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What does "Double Bottom Line" Mean?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 21 September 2016
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A double bottom line is a type of measurement that is concerned with not only the amount of financial profit or loss that a company sustains within a defined period of time, but also the level of positive social impact experienced by the business within that same time frame. This approach makes it possible to assess the impact that a socially responsible enterprise is having on both the market in which it operates and the communities where the business is based. Both public and private sector organizations can utilize this approach to measure financial profitability in light of social impact.

Assessing the double bottom line is especially important for businesses that wish to operate in a manner that promotes some areas of social responsibility. For example, a company that is interested in promoting the idea of reducing the industrial footprint on the environment may choose to incorporate certain strategies into its operations that allow the business to produce less in the way of air and water pollution. While this approach may mean a temporary decrease in monetary profits, the activity benefits the surrounding community and may influence more consumers who share similar environmental concerns to buy the company’s products.

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While there are certainly monetary advantages to evaluating a business in terms of a double bottom line, this approach may also be a tool in helping to ensure the longevity of the business. Here, the focus is not only on providing a positive social impact in the community, but also in building a corporate culture that promotes internal practices which reinforce the wider social impact. Doing so helps to establish a certain mindset within the business that in turn makes it easier to structure policies and procedures which ensure the business is true to its social conscience over the long term.

Employing a double bottom line can generate a number of benefits for companies of all sizes. Consumers who identify with the social aims of the corporation are more likely to recommend the company’s products to others in their social networks even as they choose to buy those products themselves. The approach of a double bottom line can also result in excellent public relations, which helps to augment the good press that customers are generating on behalf of the social conscious company. When a business is able to balance the use of its profits with the desire to be socially responsible, the end result can be beneficial for the company, its customers, and any community that is somehow touched by the efforts of the business.

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