The triple bottom line

- Globally, more than 22% of assets are now managed using some form of sustainable investing strategy. Europe remains the largest base for socially responsible assets under management. As of 2015, $6.57 trillion of US assets under management have a socially responsible or triple bottom line focus. What is the triple bottom line? Simply put the concept implies that companies managed not just by traditional financial and economic indicators, but also manage social and environment factors that are material to the business. By material, we mean those factors that can influence the value of a company as exemplified in the price of its stock and/or its individual share value. This focus is a direct result of social and environmental issues influencing corporate revenue and brand value over the last 20 years. Just think of one of your favorite brands and how a social or environmental issue has impacted them. Whether sweat shops, pollution, or climate change, no company is immune. Consequently, most forward thinking companies are now managing with an eye toward the triple bottom line. Is yours one of them? A recent Morgan Stanley study clearly concluded there's a positive relationship between corporate investment in sustainability and a company's stock performance. Firms that actively pursue improvements in environmental and social metrics tend to have lower costs of capital and higher operational stock price performance. Millennial investors are nearly two times more likely to invest in companies or funds that target specific social or environmental outcomes. They are also two times more likely to exit an investment position because of objectionable corporate activity. Interestingly, over half of millennials view their wealth as a vehicle to help build community and protect the environment. They also view it as a source of empowerment to pursue the greater societal good as opposed to just maximizing value for shareholders. The same goes for older generations as well. 72% of corporate employees in the USA, not just millennials, say that their company's reputation as a good social and environmental actor is important to them. 85% of millennials consider a company's reputation before deciding whether to pursue a job offer. Given that one of the largest human resources costs to any company is employee recruitment and retention. This has real implications for the bottom line. Companies can be best positioned to address triple bottom line issues and stay ahead of their peers by creating plans to identify and improve the company's key environmental and social impact areas. For example, Coca-Cola has significant efforts to evaluate and improve its water usage, replenish 100% of the water it uses for products internationally, and to minimize its waste creation. Its CEO is also very involved with the company's triple bottom line efforts and the company's chief sustainability officer is a direct report. Understanding and improving your company's triple bottom line practices has numerous quantifiable benefits. Many of the most profitable and best performing companies in the world are managing by the triple bottom line. Whether that's improving brand reputation, or improved efficiencies, maybe it's time for you to explore the opportunities the triple bottom line presents to your company.