The Triple Bottom Line: What is it and how does it work

Full text

Spring 2011
Volume 86, No. 1
INDIANABUSINESSREVIEW
Embracing
Entrepreneurship
demographic and economic perspectives, insights, and analysis since 1926
The Triple Bottom Line: What Is It
and How Does It Work?

Kelley School of Business
Daniel C. Smith
Dean
Frank Acito
Associate Dean of
Information Technology
Munirpallam Venkataramanan
Associate Dean of
Academic Programs
Idie Kesner
Associate Dean of
Faculty and Research
Philip L. Cochran
Associate Dean of
Indianapolis Programs
Anne D. Auer
Director of Marketing
Indiana Business
Research Center
Jerry N. Conover
Director and Publisher
Indiana Business Review
Carol O. Rogers
Executive Editor
Rachel M. Justis
Managing Editor
Molly A. Manns
Graphic Designer
Flora A. Lewis
Quality Control
Table of Contents
Spring 2011
Volume 86, No. 1
www.ibrc.indiana.edu
4The Triple Bottom Line: What Is It and How
Does It Work?
Timothy Slaper and Tanya Hall discuss the triple boom line,
a measure of sustainability that includes not only nancial
measures but social and environmental performance measures
as well. The fact that the triple boom line is not static across all
types of businesses, nonprots and government entities makes
it malleable and more eective at evaluating sustainability than
strictly nancial measures. This article digs into the measures
included in calculating the triple boom line, as well as some
examples of how the triple boom line has been used in practice.
1Embracing Entrepreneurship
Susan Clark Muntean takes a look at how to embrace
entrepreneurship through public policy and at the importance of
small businesses in the economy. She suggests that by improving
the skills, resources and networks of entrepreneurs, public policy
ocials can improve Indiana’s economy for years to come.
From the Editor
Entrepreneurship and triple bottom line accounting (with the goal of sustainability)
are the focus of this 86th spring issue of one of Indiana’s longest running
publications. The Indiana Business Review began as a service to the citizens of
Indiana just one year after the creation of the Indiana Business Research Center in
1925. Its goal then and now is to provide factual insight into the economy of the
Hoosier state. While we have bowed to the power (and cost savings) of the Internet
age by publishing only online now, our readership continues to grow throughout the
state and across the nation. We encourage you to connect with us and share your
ideas on our coverage of events and issues of importance to our economy, be it by
e-mail or Twitter or Facebook. Enjoy!

Indiana Business Review, Spring 2011  1
Which public policies
are most eective at
enhancing economic
performance? On two occasions
in the past six months, I have
presented research ndings on this
topic to members of the Indiana
General Assembly. I made two
interesting observations during these
meetings. First, there is an apparent
translation problem between the
quality of our top entrepreneurship
programs and the actual creation
of new employment-generating
ventures in the state. For example,
entrepreneurship programs at
Ball State University and Indiana
University both rank in the top 10
of all entrepreneurship programs
nationally, but according to a study
funded by the Kaufmann Foundation,
Indiana ranks 44th nationally in the
percent of employment accounted for
by young rms.1 Second, I observe a
disconnect between, on the one hand,
the recognition of entrepreneurship’s
importance to Indiana, and on the
other hand, the lack of knowledge
regarding what to do to create an
entrepreneurial economy.There is
signicant uncertainty exhibited
among our elected leaders regarding
what they should be doing to grow
the economy through increasing
entrepreneurial activity.
What the Research Shows
Scholars, public ocials, successful
entrepreneurs and nanciers must
come together to rapidly devise and
implement eective strategies to
take Indiana from its agrarian and
industrial past to its entrepreneurial
and globally competitive future.
Empirical research strongly suggests
that the old economic models and
economic development strategies are
not the answer.2 We need to question
the wisdom of chasing after mature
and declining industries through
traditional strategies, which often
represent a race to the boom among
states who give away the store in
the form of foregone tax revenues
in order to secure visible “wins.”
These short-sighted strategies include
temporarily delaying a plant’s
closure or claiming large job creation
numbers at low-skilled, labor-
intensive call centers, distribution
centers, service providers and big-box
retail shops.
