If your company is like most, you define profit as the difference between revenues and expenses. In recent years, however, there has been a growing trend to look beyond the traditional definition of profit and include the social and environmental impacts of operating a business. The term “triple bottom line” was coined in the mid-1990s and is a way of accounting for the effect a business has on people and the planet. Triple bottom line accounting, sometimes abbreviated as TBL or 3BL, is a way for organizations to attempt to go beyond measuring traditional profit and account for their impact on society and the environment.

The benefits of TBL seem to be strong; however, there are many points to consider when deciding if it is right for your business. Some experts believe that adopting a TBL will increase traditional profits in the long run. Others argue that TBL can hinder a company in the market when competitors are only looking at traditional measures of profit. Another potential drawback is that a TBL adds another layer to their accounting system.

Companies that are socially responsible can adopt environmentally sustainable and community friendly practices without using a TBL. But these businesses will not be able to measure and track their progress over time. As the TBL grows in popularity, more companies will need to choose whether to follow it. It can deliver many benefits, but you need to plan carefully and seek advice from your accounting business advisor before implementing a TBL in your business.