Supplementary Material for Chapter 23

Supplementary Material for Chapter 23

Business Sustainability and the Triple Bottom Line: Considering the Interrelationships of People, Profit, and Planet

This chapter is published as:

SmithM.2016.Business Sustainability and the Triple Bottom Line: Considering the Interrelationships of People, Profit, and Planet. In: Byrne L (ed) Learner-Centered Teaching Activities for Environmental and Sustainability Studies. Springer, New York. DOI 10.1007/978-3-319-28543-6_23

Marilyn Smith

College of Business Administration, Winthrop University, Rock Hill, SC USA

This file contains the following supplementary material:

• A: Background Material… beginning on p.1
• B: Related Journal Articles … beginning on p.3
• C: Additional Cases and Talking Points … beginning on p.5
• D: References for Supplementary Material… beginning on p.7

Supplementary Material A: Background Material

• This activity introduces and raises awareness of environmental sustainability from a business perspective. Many daily business decisions involve the triple bottom line (Heizer and Render, 2014; Russell and Taylor, 2011), such as:

-Product or service design, including what features the product will have and the raw materials that will be used (organic, recycled, recyclable, hazard issues, etc.).

-Process design, deciding where, how, and by whom the product will be produced, including energy and other natural resources, such as water, that will be used during production.

-Packaging design, so that the product is protected during shipment and is attractive to the customer, but at a minimum cost.

-Supply chain management (the coordination of all activities from raw material to the customer), including transportation decisions, which balance timely delivery with cost and environmental impact. For example, what are the time, cost, and environmental trade-offs between airplanes, trucks, trains, and boats?

-Quality management, especially the reduction of waste from defective products, which add to cost, make customers unhappy, and end up in the landfill.

• “The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies withten universally accepted principlesin the areas ofhuman rights,labor, environmentandanti-corruption.” (Overview of the UN Global Compact). Three of the UN Compact’s Ten Principles deal with the environment (United Nation’s Global Compact’s Ten Principles). Briefly, Principles 7-9:

-Global Compact Principle 7:"Businesses should support a precautionary approach to environmental challenges." The link defines a precaution as, “the systematic application of risk assessment (hazard identification, hazard characterization, appraisal of exposure and risk characterization), risk management and risk communication”. It also explains why a precautionary approach is important for business, “it is more cost-effective to take early action to ensure that irreversible environmental damage does not occur”, and lists six specific steps a company could take as part of a precautionary approach

-Global Compact Principle 8: "Businesses should undertake initiatives to promote greater environmental responsibility." In defining environmental responsibility, the site states, “Business gains its legitimacy through meeting the needs of society, and increasingly society is expressing a clear need for more environmentally sustainable practices.” The site provides seven steps a business could take to promote environmental responsibly, using economic, environmental, and social, instead of profit, planet, and people

-Global Compact Principle 9: "Businesses should encourage the development and diffusion of environmentally friendly technologies." “Environmentally sound technologies should protect the environment, are less polluting, use all resources in a more sustainable manner, recycle more of their wastes and products, and handle residual wastes in a more acceptable manner than the technologies for which they were substitutes.”The site lists three benefits of environmentally friendly technologies and seven strategic approaches to improving technology.

• Several of the references cited refer to the Dow Jones Sustainability Indices or one of its specific Indexes. “The Dow Jones Sustainability World Index was launched in 1999 as the first global sustainability benchmark. The family of indices tracks the stock performance of the world's leading companies in terms of economic, environmental and social criteria. The indices serve as benchmarks for investors who integrate sustainability considerations into their portfolios, and provide an effective engagement platform for companies who want to adopt sustainable best practices.” The main page’s links include a description of corporate sustainability and the methodology for the ratings.

• Savitz captured how companies can realize the benefits of a focus on the triple bottom line with the title and subtitle of The Triple Bottom Line: How Today’s Best-Run Companies Are Achieving Economic, Social, and Environmental Success- And You Can Too. (2006) Savitz first explains the history and benefits for companies which have focused on the triple bottom line, which can be a good introduction to the triple bottom line for any reader. He then presents a guide for businesses on how they can benefit by attention to the triple bottom line, addressing how the company can do a sustainability self-assessment, then how they can use the result to develop a strategy, and develop a program to support their sustainability strategy. To ensure success, he also discusses how they can engage stakeholders inside the company (employees and shareholders) outside the company (customers, suppliers), as well as those external to the company (community, government regulators, media). To continue the success the company must measure progress and create a “culture of sustainability”.

Figure 1. A packaging change for a peanut jar provides an example to discuss impacts on people, profit, and the planet.

