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August 28, 2012

1BL, 2BL, 3BL, 4

1BL - single bottom line measures the financial health of a business. Few examples:
Return on investment (ROI)
Return on assets (ROA)
Profit margin
Price-earnings (P/E) ratio
Customer lifetime value (LTV)
Cost of customer acquisition (CAC)
...and the list goes on. They're quantitative vital signs.

2BL - double bottom line simply tacks on a social layer.
# of training hours per employee
# of staff volunteer hours
% of payroll invested in training
# of reports of discrimination
# of health & safety violations
$ amount of charitable donations
Tip of the iceberg. They're accountability metrics for internal/external social benefit.

3BL - triple bottom line adds an environmental layer.
% decrease in CO2 emissions
% of energy savings
% of water returned to natural cycle
Total amount of recyclable waste collected
Compliance rate with environmental regulations
4 - it's called triple bottom line, so having a fourth, or even fifth or sixth metric to account for could be over the top. The idea though is to go beyond the single bottom line and think ethically about negative outcomes of your business.

What's missing? What kinds of things does your business measure that go beyond contributing to the margin? Continue the conversation on twitter @akshaykapur or #triplebottomline.