A beer focus would be on
maximizing the contribution of
small, fast-growing and relatively
young businesses. According to the
Statistics of U.S. Businesses, about
90 percent of employers nationally
have fewer than 20 employees.3
In 2007, 85 percent of all Indiana
businesses were micro businesses
(fewer than 20 employees) and
employed approximately one out
of every ve workers in the state.4
Importantly, high-growth small
businesses are the types that provide
the greatest percentage of net new
jobs.5 Between 1994 and 2006, U.S.
rms with fewer than 20 employees
represented approximately 94
percent of all high-impact rms
(those with high employment and
high revenue growth) and accounted
for approximately one-third of job
growth among all high-impact rms.6
As seen in Figure 1, small businesses
created nearly double the number
of net new jobs created by large
businesses, according to the most
recent data available.
According to U.S. Department
of Commerce data, rms with
greater than 500 employees have
been contracting, resulting in net
job losses year to year over the last
decade, while rms with fewer than
500 employees have been consistent
in creating net new jobs over the
same time period.7 Yet in the media,
we typically only hear about large
corporations bringing jobs, while
small rms lack recognition for
their role in overall job creation.
Net employment losses are not just
due to employment contractions
among existing, mature rms; a lack
of expansion among younger rms
in particular is thought to be just as
important of a factor.8
Public policy follows this
tendency to reward the large, mature
corporations while ignoring the
smaller, faster-growing businesses,
despite the laer being signicantly
more eective in providing new
employment opportunities.
Prototypical tax credits do not
provide incentives for new rm
creation. Start-ups do not normally
have taxable income for their rst
several years, so providing credits
and deductions to oset corporate
income tax is an ineective way to
stimulate the creation and initial
growth of new ventures. Politicians
may feel pressure from their
constituents to support what is tried
and true and visible—even though
the strategy represents a losing
n Figure 1: Net Jobs Created in Indiana
by Firm Size, 2005 to 2006
Source: U.S. Small Business Administration Office of
Advocacy
Embracing Entrepreneurship
SuSan Clark Muntean, Ph.D.: Assistant Professor of Management, Ball State University
40,302
20,829
Less than 500 Employees
500 or More Employees

2  Indiana University Kelley School of Business, Indiana Business Research Center
hand in the economic development
game. On average, low-impact rms
do not grow at all, and nearly all
job loss in the economy from 1994
to 2006 has been aributed to low-
impact rms with greater than 500
employees.9 Public ocials should
focus on providing grants for, and
equity investments in, promising
small and emerging enterprises, as
well as providing regulatory relief
and regulatory stability, which would
remove serious obstacles to the
establishment and growth of new job-
generating businesses.
Research conrms that through
nding new market opportunities
and commercializing innovation,
entrepreneurs play a central, critical
role in job creation, productivity
growth and economic prosperity.10
Smaller and younger companies
generate systematically higher
growth rates relative to their older,
larger counterparts. Regional
economic performance is linked to
how well public investment in new
knowledge translates into innovative
activity in the marketplace.
Entrepreneurship is the vehicle by
which the most important ideas are
implemented and commercialized,
representing the missing link
between investments in education,
research and development, and
economic growth.11
Innovative risk takers are likely
to become serial entrepreneurs,
reinvesting the gains from their initial
business in successive employment-
generating enterprises. Entrepreneurs
themselves are central to economic
growth, accounting for one-third of
the dierence in economic growth
rates among countries.12 Areas with
greater entrepreneurial capital in
the form of regional institutions,
professionals, and uid and
decentralized networks produce
higher economic output.13 Greater
competition and diversity among a
large number of small, innovative
enterprises itself positively impacts
economic growth.14 Wealth is
positively aected as well, since
the earnings of entrepreneurs with
incorporated businesses are nearly
double that of the earnings of wage
and salaried workers in established
rms.15 Small entrepreneurial rms
are the fastest growing segment of
exporting rms and thus are also
important for addressing the trade
decit.16
The results from these research
ndings suggest that Indiana should
focus on growing its own rms as a
high-growth economic development
strategy. States that succeed in
the new economy dierentiate
themselves by explicitly meeting
the specic needs of aspiring and
emerging entrepreneurs and by
making entrepreneurial rms
central to its economic development
strategy.17 Policy-makers should
target those industries most
conducive to new rm creation,
which research shows have lower
start-up costs, fewer barriers to
new rm entry and higher levels of
technological change.18 In addition,
policy-makers can assist by fostering
supportive networks and allocating
resources for nascent, emerging and
serial entrepreneurs. A consensus
among academics and public ocials
is forming that new ventures with
high revenue growth or so-called
“gazelles” deliver the greatest return
on public investment.19 Firms with
both high revenue growth and rapid
employment expansion, or so-called
“high-impact rms” are especially
critical, and in fact contribute to the
majority of overall economic growth
and almost all growth in private
sector employment.20 Our leaders can
promote high-impact entrepreneurial
activity by encouraging risk taking,
providing legal protection and seed
capital, and encouraging heavy
investment in human capital, research
and development, and knowledge
creation.