Supplementary Material B: Related Refereed Journal Articles

• Ambec and Lanoie published results of an empirical study which look at ways companies could find a “win-win situation, i.e. better environmental and financial performance”. Their research showed three links with examples when environmental improvements can lead to opportunities for increased revenue, and four opportunities for reducing cost (2015).

The opportunities for increasing revenue are:

-Better access to certain markets

-Differentiating products

-Selling pollution control technology (after they have figured out the solution)

The opportunities for reducing cost are:

-Risk management and relations with external stakeholders

-Cost of materials, energy, and services

-Cost of capital (interest on investments or value of stock)

-Cost of labor

• Haugh and Talwar suggest that sustainability must be embedded across the organization, not just within individual groups, and they use Tata Group, the Indian automobile “conglomerate” as a case study to illustrate their work (2010). In their case, they considered managers and employees and how corporate sustainability policies were implemented. As noted previously in the activity, the people aspect can be quite broad and include many groups, some with conflicting aims. Their work received a follow up perspective from Banerjee, who noted that Haugh and Talwar’s work did not consider any “conflicts between corporations and indigenous groups over land and resources”, adding another set of people who would be impacted by the sustainability polices of the Indian automobile manufacturer. (2011).

• In their article, Nidumolu, Prahalad, and Rangaswami first recognize that in the past executives believed that trying to address environmental issues in product and process design would come at a cost, and consumers would not be willing to pay the extra price. However, their research involving 30 large corporations shows that “companies that make sustainability a goal will achieve competitive advantage”. Then further using their research findings, they describe a five stage process to help companies become sustainable. (2009)

-Viewing compliance as an opportunity. When a global company goes with the highest standard, supply chain management becomes easier, because the rules are the same all over the world for them.

-Making value chains sustainable. Reduce the use of non-renewable resources, resulting in less cost and better image.

-Designing sustainable products and services. Investing in developing eco-friendly products today will allow them to dominate the market in the future.

-Developing new business models. New ways require examining different methods to satisfy customer requirements.

-Creating next-practice platforms. How can continually evolving technologies be applied for future improvements?

• Svensson and Wagner studied four different organizations in different countries and industries over five years to look at how they balanced economic (profit), social (people), and environmental (planet) efforts in the management of their companies. The industries were dairy (Sweden), fast food (Sweden), furniture (Norway), and potato packing (UK). The study identified seven economic “constituents” (indicators or measures), seven social constituents, and six environmental constituents of business sustainability. One of their key recommendations, which they noted at different points in the paper, was that the three components of the triple bottom line “need to be addressed simultaneously”. (2015)

Supplementary Material C: Additional Cases and Talking Points

• The local high school Band Boosters has stopped giving lids and straws on drinks they sell at the nearby professional sports arena concession stand, where they make money to support the band, unless the customer specifically asks for the straw and lid.

-What is the impact on the Band Boosters costs and profits?

-What is the impact on the environment through less waste generated?

-Is there a negative impact to the customer?

-What is the impact on the community and future generations by the reduced use of resources to produce the lids and straws, and then the disposal?

• A small locally owned submarine sandwich shop could be used an example to introduce students to the triple bottom line, or as a follow-up assignment, giving them the key points and asking them to identify the people, profit, and planet issues. Key points of the case are:

-As a small business, the owner has to pay for trash/waste pickup.

-To reduce waste pickup cost, he needs to reduce waste, including food waste.

-He starts to compost the food waste instead of paying to have it picked up.

-He uses the composted food waste grow tomatoes in his backyard.

-During the summer, the shop uses the tomatoes to make sandwiches.

What are the people, profit and planet issues?

-Less cost for trash pickup.

-Less fuel used by truck with fewer trips.

-Fewer emissions by truck.

-Less waste to landfill.

-Fresh air and exercise for owner as he gardens.

-Less cost for tomatoes.

-Fresher and better tasting tomatoes for customers.

-Others?

• Nike must make a profit to stay in business, but has set targets for people and planet, including: CO2 emissions reduction, using dyes that do not require water, using recycled plastic bottles to make shirts, and using recycled shoes to make sports surfaces (see This could be used for an outside assignment with the students writing a summary and/or critique in response to such questions as:

-What are Nike’s targets?

-Is Nike doing enough?

-What else could they be doing?

-In addition to impacting planet and people, how do these efforts impact the cost of their product?

