What is it?
When asked about the value of the TBL framework in a recent interview, asset owners (AO) and managers (AM) said companies that perform well along TBL are likely to grow faster and sustain longer than companies that don’t take “People, Planet & Profit” into consideration. Also, TBL scoring helps de-risk companies and provide more accurate valuations. In the same interview, AMs stated there really is “just one bottom line.” The TBL simply brings attention to material risks/opportunities that affect all industries (either today or tomorrow).7
In a 2018 article by the Harvard Business Review (HBR), Elkington spoke out against the misuse of the TBL framework, saying that it wasn’t meant to be an accounting/reporting tool, but a means for redefining capitalism.8 His vision was to change the DNA of value creation, revive economies, societies, and the global ecosystem.9
He said that investors don’t need to be reminded about the “profit” prong - businesses are meant to make money. Instead, Elkington proposed changing “profit” to “prosperity,” stating that this word better reflects that idea that company money should ultimately funnel back into society.10
Other weaknesses of TBL and sustainable reporting methods include:
- Mutually-Exclusive: The belief that companies/investors must sacrifice one value over another (Profit vs. Planet vs. People) when these values are synergistic.
- Non-Specific: Companies can hide bad behavior behind diluted reports that highlight sustainable initiatives and omit less favorable information.
- Non-Standardized: Businesses can use the fact that there are so many reporting frameworks to justify inaction against sustainability.
The Global Reporting Initiative (GRI), a collaboration between the U.N. and CERES, is one of the largest purveyors of sustainability standards based on the TBL. In 2017, 75% of G250 and 63% of N100 companies used the GRI framework to report their sustainability.
Companies highly regard GRI in that they can choose to disclose Environmental, Economic, and Social information based on what they consider “material.” They cover issues like climate change, human rights, governance, and social welfare. Signatories must adhere to certain reporting principles, but companies find the framework to be highly flexible. GRI’s standards are free to use, updated often, and created with the help of many stakeholders/partners.
However, the weaknesses of GRI mirror those of the TBL itself. High GRI scores don’t correlate with sustainability performance. Companies can exploit the framework to highlight only their strong points, provide incomplete information, and “check a box” - not challenge what’s possible or curb human exploitation of nature. In short, The GRI framework is yet another marketing tool that enables greenwashing and blocks corporate accountability.,
Impact Measurement & Next Steps
Investment professionals can take more proactive steps to better track and demand corporate sustainability. One call to action involves standardizing science-based impact measurement, requiring that companies report on all material issues using a single format. Collaboration between investors, companies, and scientists could lead to better compliance and non-dilutive reporting. While TBL has given birth to almost all of the sustainability frameworks used today, it must be revised in order to reflect a critical business component: societal value.
13. van de Wouw, Seline, and Natali Bremer. "All That Glitters Is Not Gold: An exploratory study into converging and diverging stakeholders perceptions of sustainability reporting." (2020) (pg. 33-34 - in “top” bar.
14. van de Wouw, Seline, and Natali Bremer. "All That Glitters Is Not Gold: An exploratory study into converging and diverging stakeholders perceptions of sustainability reporting." (2020) (pg. 33-34, 35-36 - in “top” bar).
15. van de Wouw, Seline, and Natali Bremer. "All That Glitters Is Not Gold: An exploratory study into converging and diverging stakeholders perceptions of sustainability reporting." (2020) (pg. 35-36 - in “top” bar)
16. Mähönen, Jukka. "Comprehensive Approach to Relevant and Reliable Reporting in Europe: A Dream Impossible?." Sustainability 12.13 (2020): 5277 (pg. 7-9).
 Bremer & van De Wouw, 2020 pg. 33-34 - in “top” bar
 Bremer & van De Wouw, 2020 pg. 33-34, 35-36 - in “top” bar
 Bremer & van De Wouw, 2020 pg. 35-36 - in “top” bar
 Mahonen, 2020 pg. 7-9