approach. By “systematic business planning” I mean integrating all three aspects of the Triple Bottom Line: in definition of the business (mission statement, vision statement, values statement), in formulating goals and objectives, and in establishing and executing the business processes necessary to successfully pursue those goals and objectives. The sequence is clear enough:

Values to Results

In this sense, Triple Bottom Line involves an increased scope of management awareness that includes attention to the natural world and humanity, in lock step with attention to financial realities.

The rub lies in setting (and achieving) sufficiently aggressive goals and objectives that express timely progress toward achievement of the mission, vision and values that define your business. Those goals and objectives are unique to each organization, in context of the organization and the business climate that exists as they are set and pursued. Accordingly, there is no ready package of goals and objectives – you have to figure them out for yourself. However, you can look at the efforts of others to help you find your own way.

Here are a few starting places:

Fetzer Winery – Fetzer is a medium sized California winery that has Triple Bottom Line Sustainability in its DNA. Start with Fetzer’s website.[2]

Ben & Jerry’s – Yep. The Vermont – based premium ice cream company founded by two hippies. Try Ben & Jerry’s website [3], especially the tabs on values.  Also, Ben & Jerry’s – A Case Study in Sustainability [4],an earlier post to this blog, may be useful.

Hershey Company – The maker of Hershey Bars began as a fair example of an early 20th century mill town, and then morphed into an extraordinary example of what a successful business can do for its employees and their neighbors. Today, more than 70 years after the death of Hershey’s extraordinary founder, Hershey’s continues as a successful multi-billion dollar company that still focuses on its roots. Start with the Wikipedia wiki on The Hershey Company.

Interface Corporation – Interface makes carpets, primarily for commercial buildings. Interface provides an example of what can happen when a manufacturing company thoroughly embraces Sustainability, from its expressed mission and vision all the way through business results. Start with Whither Sustainability? [5], a recent post to this blog.

Waste Management – Waste Management changed its business model from a business based on collecting refuse and carrying it to landfill, to one based on profiting from the refuse it collects. Both Waste Management and Interface are examples of firms that fundamentally changed the basis of their business to embrace Sustainability. See Waste Management Corporation – A Case Study in Sustainability,[6] this blog.

The United Nations Sustainable Development Goals – The UN recently established a set of 17 goals for the world to achieve by 2030. The UN’s set of goals provides insight as to just how broad Sustainability is. Aligning your Triple Bottom Line goals and objectives with the UN goals may be a good idea. Start with The Age of Sustainable Development – Part 3 [7] this blog . Alternatively, just google “UN Sustainable Development Goals”.


Again, your goals and objectives are unique to your business and the business context within which it exists. The examples cited above are extreme cases which may be useful to stimulate your thinking.

Chuck in FranceThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

Triple Bottom Line graphic credit – creative commons via Wikipedia


[1] The preceding two paragraphs are borrowed from Double Take on the Triple Bottom Line, an earlier post to this blog. http://jerasustainabledevelopment.com/2012/10/04/double-take-on-the-triple-bottom-line/

[2] www.fetzer.com

[3] www.benjerry.com

[4] http://jerasustainabledevelopment.com/2014/11/01/ben-jerrys-a-case-study-in-sustainability/

[5] http://jerasustainabledevelopment.com/2016/06/20/whither-sustainability/

[6] http://jerasustainabledevelopment.com/2015/01/30/waste-management-corp-a-case-study-in-sustainability/

[7] http://jerasustainabledevelopment.com/2015/12/19/the-age-of-sustainable-development-part-3/

 

Ben & Jerry’s – A Case Study in Sustainability

Artisanal Ice Cream

This post continues a series of Case Studies, intended as examples of what Sustainability means, in an operative sense, to some well known companies. It also continues a series on artisanal manufacturers – very small manufacturing firms that grow from a kitchen table, home studio, garage or, in this case, an old gas station.

Who Are Those Guys?

Ben & Jerry — Ben Cohen and Jerry Greenfield – are two guys from Brooklyn who became friends in middle school. Each went off to college, then messed around with a number of unfulfilling jobs. The 1970’s being what they were, the term “hippies” may have fit.

Ben & Jerry 2In good time, they got together and decided to go into business. Bagels were their first choice, but the equipment required seemed too pricy. On the strength of a correspondence course in making ice cream, they set out to open an ice cream cone scoop shop in some warm weather college town. They chose Burlington, Vermont. Burlington is a college town. Warm, I suppose, is relative term.[1]

The TBL in Vermont: the 7½ % Solution

In 1978, Ben and Jerry had $8,000 between them, and found somebody to lend them another $4,000. With that, they set opened a homemade ice cream scoop shop in what had been a gas station. Vermont is famous for cows: certainly a good place for cream. Vermont, as its name could be taken to imply, is also a good place for thinking Green. College students do like ice cream cones. The guys did have a flair for inventing quirky flavors that reflected college town culture. The marketing was just as quirky (like the world record ice cream sundae – 27,102 lbs.) Quirky, but authentic, and fun. The scoop shop worked. And then some. Within a few years, they added an ice cream production and bulk packaging facility, along with the beginnings of a franchising network.

