image missingTrue Value Metrics (TVM)
Meaningful Metrics for a Smart Society
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Date: 2018-05-22 Page is: DBtxt001.php L0700-CC-UNSUSTAINABILITY-SCORE


CORE CONCEPTS of TRUE VALUE METRICS
UNSUSTAINABILITY SCORE

PROCESS
THE MAIN DETERMINANT OF SOCIO-ENVIRO-ECONOMIC EFFICIENCY

PROCESS IS EVERYWHERE
The efficiency of PROCESS will determine how well the WORLD works
PROCESS IS EVERYWHERE ...

NOTE: The PROCESS is equivalent to the NODE in context / entity / relationship diagrams. PROCESS is the NODE that is at the center of all person built activities

PROCESS uses inputs (labor, materials, energy, knowhow, natural resources, etc.) and in the process degrades the environment;
PROCESS produces PRODUCTS (goods and services) ... outputs ... that enable good quality of life and living standards.

EFFICIENCY AND EFFECTIVENESS OF A PROCESS
This is more than PROFIT ... it incorporates also impact on PEOPLE and PLANET
The EFFICIENCY of the PROCESS determines the IMPACT on PEOPLE and PLANET.
EFFICIENCY is not only the PROFITABILTY of the PROCESS …
… but also how much GOOD IMPACT there is for PEOPLE …
… and how little BAD IMPACT for SOCIETY and the ENVIRONMENT.

FRAMING THE PROCESS
This is more than PROFIT ... it incorporates also impact on PEOPLE and PLANET
IIRC Value Creation Process
This is a representation of PROCESS promulgated by IIRC (International Integrated Reporting Council) as the foundational construct for Integrated Reporting (IR).
The six (6) capitals used by IIRC are similar to the convention adopted by TVIA, with both embracing the idea that ALL capital should be brought into account.
The Framing of the Capitals
IIRC TVIA
A. Financial
B. Manufacturing
C. Intellectual
D. Human
E. Social and Relationship
F. Natural
D. Human Capital
E. Social and Relationship
F. Natural Capital
B. Created Physical Capital
C. Created Intangible Capital
A. Created Financial Capital
With IIRC the 'Value Creation Process' is centered on the business organization. While this is important, it is not sufficient. What goes on outside the business organization is arguably more important than what happens inside the organization.
With IIRC the business organization draws from the 6 capitals (inpits to the process) and impacts the 6 capitals (outcomes of the process).
With the business organization there are business activities ... whcih are similar to PROCESS in TVIA.
In addition the IIRC graphic has reference to these ideas: Mission and Vosion: Risks and Opportunities, Governance, Strategy and Resource Allocation; Performance and Outlook.
In the TVIA thinking the goal is to have a tighter linke between the activities of the business and the financial accounting and the impact arising

CONVENTIONAL MONEY ACCOUNTING IS VERY POWERFUL
HOWEVER ... these accounts ONLY describe economic activity in financial or money terms while completely ignoring impact on everything else.
This graphic shows the relationship between the Balance Sheet at the beginning of the period (BOP) and the Balance Sheet at the end of the period (EOP) and the Profit and Loss Account (P&L Account) for the peiod.

A core feature of double entry accounting is that the change in the balance sheet from the BOP to the EOP is the same as the profit for the period shown by the P&L Account

AUGMENTING CONVENTIONAL ACCOUNTING TO ADD IMPACT
How the TVA data architecture adds IMPACT of the PROCESS in an easy and rigorous manner
Add the GOOD impacts to the accounting, analysis and reporting
Deduct the BAD impacts to the accounting, analysis and reporting
Have GOOD and BAD impacts together

TVA FOR THE SUPPLY CHAIN
How the TVA data architecture adds IMPACT of the performance analysis in the SUPLY CHAIN
PRODUCT AND SUPPLY CHAIN
… The MONEY dimension of the supply chain is routine; however
… The IMPACT of the supply chain on SOCIETY (PEOPLE) and ENVIRONMENT (PLANET) are rarely implemented in a coherent manner.
… This is very big next step!

NEW SECTION
Sub heading
The next slide shows …

… how the money P&L report describes the impact of the money transactions on the money balance sheet of the operation …

… while the IMPACTS of the operations on society and the environment are ignored because they are outside the reporting envelope.
A better framework for reporting would be this …
So think of all this miniaturized:

NEW SECTION
Sub heading
So think of all this miniaturized:




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