What is Triple Bottom Line?

In accounting, triple bottom line means to check company's performance on the basis of three main factors. One is financial factor, second is social factor and third is environment factor. We can not do complete explain the performance only on single bottom line which the net profit or net loss. It may be the part of total performance.

First Bottom Line :  Financial Factor

In financial factor, we check whether company is getting profit or loss. To find this is easy because we can find this from annual financial statements. We will give rank high to a company who is getting high profit. Other company who has lower profit, will be the company of lower performance. 

In this bottom line, we will see, how much did company pay income tax? Some of companies disclose everything voluntary and pay big tax as their financial responsibility. Other companies try to hide income as black money. So, more transparent company is good performing other is low performing. 

Second  Bottom Line : Social Factor

In social factor, we also check company's performance on the basis of social welfare, employees welfare and customer's welfare. Just to increase the net profit and to give more revenue to shareholder should the single aim of any company. It has its social responsibilities. Any big MNCs may have more than 1,00,000 employees. Success of this company can not be measured its net worth or net annual earning but how much it is paying salary to its employees. How much it is giving the benefits to its employees. So, this is good way to check second bottom line to make the list of salary to its lower level employee and upper level employee. Check whether it is enough to live the good life or not. 

In India, we can see its example. Some private companies and private schools are giving very low salary to its employees. All these employees are facing difficulties to survive in this small salaries. All such companies will win cost - cut competition and earn big profits. But long term, all such companies will fail with the bad wishes of its exploded employees. 

Except this, some companies do not pay the overtime. They take the work of 16 hours and give only 8 hours salary. What a bad trend? Still employees are working because high rate of unemployment. Such employees should leave such bad companies and started self-employment like me. You can get more free advice from my email vinod@svtuition.org 

Third Bottom Line : Environment Factor

Company's performance should be measured with environment factors. One company is taking big profit from using limited natural resources and polluting it at fast rate. Other company is using only unlimited natural resources by big investment and invest some money to plant the trees.So, second company is performing better. 

We know it will be more difficult for any company to complete its environment responsibility because if it will not use the limited environment resources, it can not do its business. But still, there is ideas. 

I can give the example from my personal life. I have limited space where I can make my kitchen. There was the tree just between the walls of my kitchen. Builder was suggesting me to cut this tree. But, I am environment lover. I am against to cut any tree on the earth. So, I built the walls of my kitchen without cutting the tree. Now, me and tree both are happy because I have completed my personal desire and environmental responsibility. So, the screenshot of my kitchen garden and many companies can inspire to do for protecting the environment at any cost.

My kitchen and my tree and I love both

Today, we are facing floods, earthquakes, tsunami and other disturbance of nature. Due to this, billion dollars loss. Only few days flood in south India in Nov. Dec. 2015, there was $ 471 million loss. Why? Only because bad environment performance of MNCs. Such companies should ban in India or there should be strict environment protection laws in India.

All such laws should be for 

a) Better waste management

b) Stopping pollution. 

c) Stopping Non-Veg which is doing imbalance the eco-system of India.

Resource : Accounting Dictionary