Profit as a purpose isn’t enough anymore: Rebalancing the triple bottom line (part 2 of a 3 part series)
August 23, 2021
How is the purpose of business shifting and expanding? Upside Foundation, the Pond-Deshpande Centre and Propel are exploring the past, present and potential future of business and its intersection with social purpose. The next in this series of 3 articles explores the triple bottom line - profit, people and planet - and how we are starting to rebalance this three-legged stool.
In our last article, Jennifer Couldrey examined how business went from primarily small and local, to becoming defined by returning maximum value to its shareholders. Returning maximum value to a small number of shareholders meant that ‘doing well’ and ‘doing good’ often existed as binaries in popular culture. While those dichotomies were always over-generalizations, the gap between business (doing well) and social impact (doing good) has widened over the last decades with the continued trend towards centralization of wealth in small percentages of people.
In response to the widening gap between doing well and doing good, we’re witnessing a shift away from business being solely about providing maximum return to shareholders to moving towards serving its stakeholders - which include people like staff and community in addition to shareholders, as well as the planet in considering things like supply chains and greenhouse gas emissions. This shift in businesses towards being stakeholder-centric instead of shareholder-centric has been picking up momentum and recently reflected in the principles of the Business Roundtable, composed of some of the most influential businesses of our time including Apple, Nike and P&G.
You may have heard about a triple bottom line in an effort to reflect a business's responsibility to its broader stakeholders (including, though not limited to its shareholders). The 3 legs of the triple bottom line stool are: profit, people and planet. Continuing in the metaphor of the triple bottom line as a 3-legged stool, the past has focused on building a very robust profit ‘leg’ at the cost of the other two legs, leading to an imbalance. We’re now working to rebalance so that the stool doesn’t topple over.
Measuring the triple bottom line
You can’t manage what you don’t (or can’t) measure
That above adage seems like one of the most important pieces of wisdom from business, attributed to Peter Drucker.
In order to strengthen the metaphorical ‘people and planet’ legs of the triple bottom line stool, we have to be able to measure them. We have very sophisticated measures of money and profit through formal accounting, with scores of people globally practicing in this profession.
Measuring benefits to people and planet, often called impact, is an emerging field. The movement towards measuring or quantifying impact is known by a lot of names - impact measurement, social return on investment (SROI), defining your theory of change, ESG - environmental, social governance - among others. The practitioners and entrepreneurs in impact measurement are also growing - in Canada, the Common Approach to Impact Measurement based out of Carleton University is a united effort by various stakeholders - academia, government and business - to enable impact measurement and make it easier. Their ‘Common Foundations’ to measuring impact include:
- Plan your intended change
- Use performance measures
- Collect useful information
- Gauge performance and impact
- Report on results
Sounds easy, though the widespread agreement on measuring and communicating impact (planet and people) isn’t there yet - which also means it’s ripe with opportunity. A few Canadian examples include: Simpact, who offers strategy and training courses to measure impact (or SROI - Social Return on Investment), RIDDL and Sametrica offering tech solutions for measuring impact & impact reporting, Active Impact who are investing in impact-focused, equity-investment seeking ventures, and for those looking to invest with impact, impact-focused investments are on the rise with Rally Assets, New Market Funds, Vancity providing offerings. Even Wealthsimple offers options for investing with impact. And this list is just the tip of the iceberg.
Evolution in the types of corporations enabling the strengthening of the triple bottom line
We often think of organizations existing either as a non-profit or a for-profit business, however business structures have been evolving. The evolution in the types of corporations and how they act is another important piece of rebalancing the triple bottom line.
Nesta produced the great graphic above (explained in more detail here) highlighting the social enterprise continuum. On either side are the traditional types of organization we think of, and in the middle are the newly evolving ways that organizations are acting - everything from charities who provide paid-for services or products as part of their financial and impact strategy, to for-profit organizations that exist for social purpose.
The main difference in the types of organizations listed in the gray box - social enterprise - is that they serve a social purpose as a core function of the corporation, whether it exists as a non-profit or for-profit. Both the Pond-Deshpande Centre and Propel are based on Canada’s east coast, and support entrepreneurs. East coast examples of social enterprises include charities with ‘on mission’ contract income like Key Industries who employ and serve adults with disabilities and operate a number of social purpose real estate holdings and sell swag. Jaza Energy is a recent social purpose business launched from the east coast - a tech company building a network of renewable energy hubs in communities beyond the electrical grid. There are also scores of socially-responsible businesses who have launched in the last 5 years, including Beauceron Security - empowering individuals to reduce cyber risk within companies, and Side Door, connecting people to music and the arts online and in alternative venues.
Canada is ripe with opportunity in rebalancing the triple bottom line
In 2019, Thompson Reuters released a report with 2016 data ranking Canada as the best country in the world to be a social entrepreneur based on 6 factors: government support, attracting skilled staff, public understanding, making a living, gaining momentum and access to investment. There are a number of groups and associations working to enable social enterprise throughout the country including the Investment Readiness Program, Social Value Canada, the Centre for Social Innovation, the Social Enterprise Council of Canada, Social Innovation Canada, the McConnell Foundation,, among many, many others.
The CEO of Venture for Canada - a national organization placing top talent in Canadian SMEs and early-stage ventures, and on whose board I serve - recently provided a commentary in Future of Good (another Canadian social enterprise) on how New Zealand has created a social impact worker visa program to attract more socially-focused workers and entrepreneurs. This doesn’t yet exist in Canada, though what change might be catalyzed if it did?
Profit isn’t evil. It’s part of the equation, and an important part of it. But it’s only one leg of the triple bottom line stool. Working towards strengthening the people and planet legs provide ample opportunities - from building socially-focused business, measuring and communicating impact in your business, to assisting business or government in measuring their impact.
How are you making tangible progress towards balancing the triple bottom line?
Stay tuned for the next in our series, The Future of Purpose-Driven Companies, from Charlotte Murray.
This is the second in a series of articles from Propel - the virtual accelerator for tech companies in Atlantic Canada, BE.for.CHANGE Ventures, a program of the Pond-Deshpande Centre at the University of New Brunswick focused on accelerating social entrepreneurship in Atlantic Canada, and the Upside Foundation of Canada, enabling founders of early-stage, high-growth Canadian companies to build social responsibility into their business by pledging equity to the charity of their choice and joining a community of like-minded entrepreneurs.
We hope you’ll join the conversation about the future of social entrepreneurship.
#SocialBusiness #SocialChange #SocialGood
Written by Vanessa Paesani
Vanessa Paesani is the Founder and Principal of The Folding Chair Group - a team working with organizations who strive to put purpose at the front and center of their strategy and culture. She is currently focusing most of her work at the Pond-Deshpande Centre.
Vanessa’s career is rooted in science and education that she applies in business. Her background in science gives her a deep understanding of how to build hypotheses and experiments, and measure outcomes. Her background in education reminds her that nothing is possible without people.
She’s travelled to 5 continents, and worked locally and internationally. Some highlights of her work include helping build a charity delivering energy and environmental education from starting in a garage (literally) to being a province-wide institution supported by key stakeholders. She’s led a large music festival through a key transition. She’s worked with a youth leadership organization in celebrating its accomplishments from 10 years of impact.
Vanessa gives back on a national level through serving on the board of Venture for Canada - a Canadian charity focused on accelerating youth into entrepreneurial careers. She also chairs the Investment Readiness Program Advisory Committee of the Canadian Women’s Foundation, and sits on the steering committee of the fully-funded intergenerational living project in NB, iGen.