What Entrepreneurs Need Most
Policy-makers can stimulate
economic growth and job creation
by making improvements to the
three things entrepreneurs need to
commercialize an opportunity: skills,
resources and networks. Indiana
can give its innovative and creative
citizens and new immigrants to
Indiana the greatest chance of success
by creating and nourishing networks,
fostering partnerships among local
and regional governments and
educational institutions, and by
developing the necessary technical
and managerial skills in the
population.
Entrepreneurs need assistance
in creating solid business plans
and with accessing and developing
managerial talent. Policy-makers
can improve the skills of individual
entrepreneurs by investing in
entrepreneurial education and
providing training through one-
stop shops, business development
centers and incubators. Curriculum
that fosters risk taking, innovation,
Policy-makers should target those industries
most conducive to new rm creation, which
research shows have lower start-up costs, fewer
barriers to new rm entry and higher levels of
technological change.

Indiana Business Review, Spring 2011  3
creativity, and technological and
managerial prowess can be designed
from elementary through graduate
school.
The best entrepreneurial education
will be hands-on, immersive and
experiential, and will connect active
participants with existing rms,
entrepreneurs and professional
service providers such as lawyers,
accountants and marketing
executives; as well as supportive and
resourceful investors. High schools,
community colleges, teaching
universities and small business
development centers can play a
more active role in delivering the
skill sets and providing direction
for those considering business
ownership, while entrepreneurship
centers at research universities can
deliver the next generation brain-
power and unleash the creativity
and management skills necessary to
deliver more promising high-impact
gazelles.
Policy-makers can strengthen
both networks and community
resources by pooling funds
and providing beer access to
technology as well as information
and guidance on starting, running,
growing, funding and managing a
business. Local governments can
provide the requisite information
to aspiring entrepreneurs. Rural
and small town entrepreneurs in
particular face serious challenges
in establishing the critical networks
and support systems, including
nding the right nanciers, lawyers,
accountants and business partners.21
Policy-makers can play an active
role in transitioning Indiana to the
21st century global economy by
fostering strategic relationships and
vibrant networks among research
intensive universities, corporations
and entrepreneurial agents such
as scientists, engineers, nanciers
and inventors across the globe.
In addition, policy-makers might
consider actively funding and
promoting research parks, incubators,
public-private partnerships,
immersive learning and collaborative
development projects to foster the
expansion of and returns to these
networks.
In Short
Through creating stronger linkages
among state universities, research
institutions and the global business
sector, and by shifting the culture
away from developing job retention
employment skills for mature and
dying sectors to one that develops the
skills necessary to build new high-
growth businesses, Indiana leaders
can create a rich climate conducive
to the birth, araction and retention
of innovative entrepreneurial rms
that create new products and services
and expand into new markets.
Stimulating intelligent risk taking,
creativity and innovation is good
public policy. A failed start-up is not
a net loss to society; those involved
with the start-up venture, including
the founders, venture capitalists,
lenders and other competing
businesses learn from aempts to
launch a new technology or take a
new idea to market. Later aempts by
serial entrepreneurs may just launch
the next Google, Facebook, Intel or
Microsoft, which would be a boon
to the Indiana economy for years to
come. n
Notes
1. John C. Haltiwanger, Ron S. Jarmin and
Javier Miranda, “Business Dynamics
Statistics Brieng: Entrepreneurship across
States,” February 1, 2009.
2. David B. Audretsch, Max C. Keilbach and
Erik E. Lehmann, Entrepreneurship and
Economic Growth (Oxford: Oxford University
Press, 2006).
3. Based on 2006 data.
4. Molly Manns, “Indiana’s Small Business
Snapshot,” InContext, March-April 2010,
www.incontext.indiana.edu/2010/mar-apr/
article2.asp.
5. Brian Headd, “An Analysis of Small
Business and Jobs,” U.S. Small Business
Administration, Oce of Advocacy, March
2010.
6. Zoltan Acs, William Parsons and
Spencer Tracy, “High-Impact Firms:
Gazelles Revisited,” U.S. Small Business
Administration Publication No. 328, June
2008, hp://archive.sba.gov/advo/research/
rs328tot.pdf.
