The triple bottom line is a term coined in 1994 by John Elkington, a social entrepreneur and business author known for his work in the sustainability field. The triple bottom line states that a business should be concerned with more than the traditional (profit) bottom line. The triple bottom line encourages businesses to account for social responsibility (people) and environmental stewardship (planet). Thus, the triple bottom line is also known as the three Ps: people, planet, and profit. Studies continue to emerge on both social and environmental measures that influence people’s purchasing behaviors, productivity levels, and other metrics. Facility managers are in a unique position to directly affect social capital and environmental stewardship by controlling the built environment of an organization. The following will examine why the triple bottom line is important for sustainable business growth and how facility managers can make improvements through energy efficiency improvements to the built environment.
Facilities Management and the Triple Bottom Line
According to the International Facility Management Association (IFMA), facilities management “encompasses multiple disciplines to ensure functionality of the built environment by integrating people, place, process and technology.” The successful integration of these assets has both direct and indirect consequences on the business growth and development of the organization. Facility managers have the power to improve the built environment through energy efficiency retrofits. Energy efficiency retrofits have a direct effect on an organization’s triple bottom line. Let’s look at some of the different ways energy efficiency improvements affect people, planet, and profits.
People
People are the powerhouse behind an organization, driving leads, building relationships, closing deals, and augmenting growth. People are also the most expensive line item on an organization’s balance sheet. Ensuring the most valuable assets—your employees—are happy and productive ensures the health and longevity of an organization. Indeed, there is a direct relationship between happiness and business growth. Studies have shown that a happy and engaged workforce raises sales by 37%, productivity by 31%, and task accuracy by 19%.
Keeping employees comfortable is one of the easiest ways to ensure sustained productivity. Facility managers oversee the built environment, which consists of “temperature, indoor air quality, lighting, acoustics, physical space, and humidity.” Studies on facility improvements and employee productivity conclude the following:
- Better light improves individual productivity by up to 23 percent
- Poor indoor air quality as the result of poor building ventilation and air filtration could reduce productivity by as much as 9 percent
- Performance increases between of 69-71° F and decreases between 73-75° F
- A 2009 CBRE and USD study noted nearly half of building managers agree that employee productivity increases working in Energy Star labeled or LEED certified buildings versus standard buildings
- A 2009 MSU study found tenants who moved to Energy Star labeled commercial space missed less work and contributed 39 more work hours per person annually
- A 2009 McGraw-Hill study showed that nearly half of tenants who moved to a greener commercial space did so in anticipation of higher productivity
Source: Building Efficiency Initiative
Planet
Environmental stewardship champions good corporate social responsibility (CSR), which strengthens brand reputation and drives business results. Millennials play an instrumental role on the impact of CSR and the effects of organizations on the environment. Corporate social responsibility is no longer a buzzword and can no longer be treated as one. Millennials, whom already have significant purchasing power, are 70 percent more likely to buy from brands that support causes they care about. That care needs to be genuine, says Max Lenderman, CEO at School. “Brands often want to randomly pick a cause even if they don’t truly believe in it. Millennials will see right through that.”
Energy efficiency improvements are a form of environmental stewardship: they lower greenhouse gas (GHG) emissions and reduce the organizational carbon footprint. This is important because quantifiable sustainable advancements now, more than ever, impact the customer journey. When organizations are transparent about sustainability efforts, brand trust is strengthened within a market that is increasingly placing importance on sustainability leadership practices.
Profit
The profit portion of the triple bottom line is self-explanatory. Increases in profits are an easily quantifiable bottom line improvement, often in direct relationship with cutting costs. These are numbers that are transparent on the balance sheet. For facility managers, this can mean the direct relationship between the maximization of a building’s energy efficiency and the energy savings achieved. Other profit gains, both direct and indirect, are achievable through the people and planet categories of the triple bottom line.
Final Thoughts
Social capital and environmental stewardship are not easily quantifiable on their own. The relationships between productivity, environmental stewardship, and profit are a complex formula, but numerous studies continue to prove positive causes and effects. Facility managers have a unique advantage to leverage energy efficiency upgrades, including lighting, HVAC, building envelope, and other improvements. The ultimate advantage of energy efficiency is that it impacts an organization’s bottom line directly through cost-cutting strategies. Meanwhile, it also enhances social and environmental metrics that provide an auxiliary boost to business development and profit growth.