TRIPLE BOTTOM LINE (TBL) HAY ESG LÀ KHUÔN KHỔ QUẢN TRỊ BỀN VỮNG CHO DO

Two popular frameworks for measuring and reporting on a company's sustainability performance are the Triple Bottom Line (TBL) and Environmental, Social, and Governance (ESG).

In the modern business context, where consumer awareness and expectations for social and environmental responsibility are increasingly rising, companies can no longer focus solely on profits but must also pay attention to their impact on society and the environment. Two common frameworks for measuring and reporting corporate non-financial performance are the Triple Bottom Line (TBL) and Environmental, Social, and Governance (ESG). Although both aim to promote sustainable development, they differ significantly in definition, scope, purpose, and implementation. This paper explores the comparison between these two concepts, analyzing their strengths and limitations, and provides insights on integrating both TBL and ESG into business strategies to optimize corporate sustainability performance.

1. Definition and Scope

Triple Bottom Line (TBL) is a sustainability management framework developed by John Elkington (1994). It proposes that a company’s performance should be evaluated based on three main factors:

People: Refers to the company’s social responsibility toward the community, employees, partners, and other stakeholders.
Planet: Assesses the environmental impact of business operations, including carbon emissions, energy use, waste management, and natural resource conservation.
Profit: Represents traditional business performance, indicating profitability and growth.

TBL emphasizes that these three elements are interrelated and must be balanced. It helps businesses recognize that sustainable development is not just an option but an integral part of their strategy.

Environmental, Social, and Governance (ESG), on the other hand, is a standardized framework used by investors to assess non-financial factors that may affect a company’s long-term financial performance. It includes:

Environmental (E): Climate change, pollution, waste management, energy use, and resource conservation.
Social (S): Labor practices, human rights, diversity and inclusion, health and safety, and community engagement.
Governance (G): Corporate governance factors such as board structure and independence, business ethics, risk management, and transparency.

2. Purpose and Target Audience

The main purpose of TBL is to promote sustainable development by encouraging companies to balance economic goals with social and environmental responsibilities. It guides strategy formation, sustainable business model design, and stakeholder reporting.ESG, in contrast, focuses on providing investors with information to make more informed decisions. Investors use ESG data to assess non-financial risks and identify companies with sustainable long-term growth potential. ESG has become an essential investment criterion, helping reduce risks and enhance long-term value.

3. Implementation

TBL is often integrated into sustainability or impact reports, using both quantitative and qualitative indicators. However, there is no universal standard for TBL measurement, making inter-company comparisons difficult. Companies must develop customized metrics aligned with their operations and ensure transparent reporting.ESG, however, has evolved into a widely recognized standard framework, supported by reporting systems such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). These standards provide detailed guidance on measuring, managing, and reporting ESG performance, allowing comparability and reliability for investors.

4. Strengths and Limitations

Strengths of TBL:

Simple and communicative: Simplifies sustainability, making it accessible to all stakeholders.
Encourages innovation: Promotes creative solutions balancing profit with social and environmental responsibility.
Creates multidimensional value: Generates financial, social, and environmental benefits, contributing to holistic sustainable development.

Limitations of TBL:

Lack of standardized metrics: Makes cross-company comparison difficult.
Risk of greenwashing: Without transparency, TBL can be misused for image-building without real impact.
Measurement challenges: Some social and environmental impacts are hard to quantify accurately.

Strengths of ESG:

Widely recognized: Accepted globally by investors, offering standardized and detailed evaluation criteria.
Comprehensive data: Provides in-depth insights into non-financial performance and risk.
Risk mitigation: Adherence to ESG standards reduces non-financial risks and enhances brand value.

Limitations of ESG:

Financial bias: Despite assessing non-financial factors, ESG is often used mainly for profit-driven investment decisions, potentially overlooking broader social and environmental impacts.
High cost and complexity: Data collection and reporting can be costly and complex, especially for small and medium enterprises.
Lack of consistency: Despite multiple ESG standards, uniformity and comparability remain limited.

5. Conclusion

Both TBL and ESG are essential tools for advancing sustainability. TBL offers a holistic framework to assess a company’s impact on people, planet, and profit, while ESG provides investors with concrete standards for evaluating non-financial risks. The choice between them depends on each organization’s goals and needs. However, to achieve optimal results, companies should integrate both TBL and ESG into their business strategies—ensuring they generate profits for shareholders while contributing positively to society and protecting the environment. By applying both frameworks, businesses can enhance competitiveness, attract sustainable investment, and build a strong reputation in an increasingly demanding global market.

(Author: Dr. Pham Thai Binh – Deputy Dean Sustainable Finance Institute (SFI) – University of Economics Ho Chi Minh City (UEH))

TRIPLE BOTTOM LINE (TBL) OR ESG – WHICH IS THE SUSTAINABILITY MANAGEMENT FRAMEWORK FOR BUSINESSES?