As we mentioned in our last article, the prevalence of the Triple Bottom Line philosophy is signaling a changing paradigm, a time of transformation. Our question, then, is this: What exactly are we transforming into?  The knee-jerk answer might be that we are transforming from a capitalist system to a socialist system. However, the widespread adoption of 3BL belies such a simple answer. Socialism, with its complete government control of production, is hardly desirable for private business interests. American corporations are willingly embracing 3BL without even a government mandate. There is something deeper going on than simply a tug of war between two economic systems, and we are seeking to explore just what that may be.

Our first clues as to where we are going lay in the past, with the origin of the term “Triple Bottom Line.” For that we can credit John Elkington (his personal website and blog is here), who introduced the public to the term for the first time in his 1997 publication Cannibals With Forks: The Triple Bottom Line of 21st Century Business. Elkington is a longtime advocate for corporate environmental and social awareness, having cofounded the business development consulting firm SustainAbility in 1987. In fact, we may consider him a “founder” of corporate sustainability, having been called a “dean of the corporate responsibility movement for three decades” by BusinessWeek.  Elkington currently serves as the Executive Chairman of the sustainability think tank Volans, which he helped found in 2008. His work with Volans is what provides a real glimpse into the end game of 3BL, in a concept termed “The Phoenix Economy.”

The Phoenix Economy is a concept professing that the failure of an existing economic system will leave a void and an opportunity for a new system to take its place.  (The term “phoenix” refers to the bird of that name which, in ancient mythology, dies in a self-created fire and is then reincarnated from the ashes.)  Old paradigms and established principles are replaced by a new way of approaching economics — and indeed the culture. Elkington recognizes this as an opportunity to establish a new paradigm based on 3BL philosophy. Global sustainability is the principle by which the economic and social culture will be driven. The Volans website provides a concise explanation of the Phoenix Economy.

According to Volans:

From the ashes of the downturn, a new economy is self-assembling—focused on providing social and environmental solutions, where markets and governments have failed.

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Certainly the philosophy of the Triple Bottom Line (“3BL” or “TBL”) is unconventional when compared with accepted business practices which are based upon the typical single bottom line of profit. We know that profit is essential to business survival, but we should ask how this expanded 3BL business model gained traction. For an answer, we need to look at the history of 3BL, and that history shows us that environmental and social idealism have been closely linked since the modern global environmental movement began in 1972.

In 1972, Maurice Strong, a patriarch of the global environmental movement who now sits on the board of directors for the Chicago Climate Exchange, led the United Nations Conference on the Human Environment, which met in Stockholm and released a declaration linking the human exerience to nature. It acknowledged that “man is both creature and moulder of his environment” and has advanced to the point where he has the power to significantly affect nature and, by extension, his own intellectual, moral, social and spiritual growth. The global social ramifications of man’s environmental stewardship are thus clearly stated in the Stockholm declaration:

The protection and improvement of the human environment is a major issue which affects the wellbeing of peoples and economic development throughout the world; it is the urgent desire of the peoples of the whole world and the duty of all Governments.

The UN felt the environment and social well being were so linked that the declaration’s first Principle focused on it:

Man has the fundamental right to freedom, equality and adequate conditions of life, in an environment of a quality that permits a life of dignity and well-being, and he bears a solemn responsibility to protect and improve the environment for present and future generations. In this respect, policies promoting or perpetuating apartheid, racial segregation, discrimination, colonial and other forms of oppression and foreign domination stand condemned and must be eliminated.

Without question, the UN has made a particular commitment to social and environmental ideology since the very beginning of the green movement, and in the Stockholm declaration we can see much of the framework for global socio-environmental ideology already in place.

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The story of ShoreBank has caught national attention, as this relatively small, so-called ”community development bank” has been the target for bailout assistance via state and federal taxpayer money. In the past, particular banks have received assistance if they were deemed “too large to fail,” on the presumption is that if they did fail, they would take the banking industry — and possibly the economy itself — with them. ShoreBank, however, is a special case, and the favoritism shown it is based more on its banking philosphy than its size. What is it about ShoreBank’s philosophy that has garnered the favor of those who apparently see it not as “too large” to fail, but too important to fail? To answer that, we will be exploring the concept of the “Triple Bottom Line” (TBL or 3BL), which is the most succinct statement of Shorebank’s mission and purpose. In this series of articles we will discuss what the triple bottom line is, where it came from, and where it is leading us. We will see just how important 3BL philosophy is to those who subscribe to it and why they must protect its champion, ShoreBank, at all costs. As we explore it, we will see how it is more than just a new business model, but an maturing philosophy that begs protection from stakeholders whose goal is to establish it as a societal norm. Indeed, as we shall see, the Triple Bottom Line represents a philosophy which has been deemed “too important to fail.”

What is the Triple Bottom Line?

The Triple Bottom Line (TBL or 3BL) is the most succinct statement of Shorebank’s mission and purpose, and the bank proudly touts its commitment to the 3BL objectives. What are these objectives? Essentially, they are an organizational commitment to social and environmental concerns in addition to economic concerns (profit). Shorebank’s website summarizes it as follows:

Most businesses have a single bottom line – maximizing shareholder return. “Triple bottom line” companies typically manage to achieve three returns: profitability, social return and an environmental return. ShoreBank describes its triple bottom line as profitability, community development impact and conservation.

ShoreBank claims that pursuing profit alone is inadequate for businesses today, and therefore it feels traditional accounting measures must now also incorporate the goals of social welfare and environmental responsibility as well.

How is the Triple Bottom Line Practiced?

The vision behind 3BL is praiseworthy, as responsible and upstanding companies will by necessity conduct their business in ways friendly to their employees, customers, and community — as well as protect and preserve their environmental resources. However, how does 3BL actually work in practice? Is it a feasible and practical business model that accomplishes its stated goals? Let’s look again at ShoreBank’s website for the explanation. ShoreBank explains that it invests and loans money to foster community development and environmentally friendly projects. Then it attempts a description of how it codifies its progress towards fulfilling its 3BL aims:

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