This page accessed on : 2022-08-12 at 17:33:31
TRUE VALUE METRICS
Accounting and Accountability
for PEOPLE, PLANET and PROFIT
PREVAILING METRICS ARE NOT FIT-FOR-PURPOSE
.
WE WANT TO MAINTAIN AN OPEN KNOWLEDGE MODEL
A MODEST DONATION WILL HELP MAKE THAT HAPPEN
.
THESE MAJOR METRICS ARE NOT FIT-FOR-PURPOSE. BETTER MANAGEMENT METRICS ARE NEEDED.
Performance cannot be measured in money alone:
GDP growth is not a good proxy for progress;
Profit should not be the only corporate goal;
Stock owners should benefit from more than profit results!
.
TRUEVALUEMETRICS (TVM) ARE MORE COHERENT, COMPREHENSIVE AND SUITED TO THE 21ST CENTURY
Accounting for ALL the CAPITALS;
Accounting for ALL the IMPACTS;
Accounting for ALL the ACTIVITIES ... all the PROCESSES;
Accountability for all the ACTORS ... for EVERYONE; and
Addressing progress and performance from ALL the PERSPECTIVES.
.
TVM ... BETTER MANAGEMENT METRICS
THE SOCIO-ENVIRO-ECONOMIC SYSTEM (SEES) HAS 3 SEGMENTS
SOCIAL
CAPITAL


SOCIETY
NATURAL
CAPITAL


ENVIRONMENT
ECONOMIC
CAPITAL


ECONOMY
Rather than thinking only in terms of financial progress and performance, ALL the capitals should be accounted for ... that is social capital, environmental or natural capital and economic capital, where financial capital is just one of the components of economic capital. An important aspect of TVM is that many of the core concepts of double entry accounting are being utilized to account for the state and impact of everything, not only financial elements.
.
TRENDS ... WHAT FUTURE WILL BE CHOSEN?
FACT! ... PAST PROGRESS CANNOT BE SUSTAINED!
THE LAST SEVERAL DECADES

SOCIAL PROGRESS AND ECONOMIC GROWTH WITH ENVIRONMENTAL DEGRADATION
MORE OF THE SAME

ENVIRONMENTAL CATASTROPHE THAT CANNOT SUPPORT ECONOMIC ACTIVITY AND SOCIETY
THE ESSENTIAL FUTURE

USING TECHNOLOGY TO ADDRESS SOCIAL EQUITY AND SOLVE ENVIRONMENTAL ISSUES
The underlying technical capabilities in the modern world are impressive but not widely appreciated. This is in large part because many of the people with power and wealth are using their influence in ways that do not optimise for the general good but more for their own interests. Many of the ideas that served well in the 19th and 20th centuries are no longer fit-for-purpose in the 21st century, including the management accounting and economic indicators that focus almost entirely on issues of interest to investors and corporate officers, while effectively ignoring critical social and environmental externalities. To add insult to injury, management at the national level is a political exercise where money determines policy more than a fair democratic process.
.
ILLUSION OF PROGRESS
MONEY, GDP AND PROFIT ARE USELESS INDICATORS!
PRICE OF MONEY

This is the basic measure for economic analysis. No wonder everyone is confused.
GDP-v-GPI

GDP is a nonsense metric! Genuine Progress is is a better metric but flatlining at best.
WAGES-v-PRODUCTIVITY

About 50 years of stagnant wages in the USA while productivity and profits are soaring.
The fact that productivity has improved massively over the past 50 years ought to mean the population at large has seen substantial improvement in their quality of life ... but this has not been the result. Rather few have done very well, while the vast majority have flatlined or seen their household wealth decline. This is serious socio-enviro-economic dysfunction which has not been addressed meaningfully by those with wealth, power and influence.
SOME PROGRESS HAS BEEN SPECTACULAR
SCIENCE ... TECHNOLOGY ... PRODUCTIVITY
MEDICINE

Medical science has progressed rapidly.
MATERIALS

Composite materials are stronger and lighter
ROBOTICS

Machinery replaces people for routine work
The fact that productivity has improved massively over the past 50 years ought to mean the population at large has seen substantial improvement in their quality of life ... but this has not been the result. Rather few have done very well, while the vast majority have flatlined or seen their household wealth decline. This is serious socio-enviro-economic dysfunction which has not been addressed meaningfully by those with wealth, power and influence.
MANY SOCIAL OUTCOMES ARE UNACCEPTABLE
POVERTY, URBAN SLUMS AND MALNUTRITION

