TrueValueMetrics ... Impact Accounting for the 21st Century

Date: 2024-04-29 Page is: DBtxt003.php txt00006748

Ideas Peter Burgess Describing Multi Dimension Impact Accounting (MDIA) in the context ot the circular economy CE Original article: Peter Burgess COMMENTARY Peter Burgess
Peter Burgess ... Founder/CEO at TrueValueMetrics developing Multi Dimension Impact Accounting The ideas behind the 'circular economy' are fine, and the video you have made describes CE well and simply. As an enthusiast for metrics, however, I do not like the circular image. I think of 'going round in a circle' and essentially after a lot of effort, landing back in the same place. Now for CSR getting back to the same place may be good compared to what is going on in the modern linear economy, where we have no hope of getting back to the same place, we are continually getting back to a worse place ... but that still does not solve the metrics conundrum. As I see it, the circular idea is one of connecting. Maybe it is also about feedback loops. But the purpose of all of the connections is to make progress. We see no connections in the linear economy ... just decision making that is good for a single entity. Our disconnected economy is not sustainable, though bits of it are very profitable. Such an economy results in a degradation of the 'state' of society and the economy. On the other hand an interconnected economy has the potential to be sustainable and much more profitable. This economy will result in betterment of the 'state' of the society and the economy. I argue that the underlying purpose of all economic activity is for people to have a decent and improving quality of life. Improvement in 'state' over time is progress ... and a big part of the metrics of 'state' are metrics associated with 'quality of life'. There is still profit, which is a reward for the use of capital, but there are all the other components of society and the economy ... not just the summary components of the triple bottom line (profit, people, planet) but all the big sub-components that go beyond these three 1) Profit - Organization - Economic activity 2) People - Individual - Family - Friends - Community 3) Product - Supply chain - Use - Post Use Waste Chain 4) Planet - Resource Depletion - Materials - Energy 5) Planet - Environmental Degradation - Land - Water - Air 6) Built Environment - Infrastructure, Buildings, Plant and equipment 7) Enabling Environment - Governance, Rule of Law, Taxation, Organizations 8) Knowledge - What we know The metrics associated with all of these components can be summarized for different decision making purposes 1) Summary by organization ... for the stock markets, etc. 2) Summary by place ... for decision makes in a locality ... where profit is earned, people live and work, product is produced and bought and sold 3) Summary by person ... to help individuals, families and communities to make better decisions 4) Summary by product ... to help buyers (consumers and intermediaries) to make better buy decisions In each of these 4 cases the analysis and reporting incorporates metrics about all of the 8 components described above. I call this Multi Dimension Impact Accounting (MDIA). The idea is for it to be as rigorous for all of these things as modern conventional money accounting is for corporate profit performance accounting. Peter Burgess - TrueValueMetrics ... Multi Dimension Impact Accounting Stefan Amaral, OHS, MBA (CPP Candidate) ... Manager, Operations Support & Administration Another form of measurement that was brought to my attention the other day was the measurement of Genuine Wealth. Measurements of Genuine Wealth delve into societal measures, rather than GDP measurement, which is all too solidified to economic conditions. Genuine wealth encompasses five core capital assets – human, social, natural, manufactured and financial capital. In my humble opinion, society has to stray from the idea that financial gains are key measurements as to how 'well' a nation is doing. A more people-centric measurement is long over due. Francesca Rheannon ... Senior Writer at CSRwire, The Corporate Social Responsibility Newswire I agree, and some of those measures have been developed by Gross National Happiness and other wellbeing metrics. Laura Musikanski of The Happiness Initiative in Seattle, WA has written several posts on CSRwire (and a new one coming up) on how governments and companies are incorporating happiness metrics into their work. http://www.csrwire.com/blog/bloggers/96-laura-musikanski/posts From Peter Burgess ... Founder/CEO at TrueValueMetrics developing Multi Dimension Impact Accounting Stefan ... yes, the idea of Genuine Wealth certainly makes more sense than GDP ... and in this case I think Genuine Wealth is somewhat similar to the Happiness measures that the King of Bhutan made famous. I am trying to make easy links between the numbers that populate corporate financial accounting with numbers that represent things that are important for understand performance at the level of the Triple Bottom Line or better. The MDIA framework has 8 major components: 1) Profit - Organization - Economic activity 2) People - Individual - Family - Friends - Community 3) Product - Supply chain - Use - Post Use Waste Chain 4) Planet - Resource Depletion - Materials - Energy 5) Planet - Environmental Degradation - Land - Water - Air 6) Built Environment - Infrastructure, Buildings, Plant and equipment 7) Enabling Environment - Governance, Rule of Law, Taxation, Organizations 8) Knowledge - What we know The metrics associated with all of these components can be summarized for different decision making purposes 1) Summary by organization ... for the stock markets, etc. 2) Summary by place ... for decision makes in a locality ... where profit is earned, people live and work, product is produced and bought and sold 3) Summary by person ... to help individuals, families and communities to make better decisions 4) Summary by product ... to help buyers (consumers and intermediaries) to make better buy decisions I am trying to make this system simple, without being simplistic. I am optimistic that what is emerging may get some traction in part because its granularity enables us to improve the analysis bit by bit as the data associated with each little element or module is improved. Note the sequence in the first set ... profit first and people second. This is because the prevailing metrics are all about profit built on top of conventional money profit financial accounting. People is the top priority for impact when the data from the money profit accounting is 'exploded' into the MDIA reporting formats. But note the system embraces all the other dimensions of society and the economy that matter. I hope this helps somewhat ... we live in a complex and interconnected world. It is time that we had metrics that recognized this reality! Peter Burgess - TrueValueMetrics Multi Dimension Impact Accounting

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