7. Based on U.S. Department of Commerce,
Census Bureau, and Statistics of U.S.
Businesses data on nonfarm establishment
job gains and losses for Indiana by rm size.
These statistics are presented in the annual
publications of the U.S. Small Business
Administration’s Oce of Advocacy and can
be accessed at www.sba.gov/advocacy.
8. See note 5.
9. See note 6.
10. Martin A.Caree and A. Roy Thurik, “The
Impact of Entrepreneurship on Economic
Growth,” in The Handbook of Entrepreneurship
Research, International Handbook Series on
Entrepreneurship, 2010, Volume 5, Part 6,
557–594.
11. See endnote 6, page 51 and Acs, Audretsch
and Strom, Entrepreneurship, Growth,
and Public Policy (New York: Cambridge
University Press, 2009).
12. Paul D. Reynolds, Michael Hay and S.
Michael Camp, “Global Entrepreneurship
Monitor’s Executive Summary 2000,” 20.
13. See note 2.
14. See note 2.
15. Jay Henderson, “Building the
Rural Economy with High-Growth
Entrepreneurs,” Economic Review 3Q (2002),
45–70.
16. See note 15.
17. Jay Kayne, “State Entrepreneurship Policies
and Programs,” Kaufmann Center for
Entrepreneurial Leadership, November 1,
1999.
18. See notes 2 and 15.
19. This term describes the high-growth, job
generating new venture and is aributed
to David Birch in The Job Generation Process
published in 1979.
20. See note 6.
21. See note 15.
Stimulating intelligent risk taking, creativity
and innovation is good public policy.

4  Indiana University Kelley School of Business, Indiana Business Research Center
The Triple Bottom Line: What Is It and
How Does It Work?
tiMothy F. Slaper, Ph.D.: Director of Economic Analysis, Indiana Business Research Center, Indiana University Kelley School of
Business
tanya J. hall: Economic Research Analyst, Indiana Business Research Center, Indiana University Kelley School of Business
Sustainability has been an
often mentioned goal of
businesses, nonprots and
governments in the past decade, yet
measuring the degree to which an
organization is being sustainable or
pursuing sustainable growth can be
dicult.
John Elkington strove to measure
sustainability during the mid-1990s
by encompassing a new framework
to measure performance in
corporate America.1 This accounting
framework, called the triple
boom line (TBL), went beyond the
traditional measures of prots, return
on investment, and shareholder
value to include environmental and
social dimensions. By focusing on
comprehensive investment results—
that is, with respect to performance
along the interrelated dimensions
of prots, people and the planet—
triple boom line reporting can
be an important tool to support
sustainability goals.
Interest in triple boom line
accounting has been growing across
for-prot, nonprot and government
sectors. Many businesses and
nonprot organizations have adopted
the TBL sustainability framework to
evaluate their performance, and a
similar approach has gained currency
with governments at the federal, state
and local levels.
This article reviews the TBL
concept, explains how it can be useful
for businesses, policy-makers and
economic development practitioners
and highlights some current
examples of puing the TBL into
practice.
The Triple Bottom Line Defined
The TBL is an accounting framework
that incorporates three dimensions of
performance: social, environmental
and nancial. This diers from
traditional reporting frameworks
as it includes ecological (or
environmental) and social measures
that can be dicult to assign
appropriate means of measurement.
The TBL dimensions are also
commonly called the three Ps: people,
planet and prots. We will refer to
these as the 3Ps.
Well before Elkington introduced
the sustainability concept as “triple
boom line,” environmentalists
wrestled with measures of, and
frameworks for, sustainability.
Academic disciplines organized
around sustainability have multiplied
over the last 30 years. People inside
and outside academia who have
studied and practiced sustainability
would agree with the general
denition of Andrew Savi for
TBL. The TBL “captures the essence
of sustainability by measuring the
impact of an organization’s activities
on the world ... including both
its protability and shareholder
values and its social, human and
environmental capital.”2
The trick isn’t dening TBL. The
trick is measuring it.
Calculating the TBL
The 3Ps do not have a common
unit of measure. Prots are
measured in dollars. What is
social capital measured in? What
about environmental or ecological
health? Finding a common unit of
measurement is one challenge.
Some advocate monetizing all
the dimensions of the TBL, including
social welfare or environmental
damage. While that would have
the benet of having a common
unit—dollars—many object to
puing a dollar value on wetlands
or endangered species on strictly
philosophical grounds. Others
question the method of nding
the right price for lost wetlands or
endangered species.