• Patagonia, a private company, has found a successful niche market with the mission to ““Build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis”(Patagonia). Some students may be familiar with Patagonia’s products, but other’s may not, because they are relatively expensive. Over the years, they have candidly reported on their website successes and concerns about their environmental footprint, which they called the “Footprint Chronicles”. Issues have included the energy consumed by all the shipping involved in grower to factory to consumer, pesticide free cotton, and the chemicals used in the synthetic materials. The web site provides information about how they have considered the environment from the beginning of the company and some of their accomplishments. A simple search would show that they are highly regarded by the business press for their dedication to protecting the planet (walking the talk). But as indicted before, their products cost more. To somewhat protect consumers’ wallets, Patagonia has a reputation for high quality products that last a long time. Also, through their Worn Wear program, they offer to take back used clothing and re-sell it in their stores, with the original buyer getting a gift card for half of the re-sell price.

A recent story on Market Place (American Public Radio) highlights some of the struggles Patagonia still has in designing quality, yet environmentally products. As a producer of outdoor wear, some of the items must be water proof. But they have not found an organic material for the water proofing, and the traditional chemicals used to water proof are not good for factory worker, wearer, or planet (“Patagonia tests the limits…, 2015).

-How important is it that they are a private company and cater to a niche market?

-Could a publically owned company with shareholders requiring higher returns accomplish the same thing?

-Could they accomplish the same thing with a broad line of products, where life of the product does not have to be as long and the cost must be lower to reach more consumers?

• Using the internet search tool Google Images ( and searching “triple bottom line”provides numerous illustrations, including a wide assortment of Venn diagrams to introduce students to the triple bottom line. Some students will want to address people, profit, and planet independently and/or sequentially, and the diagrams will help emphasize the overlap and interrelatedness.

• Life is about balance: work, play, rest; spend some money, save some money; a balanced diet. The triple bottom line addresses the balance that business must make between people, profit, and planet. The activity Connections mention how the whaling industry in the late 1800’s pursued profit without concern for the resource that was being depleted.Other examples are:

-The increased demand for fish by consumers for taste and health reasons and the overfishing of our oceans offers a recent issue of the balance that must be made between exhausting a natural resource to maximize profit in the short-term.

-The Duke Energy Challenge Game (activity Follow-up Engagement) shows that the company can make the most profit by generating electricity using coal. But what would they do when they have used all the coal, and the customers who wanted cheap electricity cannot breathe due to the pollution, and the waters have been polluted by the ashes? The game gives results for capacity, CO2 emissions, and costs, rather than a single score, emphasizing the imperative for balance of profit, planet, and people, which includes shareholders, customers, and community (defined as the inhabitants of the planet impacted by Duke’s use of natural resources and any pollution generated).

-Other balance examples would include any endangered species, such as the hunting and selling of elephant ivory, as well as biodiversity or ecosystem issues such as destroying rain forests for grazing pastures for beef.

Supplementary Material D: References for Supplementary Material

AmbecS, Lanoie P (2008) Does It Pay to Be Green? A Systematic Overview. Academy of Management Perspectives22 (4): 45-62

Banerjee S (2011) Embedding Sustainability across the Organization: A Critical Perspective. Academy of Management Learning and Education 10(4): 719-731

Dow Jones Sustainability Indices (2015) Accessed13 May 2015

Google Images (2015) Triple Bottom Line Accessed 15 Jan 2015

Haugh H,Talwar A(2010) How Do Corporations Embed Sustainability across the Organization? Academy of Management Learning and Education9(3):384-396

Heizer J, Render B (2014) Principles of Operations Management: Sustainability and Supply Chain Management, 9thedn. Pearson, Upper Saddle River, NJ

Nidumolu R, Prahalad C,RangaswamiM (2009) Why Sustainability is the Key Driver of Innovation. Harvard Business Review. 87(9):56-64

Nike Social Responsibility Targets Accessed 4 April 2015

Overview of the UN Global Compact Accessed 4 April 2015

Russell R, Taylor, B (2011) Operations Management: Creating Value along the Supply Chain, 7th edn. Wiley, Hoboken, NJ

Savitz A (2006) The Triple Bottom Line: How Today’s Best-Run Companies Are Achieving Economic, Social, and Environmental Success- and You Can Too.Jossey-Bass, San Francisco, CA

Svensson G, Wagner B (2015) Implementing and Managing Economic, Social, and Environmental Efforts of Business Sustainability: Propositions for Measurement and Structural Models.Management of Environmental Quality 26 (2)

Patagonia Accessed 4 April 2015

Patagonia tests the limits of sustainability.(2015) Market Place APR. Accessed 4 April 2015

United Nation’s Global Compact’s Ten Principles. Accessed 4 April 2015

Note: While Wikipedia is not an academic source, it provides a good general introduction to “Triple Bottom Line” and other references.

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