Ben and Jerry were, and still are, very Green people. Vermont exudes environmental awareness and attention to healthy living. To that, the guys added a deep personal commitment to the social aspect of the Triple Bottom Line.[2] That commitment permeates the entire company. As Ben & Jerry’s website puts it:

“Ben & Jerry’s has always believed in linked prosperity — that all stakeholders connected to our business should prosper as we prosper, from those who produce the ingredients, to employees who make the product, to the communities in which the company operates.”

Here are some examples:

>> All employees, including those at entry level are paid a living wage, not minimum wage.

>> The company uses Fair Trade suppliers for imported ingredients (like cocoa for chocolate). Fair Trade ensures that small producers receive fair payment for the goods they produce.

>> Ben & Jerry’s earmarks 7½ % of earnings for support of social causes.

B Corporation

In 2010, Ben & Jerry’s became a wholly – owned subsidiary of Unilever,[3] the international consumer products giant. Unilever owns the stock, but Ben & Jerry’s continues to exist as an autonomous business unit under an independent Board of Directors.

The business exists as a B Corporation. A “B” corporation is a legal entity that, unlike other corporations, is not obligated to put shareholders’ interests ahead of the interests of other stakeholders. Twenty-seven states currently offer “B” incorporation, including Vermont and Delaware (where most corporations register). Fourteen additional states have “B” incorporation legislation in process.[4]

For Smaller Manufacturers

Ben & Jerry’s is a great example of a started-on-a-shoestring manufacturing business that has achieved notable success. Here are a few points that stand out for me:

>> Premium Pricing – From the beginning, Ben & Jerry’s has been able to price their products to yield an adequate margin. Without an adequate margin, profits are inadequate. Absent adequate profits, benefits to stakeholders (including stockholders) just can’t happen.

>> Differentiation – Ben & Jerry’s apparently recognizes that “product” refers to that collection of tangibles, services and perceptions that customers choose to buy. Ben & Jerry’s is more than good ice cream. The entire somewhat counter-cultural mystique wrapped up in a sense of humor is integral to the product – that is, integral to what it is that people choose to buy.[5]

I find it interesting that Ben & Jerry’s continues to exist as a distinct entity within Unilever. It seems that Unilever, big as Unilever is, understands and appreciates the importance of the perceptions component of Ben & Jerry’s product.

>> Seriously Green – The entire company and its culture could be labeled “seriously Green”[6]. Apparently, when done authentically, as Ben & Jerry’s does, it works. The authenticity, in my view, is critical.

Chuck - Sedona 5K - 2Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

P.S: Contact me when your organization is serious about confronting the realities of 21st century manufacturing … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.


[1] For more on Ben and Jerry, see the Wikipedia wiki at http://en.wikipedia.org/wiki/Ben_%26_Jerry%27s. For more on the business, see  http://www.benjerry.com/about-us

[2] TBL – Triple Bottom Line – is the most familiar means for discussing Sustainability in business. TBL balances profitability with the interests of the natural world and with the interests of humanity. For more on the Triple Bottom line, see Double Take on the Triple Bottom Line, this blog, http://jerasustainabledevelopment.com/2012/10/04/double-take-on-the-triple-bottom-line/

[3] Unilever is an international Sustainability leader. For more on Unilever and Sustainability, see Unilever – A Case Study in Sustainability, this blog, http://jerasustainabledevelopment.com/2014/07/17/unilever-a-case-study-in-sustainability/

[4] For more on B corporations, see http://www.bcorporation.net/

[5] Customers pay premium prices for products they perceive to offer better value than others. Case in point: Ben & Jerry’s ice cream, one pint packages were priced at $3.99 today at my usual local supermarket. One pint packages of the supermarket’s house brand of ice cream were priced at $1.49. Presumably, the cost to manufacture and distribute the house brand is less than $1.49. It is hard to image that Ben & Jerry’s manufacturing and distribution cost is much different – perhaps a few cents. That’s an extra ($3.99 – $1.49) = $2.50 margin dollars on each pint, based almost entirely on perceptions. Wow.

[6] There are people who maintain that dairy products, especially ice cream, aren’t even Green, let alone Seriously Green. As President Clinton didn’t say, “it depends on what you mean by ‘Green’”.