Another solution would be to
calculate the TBL in terms of an
index. In this way, one eliminates
the incompatible units issue and,
as long as there is a universally
accepted accounting method, allows
for comparisons between entities,
e.g., comparing performance between
companies, cities, development
projects or some other benchmark.
An example of an index that
compares a county versus the
nation’s performance for a variety of
components is the Indiana Business
Research Center’s Innovation Index.
There remains some subjectivity
even when using an index however.
For example, how are the index
components weighted? Would each
“P” get equal weighting? What about
the sub-components within each “P”?
Do they each get equal weighting? Is
the people category more important
than the planet? Who decides?
Another option would do away
with measuring sustainability using
dollars or using an index. If the users
of the TBL had the stomach for it,
each sustainability measure would
stand alone. “Acres of wetlands”
would be a measure, for example,
and progress would be gauged based
on wetland creation, destruction or
status quo over time. The downside
to this approach is the proliferation
of metrics that may be pertinent to
measuring sustainability. The TBL
user may get metric fatigue.
Having discussed the diculties
with calculating the TBL, we turn
our aention to potential metrics

Indiana Business Review, Spring 2011  5
for inclusion in a TBL calculation.
Following that, we will discuss how
businesses and other entities have
applied the TBL framework.
What Measures Go into the
Index?
There is no universal standard
method for calculating the TBL.
Neither is there a universally
accepted standard for the measures
that comprise each of the three TBL
categories. This can be viewed as a
strength because it allows a user to
adapt the general framework to the
needs of dierent entities (businesses
or nonprots), dierent projects or
policies (infrastructure investment or
educational programs), or dierent
geographic boundaries (a city, region
or country).
Both a business and local
government agency may gauge
environmental sustainability in
the same terms, say reducing the
amount of solid waste that goes into
landlls, but a local mass transit
might measure success in terms of
passenger miles, while a for-prot
bus company would measure success
in terms of earnings per share.
The TBL can accommodate these
dierences.
Additionally, the TBL is able
to be case (or project) specic or
allow a broad scope—measuring
impacts across large geographic
boundaries—or a narrow geographic
scope like a small town. A case
(or project) specic TBL would
measure the eects of a particular
project in a specic location, such as
a community building a park. The
TBL can also apply to infrastructure
projects at the state level or energy
policy at the national level.
The level of the entity, type of
project and the geographic scope will
drive many of the decisions about
what measures to include. That said,
the set of measures will ultimately
be determined by stakeholders and
subject maer experts and the ability
to collect the necessary data. While
there is signicant literature on the
appropriate measures to use for
sustainability at the state or national
levels, in the end, data availability
will drive the TBL calculations.
Many of the traditional sustainability
measures, measures veed through
academic discourse, are presented
below.
Economic Measures
Economic variables ought to be
variables that deal with the boom
line and the ow of money. It could
look at income or expenditures,
taxes, business climate factors,
employment, and business diversity
factors. Specic examples include:
• Personal income
• Cost of underemployment
• Establishment churn
• Establishment sizes
• Job growth
• Employment distribution by
sector
• Percentage of rms in each
sector
• Revenue by sector contributing
to gross state product
Environmental Measures
Environmental variables should
represent measurements of natural
resources and reect potential
inuences to its viability. It could
incorporate air and water quality,
energy consumption, natural
resources, solid and toxic waste, and
land use/land cover. Ideally, having
long-range trends available for
each of the environmental variables
would help organizations identify
the impacts a project or policy would
have on the area. Specic examples
include:
• Sulfur dioxide concentration
• Concentration of nitrogen
oxides
• Selected priority pollutants
• Excessive nutrients
• Electricity consumption
• Fossil fuel consumption
• Solid waste management
• Hazardous waste management
• Change in land use/land cover
Social Measures
Social variables refer to social
dimensions of a community or region
and could include measurements of
education, equity and access to social
resources, health and well-being,
quality of life, and social capital. The
examples listed below are a small
snippet of potential variables:
• Unemployment rate
• Female labor force participation
rate
• Median household income
• Relative poverty
• Percentage of population with
a post-secondary degree or
certicate
• Average commute time
• Violent crimes per capita
• Health-adjusted life expectancy
Data for many of these measures
are collected at the state and national
levels, but are also available at the
local or community level. Many are
appropriate for a community to use
when constructing a TBL. However,
as the geographic scope and the
nature of the project narrow, the set
The level of the entity, type of project and
the geographic scope will drive many of the
decisions about what measures to include.

