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Discussion: Relevant Impact Metrics are the Key to Global Social Accountability ... started by Peter Burgess

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Peter Burgess Founder/CEO at TrueValueMetrics
I have a passion for metrics. The analysis of data and appropriate reporting is a powerful way to enable change, but, in my opinion, most of the initiatives that are most popular at the moment do not have the architecture to be effective. So the question is, what exactly should we be doing so that there are meaningful metrics about everything that matters? Peter Burgess TrueValueMetrics
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Parveen Kalia Follow Parveen Kalia Social / Environmental Compliance / CSR Professional
This is a very interesting post and I look forward to comments posted by various readers.
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Our modern economy and society is dominated by a conversation about what I refer to as the terrible trio of: (1) profit performance for business; (2) stock price for investors; and, (3) GDP growth for pundits and policy makers. One problem with this is that while these metrics worked for an economy that looked like the Adam Smith world of the 18th century, these metrics do not work very well for the actual economy that we have in 2013. I think the tipping point for this came around the 1970s.

Another problem is that the economy that became the Western economic model in the last 50 years is based on a huge growth in consumption that is not sustainable as a system to support a prosperous global population of 8 billion people. The Western economic model can go on for a while with increasing corporate profits and stock prices, but on top of a global society that is increasingly poor at the bottom of the pyramid relative to those at the top. This will not work.

The Triple Bottom Line (TBL) approach to business metrics is a step in the right direction, but people, profit and planet from the singular perspective of the organization is not enough. While there is clarity about profit and the organization, there is less clarity about impact on people and impact on planet. To solve this problem I argue that there needs to be accounting around place where people work and live, and where impact on planet can be seen both as regards the consumption of resources and the damage to the environment (water, carbon, acid rain, etc.)

Optimizing for people, place, planet and profit is more complex than optimizing just for profit. There is a need for a good way to quantify the impact of economic activity on people and planet. It can be done, but it is not being done with any rigor at the moment. A system of standard values would work, similar to standard costs in cost accounting.

But even this is probably not enough. There also needs to be better metrics about product. Product ... goods and services ... delivers profit to the organization, but in the process there are all sorts of impacts along the supply chain, and then during use and in the post use waste chain. All of these should be accounted for in a rigorous manner.

Money profit accounting is very powerful inside a corporate organization, but does nothing for impact on people and planet. Something like money profit accounting for the organization needs to be set up for the impacts on place, and also the impacts emanating from product.

All of this can be done. It is not easy, but it is possible. The biggest question is whether or not the corporate world will embrace the idea or will do everything they can to resist it.

Peter Burgess TrueValueMetrics