How to Measure a Triple Bottom Line

A new and evolving field, social accounting analyzes a company's triple bottom line by reviewing its economic, social and environmental performance. Measuring a company's triple bottom line provides a means for determining the social sustainability of a company while holding management accountable for the societal and environmental impact of business decisions. While metrics for determining a triple bottom line are still evolving, measurements are company- and industry-specific and are defined by a company's market, industry and services provided.

• 1

  Divide the businesses' bottom line into three categories: social, environmental and economic impact. Represent each category in terms of benefits and costs. Calculate net income using traditional accounting methods to represent the economic impact category, or the first of the three bottom lines.

• 2

  Analyze the company's environmental impact based on the company's use of renewable and non-renewable resources for the second bottom line.

• 3

  Calculate the flow of these resources based upon the company's annual operations with the goal of reducing usage of non-renewable resources. As an example, calculate the amount of fuel such as coal, gas, wood or alternative sources and electric power used on a yearly basis.

• 4

  Establish the percentage of alternative fuels used by dividing the cost of alternative fuels by overall fuel usage. Use the percentage of non-alternative fuels as an environmental cost measure. Change management practices so that there is a focus on increased use of alternative fuels.

• 5

  Evaluate the company's social impact based upon the company's involvement with the local community to establish the third bottom line. Evaluate company-driven community programs by establishing the number of people or programs the company helps in the community. Create a goal to increase these numbers or to positively affect community change over a set period of time.

• 6

  Implement yearly surveys that repeat the same set of questions within the same population segment to determine the impact of the company's community programs.

• 7

  Measure profit for this bottom line by using the percentage increase in impact as a unit measure. Perform a statistical analysis of the survey results with data mining tools. Compare the results on a yearly basis.

• 8

  Hire social psychologists and environmental experts to help the company with establishing additional attributes for triple bottom line measurements as the process evolves within your company.