6  Indiana University Kelley School of Business, Indiana Business Research Center
of appropriate measures can change.
For local or community-based
projects, the TBL measures of success
are best determined locally.
There are several similar
approaches to secure stakeholder
participation and input in designing
the TBL framework: developing
a decision matrix to incorporate
public preferences into project
planning and decision-making,3
using a “narrative format” to solicit
shareholder participation and
comprehensive project evaluation,4
and having stakeholders rank and
weigh components of a sustainability
framework according to community
priorities.5 For example, a community
may consider an important measure
of success for an entrepreneurial
development program to be
the number of woman-owned
companies formed over a ve-year
time period. Ultimately, it will be
the organization’s responsibility
to produce a nal set of measures
applicable to the task at hand.
Variations of the Triple Bottom
Line Measurement
The application of the TBL
by businesses, nonprots and
governments are motivated
by the principles of economic,
environmental and social
sustainability, but dier with regard
to the way they measure the three
categories of outcomes. Proponents
who have developed and applied
sustainability assessment frameworks
like the TBL encountered many
challenges, chief among them,
how to make an index that is both
comprehensive and meaningful and
how to identify suitable data for the
variables that compose the index.
The Genuine Progress Indicator
(GPI), for example, consists of 25
variables that encompass economic,
social and environmental factors.
Those variables are converted into
monetary units and summed into a
single, dollar-denominated measure.6
Minnesota developed its own
progress indicator comprised of 42
variables that focused on the goals
of a healthy economy and gauged
progress in achieving these goals.7
There is a large body of literature
on integrated assessment 8 and
sustainability measures that grew
out of the disciplines that measure
environmental impact. These are
not constrained by strict economic
theory for measuring changes in
social welfare.9 Researchers in
environmental policy argue that
the three categories—economic,
social and environmental—need
to be integrated in order to see the
complete picture of the consequences
that a regulation, policy or economic
development project may have and to
assess policy options and tradeos.
Who Uses the Triple Bottom Line?
Businesses, nonprots and
government entities alike can all use
the TBL.
Businesses
The TBL and its core value of
sustainability have become
compelling in the business world due
to accumulating anecdotal evidence
of greater long-term protability.
For example, reducing waste from
packaging can also reduce costs.
Among the rms that have been
exemplars of these approaches are
General Electric, Unilever, Proctor
and Gamble, 3M and Cascade
Engineering.10 Although these
companies do not have an index-
based TBL, one can see how they
measure sustainability using the
TBL concept. Cascade Engineering,
for example, a private rm that does
not need to le the detailed nancial
paperwork of public companies, has
identied the following variables for
their TBL scorecard:
• Economic
o Amount of taxes paid
• Social
o Average hours of training/
employee
o From welfare to career
retention
o Charitable contributions
• Environmental/Safety
o Safety incident rate
o Lost/restricted workday rate
o Sales dollars per kilowa
hours
o Greenhouse gas emissions
o Use of post-consumer and
industrial recycled material
o Water consumption
o Amount of waste to landll
Nonprots
Many nonprot organizations have
adopted the TBL and some have
partnered with private rms to
address broad sustainability issues
that aect mutual stakeholders.
Companies recognize that aligning
with nonprot organizations makes
good business sense, particularly
those nonprots with goals of
economic prosperity, social
well-being and environmental
protection.11
The Ford Foundation has funded
studies that used variations of
the TBL to measure the eects of
programs to increase wealth in
dozens of rural regions across the
United States.12 Another example
Companies recognize that aligning with nonprot organizations makes
good business sense, particularly those nonprots with goals of economic
prosperity, social well-being and environmental protection.

Indiana Business Review, Spring 2011  7
is RSF Social Finance,13 a nonprot
organization that uniquely focuses
on how their investments improve
all three categories of the TBL. While
RSF takes an original approach to
the TBL concept, one can see how
the TBL can be tailored to nearly
any organization. Their approach
includes the following:
• Food and Agriculture
(economic): Explore new
economic models that support
sustainable food and agriculture
while raising public awareness
of the value of organic and
biodynamic farming.
• Ecological Stewardship
(environmental): Provide
funding to organizations and
projects devoted to sustaining,
regenerating and preserving the
earth’s ecosystems, especially
integrated, systems-based and
culturally relevant approaches.
• Education and the Arts (social):
Fund education and arts
projects that are holistic and
therapeutic.