Terrible Poverty

Urban slums

Malnutrition
MALNUTRITION, GENOCIDE AND WARTIME DESTRUCTION

Genocide

War Damage
While many things have improved in a very impressive way during the last half century, too many people have been left behind and are living in terrible conditions. Part of this has been caused by the misuse of data to support policy formulation that favors those with power and influence. The misuse of power has been a governance issue since ancient times, and remains an ongoing issue. Better metrics can help.
.
EMERGING ENVIRONMENTAL CRISES
INDUSTRIAL POLLUTION / SOLID WASTE / CHEMICAL TOXINS
GHG Emissions Plastic Pollution Chemical Toxins
AIR POLLUTION

Road Traffic

Power Generation
Industrial Pollution
Business generates profit and enables wealth accumulation, but in the process there are many negative impacts that are ignored and not taken into account by policy makers and those with wealth, power and influence.
.
SECTORS / INDUSTRIES
TRANSPORTATION

Road vehicles

Aircraft
Ships
BASIC MATERIALS

Mining

Iron and Steel
Petrochemicals
.
.
PROGRESS IS CHANGE IN STATE OVER TIME
NO NEED TO MEASURE ACTIVITY DETAIL

STEADY STATE
WHERE DAILY RESOURCE CONSUMPTION OFFSETS SYSTEM VALUE ADD

GOOD PROGRESS
WHERE SYSTEM VALUE ADD EXCEEDS RESOURCE CONSUMPTION

'OOPS' PROBLEM
WHERE SYSTEM VALUE ADD LESS THAN RESOURCE CONSUMPTION
.
The idea of BALANCE SHEET (B/S) accounts being a measure of STATE and PROFIT and LOSS (P&L) accounts measuring activity performance is a core concept of financial accounting. Note that the CHANGE in the BALANCE SHEET is the same as the PROFIT or LOSS reported via the P&L accounts. Accordingly, PROGRESS may be measured simply by looking at the CHANGE in the STATE (B/S) which can be much simpler than keeping track of all the activities that cause the change in state. Over time, business organizations have improved their technical performance in ways that improve the productivity of activities and in turn create profit that improves the state of their financial capital. TVM is applying the same conceptual logic to the impact that business and other activities have on the state of ALL the capitals ... everything in the realm of social capital, natural capital and economic capital (of which financial capital is a part).
.
TVM ... BETTER MANAGEMENT METRICS
USING ACCOUNTANCY WELL BEYOND ITS PRESENT LIMITS

CONVENTIONAL FINANCIAL ACCOUNTING, USED EVERYWHERE FOR A VERY LONG TIME

BETTER METRICS WITH ACCOUNTING FOR IMPACT ON EXTERNALITIES

BETTER METRICS WITH ALL IMPACTS ACCOUNTED FOR COMPREHENSIVELY
.
The idea of BALANCE SHEET (B/S) accounts being a measure of STATE and PROFIT and LOSS (P&L) accounts measuring activity performance is a core concept of financial accounting. Note that the CHANGE in the BALANCE SHEET is the same as the PROFIT or LOSS reported via the P&L accounts. Accordingly, PROGRESS may be measured simply by looking at the CHANGE in the STATE (B/S) which can be much simpler than keeping track of all the activities that cause the change in state. Over time, business organizations have improved their technical performance in ways that improve the productivity of activities and in turn create profit that improves the state of their financial capital. TVM is applying the same conceptual logic to the impact that business and other activities have on the state of ALL the capitals ... everything in the realm of social capital, natural capital and economic capital (of which financial capital is a part).
.
THE SYSTEM IS VERY COMPLEX.
VERY DIFFICULT TO UNDERSTAND AND MANAGE
.
The use of accounting to achieve some degree of financial control goes back to the 1700s when it was being applied in commerce. Financial acounting became an important enabler of the industrial revolution and the need for big investments in factories and transport in the 19th century and into the 20th century. The scale of industrial activity in the late 20th century and the present 21st century requires not only the accounting for financial activities but also accounting for impact on everything including society (people) and the environment (nature). In conventional financial reporting these have been treated as 'externalities' and ignored. This is no longer a reasonable option ... though meaningful change has been resisted by many with wealth, power and influence because they understand what change might mean to their own position!
.
SITE COUNT<
Amazing and shiny stats
Blog Counters --> Reset to zero January 20, 2015
TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative. It has been funded by family and friends. TVM is a 'big idea' that has the potential to be a game changer. The goal is for it to remain an open access initiative.
WE WANT TO MAINTAIN AN OPEN KNOWLEDGE MODEL
A MODEST DONATION WILL HELP MAKE THAT HAPPEN
The information on this website may only be used for socio-enviro-economic performance analysis, personal information, education and limited low profit purposes
Copyright © 2005-2021 Peter Burgess. All rights reserved.
?>