Understanding ESG and the Triple Bottom Line

A Global Perspective for Emerging Business Leaders

1. Introduction

Environmental, Social, and Governance (ESG) and the Triple Bottom Line (TBL) are fundamental frameworks in contemporary corporate strategy—especially relevant for MBA students, researchers, and professional practitioners. While they overlap in promoting responsible business practices, each offers distinct lenses:

• TBL emphasizes measuring profit, people, and the planet, advocating that long-term success requires balancing financial, social, and environmental impact (Elkington, 1997; Slaper & Hall, 2011).
• ESG offers a structured set of criteria for evaluating how firms manage environmental, social, and governance risks and opportunities—a framework increasingly influential in corporate reporting, investment decisions, and policymaking (Kell, 2014; Environmental, Social & Governance, 2025).

This blog post explores both frameworks, situates their application across multiple regions, and offers a practical roadmap for embedding ESG in an FMCG soap manufacturer in Sri Lanka.

2. What Is ESG?

ESG refers to a set of standards assessing firms on three dimensions (Kell, 2014; Environmental, Social & Governance, 2025):

1. Environmental – Climate impact, greenhouse gases, water use, pollution, and biodiversity.
2. Social – Labor practices, diversity, employee well‑being, community engagement, and human rights.
3. Governance – Board composition, executive compensation, disclosure, ethics, and shareholder rights.

ESG emerged in the 2004 UN “Who Cares Wins” initiative, and by mid-2023 boasted over US $30 trillion in assets under management (Environmental, Social & Governance, 2025). Its importance lies in how ESG factors influence corporate reputation, investment value, regulatory compliance, and risk exposure (Kell, 2014).

3. What Is the Triple Bottom Line (TBL)?

Coined in 1994 by John Elkington, TBL is an accounting and sustainability framework assessing corporate performance across three interrelated dimensions—People (social), Planet (environmental), and Profit (economic) (Investopedia, 2025; UW‑Wisconsin, 2022).

• People encapsulates social impact—employee conditions, community relations, and stakeholder value.
• Planet measures environmental stewardship—carbon emissions, material use, pollution, resource conservation.
• Profit maintains traditional financial performance—revenues, costs, and shareholder returns.

Organizations using TBL strive to integrate all three pillars, avoiding optimization of one at the expense of another, and aiming for sustainable long-term performance (UW‑Wisconsin, 2022; Investopedia, 2025).

4. The Interplay Between ESG and TBL

Though related, ESG and TBL have distinct roles:

• TBL provides a broad philosophical and accounting framework for including social and environmental costs alongside financials.
• ESG operationalizes this philosophy via industry-aligned metrics and reporting standards—such as greenhouse gas accounting, diversity ratios, supply chain audits, and board composition reports (Kell, 2014; Environmental, Social & Governance, 2025).

Jessica Glorius-Dangelo (2023) argues that ESG builds the business case for TBL, offering measurable, risk-aligned approaches that support triple bottom line thinking .

5. ESG & TBL Across Regions

5.1 United States

• ESG heavily influences investment decisions. By 2020, U.S. sustainable funds saw inflows of about US $52 billion (Environmental, Social & Governance, 2025).
• Regulators (SEC, Labor Department) and major asset managers (e.g., BlackRock) are tightening reporting standards and accountability.
• U.S. companies like General Electric and 3M operationalize TBL in sustainability initiatives, notably in emissions reduction technologies (Winans et al., 2024) .

5.2 United Kingdom

• UK regulations support stakeholder-inclusive governance (e.g., Cadbury Code, B-Corp registrations).
• Unilever (UK‑based) set its Sustainable Living Plan in 2010: sourcing 100% of agricultural raw materials sustainably, improving health and well-being, and enhancing livelihoods. The plan achieved significant progress by 2020 .
• B-Corp legal frameworks emphasize holding companies accountable to environmental and social objectives.

5.3 Singapore

• ESG adoption, aligned with shared-value and stakeholder theory, has been empirically linked to competitive advantage (Asian firms, 2005–2017) .
• In nearby Malaysia, ESG performance correlated positively with economic success—suggesting similar potential in Singapore.
• The government promotes sustainable finance via regulatory lenses like MAS’s Green Finance Action Plan.