Government
State, regional and local governments
are increasingly adopting the
TBL and analogous sustainability
assessment frameworks as decision-
making and performance-monitoring
tools. Maryland, Minnesota, Vermont,
Utah, the San Francisco Bay Area and
Northeast Ohio area have conducted
analyses using the TBL or a similar
sustainability framework.
Policy-makers use these
sustainability assessment frameworks
to decide which actions they should
or should not take to make society
more sustainable. Policy-makers
want to know the cause and eect
relationship between actions—
projects or policies—and whether
the results move society toward or
away from sustainability. The State
of Maryland, for example, uses a
blended GPI-TBL framework to
compare initiatives—for example,
investing in clean energy—against
the baseline of “doing nothing” or
against other policy options.14
Internationally, the European
Union uses integrated assessment
to identify the “likely positive and
negative impacts of proposed policy
actions, enabling informed political
judgments to be made about the
proposal and identify trade-os in
achieving competing objectives.”15
The EU guidelines have themselves
been the subject of critique and
have undergone several rounds
of improvement.16 The process of
rening the guidelines shows both
the transparency of the process and
the EU commitment to integrated
assessment.
Regional Economic
Development Initiatives
The concept of the triple boom
line can be used regionally by
communities to encourage economic
development growth in a sustainable
manner. This requires an increased
level of cooperation among
businesses, nonprot organizations,
governments and citizens of the
region. The following examples
throughout the United States show
various ways the TBL concept can
be used to grow a region’s economic
base in a sustainable manner.
Cleveland, Ohio
In 2009, the mayor of Cleveland
convened the Sustainable Cleveland
2019 (SC2019) Summit to bring
together hundreds of people
interested in applying the principles
of sustainability to the design of
the local economy.17 The SC2019
is a 10-year initiative to create a
sustainable economy in Cleveland
by focusing on a TBL-like concept.
The city uses four key areas for
measuring sustainability: the
personal and social environment,
the natural environment, the built
environment (e.g., infrastructure
and urban growth paerns) and the
business environment. Each key area
has six goals. At this point, specic
measurement indicators have not
been fully developed; however, the
city is looking to create a dashboard
that could be combined to create an
index for overall project success. This
dashboard would allow for quick
year-to-year assessment in the SC2019
progress.
Grand Rapids, Michigan, and the
Surrounding Region
In 2005, the Grand Rapids region
created the nation’s rst “Community
Sustainability Partnership” to
develop a roadmap to lead Grand
Rapids to sustainability. The
region employs 14 major indicators
related to the region’s quality of
life and environmental factors to
determine progress made towards
sustainability. Rather than create an
index, target goals were established
for each indicator. More detailed
information of the metrics used
for each indicator can be found in
their TBL report.18 Below are brief
explainations of the variables used to
measure their TBL.
• Environmental Quality
o Waste: trends in recycling,
refuse and yard waste
o Energy: energy
consumption, natural gas
The concept of the triple boom line can be
used regionally by communities to encourage
economic development growth in a sustainable
manner.

8  Indiana University Kelley School of Business, Indiana Business Research Center
consumption and alternative
fuel usage
o Water: water consumption
o Air Quality: toxic release
inventory and number of air
pollution ozone action days
o Built Environment: number
of LEED registered and
certied projects
o Land Use and Natural
Habitat: inventory of land
use and forest canopy
o Transportation: public
transportation ridership
• Economic Prosperity
o Personal Income: personal
income per capita
o Unemployment:
unemployment rate
o Redevelopment,
Reinvestment and Jobs:
results from browneld
redevelopment investment
and job creation
o Knowledge Competitiveness:
third-party report ranking
U.S. regions
• Social Capital and Equity
o Safety and Security: crime
statistics
o Educational Aainment:
degree aainment levels
o Health and Wellness: infant
mortality rate and blood
lead levels trends
o Quality of Life: home
ownership, poverty, and
reduced price and free
lunches trends
o Community Capital: 211
calls for assistance, voter
participation and population
and ethnicity
Summary
The Triple Boom Line concept
developed by John Elkington
has changed the way businesses,
nonprots and governments
measure sustainability and
the performance of projects or
policies. Beyond the foundation of
measuring sustainability on three
fronts—people, planet and prots—
the exibility of the TBL allows
organizations to apply the concept
in a manner suitable to their specic
needs.
