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Date: 2018-09-20 Page is: DBtxt001.php L07-MANAGEMENT-DATA-at-the-CENTER


MANAGEMENT
DATA at the CENTER

Evidence that market mechanisms will solve all problems does not exist
Business organizations report their financial performance

IBM

Microsoft

Oracle

HSBC

Amazon

WalMart
But there is little about their social and environmental impacts

FINANCIAL REPORTING IS EVERYWHERE
SINCE THE 1980s FINANCIAL PERFORMANCE HAS BEEN OPTIMIZED TO BENEFIT OWNERS AND TOP MANAGEMENT WHILE BROADER SOCIAL AND ENVIRONMENTAL ISSUES HAVE BEEN IGNORED.
MORE AND MORE, THE NEED FOR IMPACT REPORTING IS BEING RECOGNIZED ... BUT NO SYSTEM OF NUMBERING HAS YET EMERGED THAT IS EASY AND WIDELY ACCEPTED. THIS IS WHAT TVM AIMS TO DO!
Organizations report more than any other part of the socio-enviro-economic system, but the focus is all about financial performance and the impact for owners / investors. External impacts are ignored in conventional accounting and financial reporting. TVM builds on the existing conventional accounting making it possible to also report on material externalities that impact people, society and the environment.
There are many compliance rules for financial reporting as well as independent auditing to ensure the integrity of the reporting
More and more business organizations are preparing reports relating to corporate social responsibility (CSR) and sustainability, but there is a lack of standardization and meaningful numbering. More than anything else these reports tend to show how small the initiatives related to CSR and sustainability are relative to the scale of the profits.
Most of the reporting by business organizations is 'self-reporting' and to a large extent very much self-serving. The main thrust of ESG (Environment. Social and Governance) advocacy is that good ESG will result in enhanced corporate financial value ... but this shows a terrible misunderstanding of the overall dynamic of the socio-enviro-economic system and the nature of value creation in the system.

Many economic / financial metrics show growth and are considered good

Stock market

Intangible value

Money supply

World GDP growth

US GDP growth
Metrics about social performance are less positive and mostly ignored

GDP v GPI

Value of $ down

Wages flat
Metrics about environmental issues are alarming and also ignored by decision makers and general public
CO2 concentration
Temp v CO2

Sea level rise

CO2 emissions

MEASURE WHAT MATTERS
MODERN METRICS ARE DANGEROUSLY DYSFUNCTIONAL
GO TOP
Peter Drucker famously said 'You cannot manage what you don't measure'
This is undoubtedly true ... in the corporate world, the components that go into making profit are measured intensely in order to improve profit performance ... and it works!
Unfortunately, we don't do anything like the same amount of measuring in order to improve society and avoid degrading the environment ... and we don't have any easy way of talking about social performance and environmental performance in the same way that we are able to talk about corporate performance and investment portfolio performance. This has to change
.
DATA AT THE CENTER GO TOP
Data drives knowledge and understanding.
Data should be used to drive all the steps of decision making: (1) Plan; (2) Organize; and (3) Implement.
Progress is when the Post Activity status is better than the Pre Activity status.
Data should be flowing to inform at every possible stage where decisions may be made to improve performance.
Progress should be assessed not only for the organization or project but also for the impact on community (which comprises outside society and the natural environment.

CONVENTIONAL FINANCIAL REPORTING IS EVERYWHERE / MORE AND MORE IMPACT REPORTING IS BECOMING A NEW NORMAL
ORGANIZATIONS: Banks / E-Business / Big retail / Franchise chains / Small business

Organizations report more than any other part of the socio-enviro-economic system, but the focus is all about financial performance and the impact for owners / investors. External impacts are ignored in conventional accounting and financial reporting. TVIA builds on the existing conventional accounting making it possible to also report on material externalities that impact people, society and the environment.



The text being discussed is available at

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TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative.
It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right.
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