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Meaningful Metrics for a Smart Society
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Date: 2019-04-19 Page is: DBtxt001.php L07-00-TVM-BRIEF


TRUE VALUE METRICS
BRIEF OVERVIEW
image missing Numbering the Triple Bottom Line

Accounting for ALL the Capitals
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Double Entry AccountabilityTM
for PEOPLE, PLANET and PROFIT
FACING UP TO CHRONIC UNSUSTAINABILITY
METRICS TO MAKE THE WORLD A BETTER PLACE
TRANSPARENCY / ACCOUNTING / ACCOUNTABILITY
WE WANT TO MAINTAIN AN OPEN KNOWLEDGE MODEL
A MODEST DONATION WOULD BE OF HUGE VALUE!
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SECTION I
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HOW THE WORLD WORKS
SOCIO-ENVIRO-ECONOMIC SYSTEM
IT'S A COMPLEX WORLD!
Managing complexity is difficult. In modern times, the system has been managed for the benefit of those who own financial capital. The dominant economic metrics have been GDP growth, corporate profit growth and stock market wealth. Management metrics have been aligned to these same goals, and have been very effective.
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SECTION II
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STATE
THE STATE OF ALL THE CAPITALS
SOCIAL
CAPITAL


SOCIO
NATURAL
CAPITAL


ENVIRO
ECONOMIC
CAPITAL


ECONOMIC
In conventional financial accountancy STATE is reported using the 'balance sheet' accounts. They refer to the situation of each of these accounts at a moment in time. Progress has been achieved when the value of the balance sheet improves (increases) over time. In this reporting, it is all about the ECONOMIC CAPITAL ignoring all externalities. In TrueValueMetrics (TVM) it is about the SOCIAL CAPITAL STATE and NATURAL CAPITAL STATE as well. Worse, most of the reporting in the modern world is solely from the PERSPECTIVE of the corporate business organization about its own perforemance and how this correlates with key MACROECONOMIC totals and various popular averages, many, like GDP which have dubious relevance to the lives of ordinary people and the natural capital upon which everything depends.
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SECTION III
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FLOW
INPUTS ... ACTIVITIES ... OUTPUTS
ACTIVITIES / ACTORS / PERSPECTIVES
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PAYING ATTENTION TO EVERYTHING
RECOGNISING IMPACTS AT EVERY STAGE OF THE LIFE CYCLE
NATURE EXTRACTION
SUPPLY CHAIN PRODUCTION
USE
WASTE
ALL ACTIVITIES have impact on STATE. There are complex flows which result in CHANGE in STATE. Most activities have the goal of growing ECONOMIC WEALTH and over the past many decades there has been an impressive growth in ECONOMIC WEALTH. Until recently little attention has been paid to the impact of these ctivities on SOCIAL CAPITAL and NATURAL CAPITAL. It should be a priority to focus more on improving the progress of SOCIAL CAPTAL with the least degradation of NATURAL CAPITAL ... and for this, TVM has developed an enhanced system of multi dimension impact accounting.
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SECTION IV
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MANAGEMENT
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ABOUT THE TVM INITIATIVE
ENHANCED ACCOUNTANCY
TVM uses the core framework of conventional accountancy, that is balance sheet accounts and profit and loss account accounts to account for not only financial impact (money and profit), but also social impact and environmental impact.
RADICAL ACCOUNTABILITY
There has been accountability of business to the owners (investors / stockholders) with periodic reporting and audit. In the modern day it is time for business to become accountable for impacts on society and the long term sustainability of the environment.
MOVING THE NEEDLE ON IMPORTANT ISSUES
Talk is easy, but moving the needle requires a framework for management involving data, plans, action, review and feedback. The fastest progress is achieved with rapid iterations of small steps at the lowest level of the pyramid.
USING DATA TO ENABLE BETTER DECISIONS BY ALL THE ACTORS
Big data may be used for academic research, but data for better decisions is often very different. Data should help with understanding and enable rapid action to remove constraints and move the needle rapidly in the right direction.
METRICS / MULTIPLE UNITS OF ACCOUNT
Money is used to measure economic performance. Something else is needed to measure and account for social performance and environmental performance. TVM is building on the existing detail measures to establish summary metrics for these dimensions.
EXTERNALITIES / EVERY PERSPECTIVE OF THE SYSTEM
In conventional financial reporting, all externaities are ignored. In TVM the externalities are brought into account as well as addressing how the measure of performance changes with different perspectives. For example, profit up but social performance (wages) down.
STANDARD VALUE PROFILES BASIS FOR COMPARATIVE PERFORMANCE
TVM standard value profiles (SVPs) are the basis for comparative performance not only for economic performance (profit) but also social performance (social benefits) and environmental performance. SVPs may be used everywhere in the system
USING PAYROLL PROFILES TO UNDERSTAND SOCIAL IMPACT
Inequality has grown dramatically in the past several decades because top managers and owners have been rewarded too much and workers paid too little. TVM payroll profiles show this and better enables payrolls to be managed.
USING ENERGY CONSUMPTION TO REDUCE UNSUSTAINABILITY
The modern consumption economy is catastrophically unsustainable already with relatively few people middle class and rich. Much of this is assocated with energy throughout the supPly chain and during use. TVM energy profiles enable better management of this problem.
USING MATERIAL FLOWS TO ADDRESS OUT OF CONTROL PRODUCTION
Modern industry is consuming resources and stressing the ecosystem in an unsustainable way. Many major material classes exceed the planetary boundaries of sustainability by a large margin. Every business, production system, product and user must be held accountable.
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