Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

3.3.1 TBL — The Triple Bottom Line

Intended learning outcomes: Produce an overview on the concept of the triple bottom line.

Triple bottom line refers to measuring success of today’s business activities not only in economic terms but also according to environmental and societal criteria, with the aim of “full cost accounting” (see, for example, [GRI02], [WiLe09]).

The annual performance of an organization in the economic, environ­mental, and social areas may be reported to the public and its impact on its surroundings evaluated. Figure illustrates the concept with the three areas, which are also called the “three pillars of sustainability.”

Fig.        The concept of the triple bottom line is based on the three pillars of sustainability — namely, economy, society, and environment, which interact with companies (see [ScVo10]).

From the point of view of industry, the three pillars may be defined as follows:

  • Environmental aspects (ENV) refer to nature as a closed system, with its limited resources and regenerative capacities (e.g., for greenhouse gases) as a base for any business activity.
  • Social aspects (SOC) refer to society represented by governmental organizations (GOs), nongovernmental organizations (NGOs), individuals, employees, and customers.
  • Economic aspects (ECO) refer to events and developments relevant to manufacturing industries’ competitiveness and their strategic and operational business practices.

The three aspects influence the development of each interdependently. Industry was affected in different ways, depending on the specific importance of each aspect as it changed over time. Every business activity, company, industry, supply chain, and economy is dependent in some way on the availability of (often limited) resources. Companies’ competitive­ness is affected by these conditions and thus by the three pillars of sustainable development. Perfor­mance indicators such as quality, costs, delivery reliability, and flexibility undoubtedly remain relevant, but their importance has to be evaluated as the conditions, under which businesses operate, aim toward sustainable development.

Continuation in next subsection (3.3.1b).

Course section 3.3: Subsections and their intended learning outcomes