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File: TVM-MILE-webinar-150616 Peter Burgess (c) All rights reserved
How to Manage for Best Triple Bottom Line Performance
MULTI DIMENSION IMPACT ACCOUNTING
File: TVM-MILE-webinar-150616 Peter Burgess (c) All rights reserved
How to Manage for Best Triple Bottom Line Performance
MULTI DIMENSION IMPACT ACCOUNTING
WORK-IN-PROGRESS.SLIDESET STILL IN DEVELOPMENT.UPDATES WILL BE POSTED OVER THE NEXT SEVERAL WEEKS
MULTI DIMENSION IMPACT ACCOUNTING
For best possible performance, EVERYTHING must be taken into consideration.
MULTI DIMENSION IMPACT ACCOUNTING
That is a significant change from the conventional wisdom of prevailing BEST PRACTICE that optimizes for money profit performance in the company
MULTI DIMENSION IMPACT ACCOUNTING
It is a fallacy that if GDP growth is good, corporate profits are good, and stock markets are good, then everything is good.
MULTI DIMENSION IMPACT ACCOUNTING
It is also false to expect high performance in 'my silo' to result in high performance throughout the complex system that is the modern company and the modern society.
MULTI DIMENSION IMPACT ACCOUNTING
Who am I? Who is Peter Burgess?
MULTI DIMENSION IMPACT ACCOUNTING
I am in the 4th quarter of my life the progress of science and technology in my lifetime has been quite amazing and much else in the world has changed.
MULTI DIMENSION IMPACT ACCOUNTING
1st quarter I grew up in the UK and ended up with a formal training in engineering and economics from Cambridge, and qualified as a Chartered Accountant in London with Cooper Brothers (now the PriceWaterhouseCoopers firm)
MULTI DIMENSION IMPACT ACCOUNTING
2nd quarter A fast track career in corporate management in the USA engineering, construction, iron and steel, pulp and paper, consumer products, electronic technology, marine fisheries.
It was all about improving profitability, and I was good at it!
MULTI DIMENSION IMPACT ACCOUNTING
3rd quarter Independent consulting, mainly international work with both the private sector and institutions like the World Bank, the IFC and many UN agencies. This involved work at the highest levels of Government as well as with people in crisis refugees, drought victims, etc.
MULTI DIMENSION IMPACT ACCOUNTING
4th quarter Still independent but less traveling and now with a focus on rethinking the metrics of management so that the fantastic potential of modern technology can be harnessed to enable faster PROGRESS and much better PERFORMANCE of the very complex global SOCIO-ENVIRO-ECONOMIC system.
MULTI DIMENSION IMPACT ACCOUNTING
So what is the state of play in the 1st quarter of this century?
A lot that is amazingly good:Fantastic technological progress;
Considerable growth of GDP and financial wealth;
Substantial reduction in global poverty and poverty related issues;
Significant improvements in health and education.
MULTI DIMENSION IMPACT ACCOUNTING
But also many things that should be a whole lot better:Social issues of all sorts are emergingand not being addressed;Increasing wealth and income disparities;
Increasing violence, much of it highly organized;
More and more migration and refugee movements;
Disaffection with the political establishment;
Disaffection with the corporate establishment.
MULTI DIMENSION IMPACT ACCOUNTING
Also Environmental issues of all sorts that areemerging and not being addressed;Greenhouse Gas (GHG) emissions and the relatedclimate change;
Land degradation and reduction in ecosystemservice capacity;
Water shortages and water quality degradation;
Air pollution other than GHGs;
Loss of bio-diversity;
MULTI DIMENSION IMPACT ACCOUNTING
Most of our modern quality of life has come about because of amazing technological progress and productivity improvement in the corporate sector.
MULTI DIMENSION IMPACT ACCOUNTING
The future depends more than anything else on decisions that are going to be made by leaders in the corporate sector.
Will they make the right decisions?
MULTI DIMENSION IMPACT ACCOUNTING
The idea of the TRIPLE BOTTOM LINE (TBL)* was a step towards having the corporate world think about PEOPLE and PLANET as well as PROFIT.
* John Elkington is credited with originating thisidea in the 1990s.
MULTI DIMENSION IMPACT ACCOUNTING
The idea of the TRIPLE BOTTOM LINE (TBL) is a beginning and not an end.