5.4 Sri Lanka

• FMCG soap manufacturers are beginning to experiment with low-cost sustainable packaging strategies that reduce, reuse, redesign secondary packaging .
• Sri Lankan FMCG firms integrating ESG into strategic plans (2024) report gains in environmental responsibility, social inclusion, and governance .
• Studies of Sri Lankan listed companies (2021–2023) reveal a mild positive relationship between ESG disclosure and ROA/ROE—suggesting need for deeper implementation .
• Leading conglomerates like Hayleys PLC have launched ESG roadmaps (Hayleys Lifecode) and signed global commitments like UN CEO Water Mandate (2008) .
• FMCG companies such as Unilever Sri Lanka (with ~96% local production) have introduced plastic-free packaging and earned eco-certifications by 2020 .

6. Business Benefits of ESG & TBL

Financial Returns

Empirical studies show high ESG performance correlates with stronger profitability, value creation, and investor appeal .

Risk Mitigation

ESG reporting helps identify and reduce exposure to regulatory, environmental, and social threats (e.g., supply chain disruptions, reputational damage).

Stakeholder Trust & Brand Strength

Firms with robust ESG track records attract investment, retain talent, and build consumer loyalty. Unilever’s initiatives exemplify this effect.

Innovation & Efficiency

TBL-driven innovation—like eco-friendly packaging—leads to operational efficiencies and cost savings (e.g., studies in Sri Lanka’s FMCG packaging).

Competitive Positioning

In global markets, aligning with ESG and TBL enhances entry into ethical sourcing networks, investment pools, and procurement partnerships.

7. Designing an ESG Governance Framework: Focus on a Sri Lankan FMCG Soap Manufacturer

Step 1: Establish Leadership & Governance

Form an ESG Committee with multi-departmental representation (R&D, operations, finance, HR) and label ESG objectives as strategic priorities (IFC, 2021).

Step 2: Conduct Materiality Assessment

Engage stakeholders—including suppliers, consumers, regulators, and communities—to map priority ESG themes: water usage, carbon footprint, packaging impact, labor practices, board transparency, and health safety.

Step 3: Define KPIs (5-Year Horizon)

• Environmental: Reduce water use/m³ per ton by 20%, cut carbon emissions by 30%, shift 50% packaging to recyclable/biodegradable material.
• Social: Achieve 100% supplier labor compliance, raise workforce diversity by 25%, win three CSR awards community-wide.
• Governance: Ensure 50% independent board seats, publish annual ESG report aligned with GRI standards, and roll out anti-corruption policy training.

Step 4: Implement Policies & Systems

• Adopt ISO standards (e.g., ISO 14001, OHSAS 18001, ISO 9001).
• Launch sustainable procurement policies.
• Integrate ESG responsibilities in senior executive contracts and performance reviews.

Step 5: Measure & Report

• Track KPIs quarterly, benchmark against prior year.
• Use third-party ESG auditors; assure data reliability and compliance.
• Publish annual sustainability/ESG report in line with GRI or IFC guidance.

Step 6: Engage & Communicate

• Host supplier workshops on sustainable sourcing.
• Share community impact stories (e.g., rural water restoration).
• Communicate KPIs and progress to employees via townhall updates.

Step 7: Review & Iterate

• Reassess materiality annually.
• Update targets based on performance, stakeholder feedback, and evolving regulations.
• Embed continuous improvement in strategy review cycles.

8. Conclusion

Integrating ESG and TBL is no longer optional—it’s an essential component of strategic competitiveness, innovation, and stakeholder trust. For business leaders and MBA researchers, understanding and operationalizing these frameworks enables impactful, sustainable decision-making. Whether analyzing Unilever in the UK, tracing packaging innovations in Sri Lanka, or benchmarking Singapore’s ESG disclosures, the global story is clear: the future of business is triple‑bottom-line thinking—and it’s happening now.

References

Elkington, J. (1997) Cannibals with Forks: The triple bottom line of 21st century business. Capstone.

Environmental, Social & Governance (2025) ‘Environmental, social, and governance’, Wikipedia, accessed June 2025.

Glorius-Dangelo, J. (2023) ‘Making the Business Case for Triple Bottom Line and ESG’, Design With Ma, 9 March.

Investopedia (2025) Triple Bottom Line – definition, viewed June 2025, <…>.

Kell, G. (2014) ‘Five trends that show corporate responsibility is here to stay’, The Guardian, 13 August.

Slaper, T. and Hall, T. (2011) ‘The Triple Bottom Line: What is it?’, Indiana Business Review, Spring.

UW‑Wisconsin (2022) An Explanation of the Triple Bottom Line, viewed June 2025.