Does the Triple Bottom Line Matter in Commercial Real Estate?

By Published On: September 24, 20213.4 min read

The Triple Bottom Line (TBL) is an accounting framework for measuring an organization’s cost of doing business based on profits and their investment in the lives of people on the planet. In other words, the triple bottom line measures an organization’s commitment to sustainable business practices.What Is the Triple Bottom Line (TBL)?

The triple bottom line is a sustainable and an accounting framework for measuring an organization’s performance based on three key metrics: social, environment and financial.

The concept was coined by John Elkington, a British management consultant and sustainability specialist to evaluate business performance in corporate America.

The triple bottom line posits that firms should not only measure performance in terms of profit alone, but should also commit to measuring their social and environmental impact as well. Hence, it is usually broken down into the “3Ps”: profit, people and planet.

How the Triple Bottom Line Applies to Commercial Real Estate

Commercial real estate today operates with a triple bottom line perspective by creating an environmentally stable future.

By continuing in its efforts to help support sustainable development through environmentally sustainable structures, construction projects that will provide employment opportunities by empowering the population financially, sustainable business practices and social responsibility offers commercial real estate a triple bottom line.

To further contribute to sustainable development, the commercial real estate sector can minimize energy usage by creating energy efficient homes, net zero energy buildings, and by approaching real estate initiatives from a sustainable development perspective.

How to Meet the Challenges of the Triple Bottom Line

In a world that emphasizes profits over purpose, you might think that social and environmental factors affect economics or profits. However, innovative companies have proven that focusing on profits alone puts companies at a competitive disadvantage.

Also, sustainable growth can easily be achieved by being socially responsible to people on the planet. The two major challenges facing the triple bottom line are measurement and aggregation.

For instance, how do you measure social impact and how do you add up the various elements of your social bottom line?

Well, the simple truth is that it is possible to meet the challenges of triple bottom lIne by understanding how processes in the industry affect the lives of people on the planet. You can then set metrics to measure your organization’s investment in the lives of people and the planet.

For instance, you can meet the challenges of environmental impact by looking at the pollutants emitted, product impacts on the lives of people and the environment, percentage of recycling or reusing, carbon footprint, and percentage of water or energy use.

Similarly, you can also account for social responsibility by looking at community impacts, employee relations, health and safety records, and producer responsibility. These metrics will guide you and help you meet the challenges of TBL.

Examples of the Triple Bottom Line in Commercial Real Estate

Commercial real estate can contribute to the triple bottom line through eco-efficiency and socio-efficiency. That is, real estate development approaches should use water, energy and resources to sustain and save.

Transportation of construction resources should involve use of fuel-efficient vehicles. This not only saves fuel resources but also prevents environmental pollution by reducing total carbon dioxide emissions. Also, use approaches that reduce energy consumption, eliminate waste and minimize energy usage. Some of these approaches involve:

  • Use of eco-friendly designs that allow buildings to reduce cooling costs with the installation of a high emittance coating on the roof. This reduces cooling costs by reflecting more of the sun’s thermal energy.
  • Use of porous paving to improve drainage and limit demand on stormwater infrastructure.
  • Use of low-flow and dual-flush systems to minimize water usage.
  • Other options include bamboo flooring and recycled insulation to improve indoor acoustics, anaerobic digesters to reduce waste and produce biogas, and electrochromic glass to reduce energy waste.

Conclusion: The Triple Bottom Line

Businesses are now becoming more socially responsible and environmentally conscious. Businesses can positively impact the world and create a positive change by accounting for the full cost of doing business by focusing on social and environmental issues as much as they focus on financial matters.

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