People, Planet and Profits: How do corporations prioritize the 3Ps?

Micro-sustainability can be defined as “the small environmental actions which when calculated collectively, result in a large environmental impact. Micro-sustainability centers around individual efforts, behavior modification and creating attitudinal changes, which result in an environmentally conscious individual or community. It encourages sustainable changes through change agents, who are individuals …who foster positive environmental action inside their own sphere of influence.” This term is actively used in niche spaces like architecture and construction as the concept of “sustainable residences” has garnered popularity. The otherwise common examples are in the form of community groups who practice small-scale projects aiming to make a difference. A concept analogous to this is macro-sustainability which tackles issues at the national and international level- the most common ways being laws and treaties which may be multilateral. For the sake of this article, macro will be the level of large corporates who have considerable presence in multiple countries (MNCs) and micro will be firms whose presence is only felt in a single country or a community. 

The context set so far was to introduce the concept of the Triple Bottom Line (TBL):“People, Planet and Profit” in a business framework and the difference between how it’s viewed from top-down to bottom up. “People” refers to the employees and their welfare, “Planet” refers to a firm’s contribution to the betterment of the environment and “Profits” mean any economic and social impact that a firm has on the community in terms of generation of jobs and payment of taxes. In recent times, the order of the three P’s has been distorted. Major firms have been putting Profits over both People and the Planet – the effects of which are visible in terms of the inequalities between executive owners of the company and those down the hierarchy. John Elkington who coined the phrase “People, Planet, Profits” in 1994 has recalled his definition of “Profits” and how the phrase has been reduced to just “financial profit” when it was meant to mean a shared economic profit which benefits the economy as a whole. 

So now the question being how can we ask firms, set up with a profit motive to begin with, to put the Planet first? Ironically, the answer is by recruiting the right People. Scot Case in his work about trickle down sustainability found that people perceived sustainability differently down the supply chain. He says that “Smaller suppliers define sustainability as the viability of their business. They are focused on the ability to make payroll, to meet their debt payments and to keep the factory doors open”. He talks about the supply chain but this could be true even within a firm. External pressures such as government laws cause those at the executive level to take environmental and sustainable measures for the firm but, these actions may negatively impact the employees at the bottom level, who define sustainability as the longevity of their livelihood and the improvement of their immediate environment. There is an asymmetry of purpose even within a firm. In a system like this where not everyone thinks about the three P’s in the same way, a trickle-down measure to being sustainable will not work effectively. 

As a counter to this is the “grassroots innovation” measure which is defined as “networks of activists and organizations generating novel bottom–up solutions for sustainable development solutions that respond to the local situation and the interests and values of the communities involved.” by Dr. Gill Seyfang and Prof. Adrian Smith in their work. Firms that start from the bottom up to address local issues are effective since their sustainable goals are pre set and thus the employees in the firm will also be on the same page as the executives. The Canada based ride-sharing and food delivery company Facedrive (FD) founded in 2016 has from the get-go tried to remodel the industry currently dominated by Uber and Lyft. The carbon footprint of the Uber rides was causing an alarm in 2019 and it’s only as recently as late 2020 that Uber has brought about an Uber-Green model which lets its customers choose an electric vehicle to commute in. Meanwhile, FD gives customers a choice of car to ride in and offsets the CO2 footprint with tree-planting, all without paying a premium.

Realizing the lack of companies in the field, Facedrive had decided to make itself a platform for investments based on ESG (Environmental, Social and Governance criteria) which have been predicted to be more profitable in the long run. Facedrive hires drivers with electric or hybrid cars and hence ensure that the whole firm has like-minded individuals who believe in sustainability. This is not the case with Uber as they now have to give an incentive for its millions of drivers to make a switch in order to kick start its Uber Green program. This switch may not seem sustainable (in terms of livelihood) to their drivers. Moreover, the FD drivers receive 85-90% of their payments plus tips despite the price surge while Uber and Lyft drivers have faced a fall in wage share percentage over time due to the same reason. Facedrive also supports the local restaurants with their green food delivery system. A big corporation such as Uber will have to roll out billions of dollars in order to make a switch to sustainability and essentially change their motto from “ride-sharing” to “green ride- sharing” but a firm set-up with such goals will not have to.

There is a need to push for and promote companies that are prioritizing the Triple bottom line framework. The current interest of investors in companies that are aligned with environmental and social issues might just be the catalyst for change in the way “People, Planet and Profits” are prioritized. Such stocks are deemed to be profitable in the long run as per 2000 Empirical studies done which found that in 90% of these cases there was a positive relationship between ESG investing and corporate financial performance (CFP). Within a firm set up with a profit motive and no environmental and sustainable aspect in its core beliefs, it is hard to make a switch later on as the employees down the command chain are not in the loop for the goals which will be rolled out from the executive level. Instead, grassroot innovative companies which have sustainable intentions from the start who hire employees with a similar mindset seem capable of making a difference. 

Ashika Thomas is a second-year student who is pursuing an Economics major and an Environmental Science minor at Ashoka University.

3 comments

  1. Good idea and practice which would lead us to be more sustainable from an environmental perspective.
    Would trickle down economics in terms of some of the profit of a major corporation going to their employees to work on sustainability projects at a community and personal level help.
    Would this drive behaviour of people at a community and a personal level.
    So would this help in drive the 3P’s?

    Like

  2. Great article! The student author has written the article very thoroughly. Indeed, she brings out the importance of micro-sustainability very well. Worth reading and sharing.

    Like

  3. Good idea with real world examples to show both approaches and their pros and cons.
    Building in environmental sustainability shouldn’t mean a less sustainable businesses model.

    Like

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