There are challenges to puing the
TBL into practice. These challenges
include measuring each of the three
categories, nding applicable data
and calculating a project or policy’s
contribution to sustainability. These
challenges aside, the TBL framework
allows organizations to evaluate the
ramications of their decisions from a
truly long-run perspective. n
Notes
1. John Elkington, “Towards the Sustainable
Corporation: Win-Win-Win Business
Strategies for Sustainable Development,”
California Management Review 36, no. 2 (1994):
90–100.
2. Andrew Savi, The Triple Boom Line (San
Francisco: Jossey-Bass, 2006).
3. Peter Soderbaum, “Positional Analysis and
Public Decision Making,” Journal of Economic
Issues 16, no. 2 (June 1982): 391–400,
www.jstor.org/stable/pdfplus/4225177.pdf.
4. Terre Saereld, Paul Slovic and Robin
Gregory, “Narrative Valuation in a Policy
Judgment Context,” Ecological Economics 34
(2000): 315–331.
5. Stephen R. J. Sheppard and Michael
Meitner, “Using Multi-Criteria Analysis
and Visualization for Sustainable Forest
Management Planning with Stakeholder
Groups,” Forest Ecology and Management
207 (2005): 171–187. Another example can
be found in Katrina Brown et al., “Trade-
O Analysis for Marine Protected Area
Management,” Ecological Economics 37, no. 3
(June 2001): 417–434.
6. See Herman E. Daly, John B. Cobb and
Cliord W. Cobb, For the Common Good:
Redirecting the Economy towards Community,
the Environment, and a Sustainable Future
(Boston: Beacon Press, 1989) and John
Talberth, Cliord Cobb and Noah Slaery,
“The Genuine Progress Indicator 2006: A
Tool for Sustainable Development,” www.
environmental-expert.com/Files/24200/
articles/12128/GPI202006.pdf.
7. Minnesota Planning Environmental Quality
Board, “Smart Signals: An Assessment of
Progress Indicators,” March 2000,
www.green.maryland.gov/mdgpi/pdfs/GPI-
Minnesota.pdf.
8. Integrated assessment is used as a
general rubric for all sustainability
assessment frameworks, including TBL.
The proliferation of frameworks and
their acronyms often complicates the
issues associated with implementing a
TBL framework for evaluating economic
development initiatives. Except for a
couple of sustainability frameworks, the
accessibility components and measures
can be easily organized into the three
TBL categories (economic, social and
environmental).
9. Theo Hacking and Peter Guthrie, “A
Framework for Clarifying the Meaning
of Triple Boom-Line, Integrated, and
Sustainability Assessment,” Environmental
Impact Assessment Review 28 (2008):73–89
and Wouter de Ridder et al., “A Framework
for Tool Selection and Use in Integrated
Assessment for Sustainable Development,”
Journal of Environmental Assessment Policy
and Management 9, no. 4 (December 2007):
423–441.
10. Cascade Engineering, “The Triple Boom
Line Report,” 2009, www.cascadeng.com/
pdf/TBL_2009.pdf.
11. Nancy Fell, “Triple Boom Line Approach
Growing in Nonprot Sector,” Causeplanet,
January 21, 2007, and Peter Senge, et al., The
Necessary Revolution (New York: Doubleday,
2008).
12. For example, see Nancy Stark and
Deborah Markley, “Rural Entrepreneurship
Development II: Measuring Impact on the
Triple Boom Line, Wealth Creation in Rural
America,” July 2008, www.yellowwood.org/
wealthcreation.aspx.
13. “Focus Areas,” RSF Social Finance, hp://
rsfsocialnance.org/values/focus/.
14. “Maryland’s Genuine Progress Indicator:
An Index for Sustainable Prosperity,”
Maryland: Smart, Green and Growing,
www.green.maryland.gov/mdgpi/.
15. Commission of the European Communities,
“Communication from the Commission on
Impact Assessment,” May 6, 2002, hp://
trade.ec.europa.eu/doclib/docs/2005/
february/tradoc_121479.pdf.
16. EU Secretariat General, “Memo: The Main
Changes in the 2009 Impact Assessment
Guidelines Compared to 2005 Guidelines,”
hp://ec.europa.eu/governance/impact/
index_en.htm.
17. Sustainable Cleveland 2019, “Action and
Resources Guide: Building an Economic
Engine to Empower a Green City on a Blue
Lake,” October 2010,
www.gcbl.org/system/les/SC2019+Executiv
e+Summary+%289SEP10%29.pdf.
18. City of Grand Rapids, Michigan,
“Community Triple Boom Line Indicator
Report,” September 2008, www.grpartners.
org/pdfs/resources/TBLFinal1.pdf.