MULTI DIMENSION IMPACT ACCOUNTING
TBL (or 3BL) may even be something of a distraction. TBL is simply more information that has a focus on the performance of the organization.
The bigger need is for the performance of the organization to be put in context with the many other stakeholders in the global socio-enviro-economic system.
MULTI DIMENSION IMPACT ACCOUNTING
It should be noted that there is a lot of work being done to improve the measurement and management of IMPACT.
Recently Kering published information abouttheir work on an environmental profit and lossaccount (EP&L). Good work, but too slow andtoo expensive
Reporting initiatives like the GRI (G4) arespreading. There are also the IR initiative(Integrated Reporting), SASB, SROI and manyothers, not to mention a variety of initiativesaround specific issues like carbon footprint.
MULTI DIMENSION IMPACT ACCOUNTING
Most of the better known initiatives are not making much use of the old established double entry feature of conventional accounting which clearly differentiates between STATE and FLOW.
MULTI DIMENSION IMPACT ACCOUNTING
AND also makes it possible to get a lot more useful information from less data
MULTI DIMENSION IMPACT ACCOUNTING
These 3 slides explain the concept of STATE and FLOW
or in accounting terms, the BALANCE SHEET / PROFIT AND LOSS relationship
MULTI DIMENSION IMPACT ACCOUNTING
STEADY STATE
MULTI DIMENSION IMPACT ACCOUNTING
POSITIVE PROGRESS
MULTI DIMENSION IMPACT ACCOUNTING
DETERIORATION OF STATE
These reflect
Steady state;
Positive progress; and
Deterioration of state
MULTI DIMENSION IMPACT ACCOUNTING
No information about the activities is needed in order to understand PROGRESS
only information about changes in STATE
MULTI DIMENSION IMPACT ACCOUNTING
State, Progress and PerformanceState is the Balance Sheet of the entity at amoment in time;
Progress is measured by comparing BalanceSheet changes between the beginning and theend of the period;
Performance is a measurement that relatesProgress to the resources consumed.
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
EFFICIENCY AND EFFECTIVENESS
Cost, Price and ValueClarity about what is cost and what is price isvery important;
A buy/sell transaction takes place at a price;
The buy price becomes the buyer's cost;
There is a lot of data about price;
There is very little accessible data about cost;
Value is a very important idea, but quantified data about value are missing;
Data about cost, price and value ignoreexternalities (impact on people and planet)
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
Money as a measure
Money is fatally flawed as a universal way of measuring progress and performance in the totality of the socio-enviro-economic system.
Money value is derived from exchange transactions the market which gives a result based on supply and demand.
It is a 'result' and not a 'measure'.
MULTI DIMENSION IMPACT ACCOUNTING
In engineering and science, measures are strictly defined and are constant no matter what changes in the surrounding system.
A metre is always a metre.
A kilogram is always a kilogram.
Not so money
MULTI DIMENSION IMPACT ACCOUNTING
Nevertheless ...
Money and conventional money based double entry accounting has been a very effective tool for managing performance in the business setting going back a very long time and today at the core of ALL corporate MIS (management information systems).
MULTI DIMENSION IMPACT ACCOUNTING
Standard costs
Conventional cost accounting often uses a framework of standard costs as a powerful management tool.
The standard is the norm. Variations from the standard are identified and used to implement corrective action.
MULTI DIMENSION IMPACT ACCOUNTING
Summaries AND Drill-Down
Conventional money based accounting enables financial reporting in a simple, understandable way at a summary level.
and on top of the same data enables 'drill-down' to the detail whether it be business unit, department, process or product.
MULTI DIMENSION IMPACT ACCOUNTING
Measurement
Money is universally used to measure business performance as well as wealth and values in capital markets good!
But what measure to use for everything that affects human life and quality of life?
What measure to use to reflect impact on the environment the natural systems upon which everything depends.
MULTI DIMENSION IMPACT ACCOUNTING
Peter Drucker
You manage what you measure
MULTI DIMENSION IMPACT ACCOUNTING
Limited scope
Financial reporting is strictly limited to the financial progress and performance of the reporting entity.
What happens beyond the reporting boundary has no reporting effect on the entity. None.
This is the system and it is inadequate for the modern world where externalities are of consequence.
MULTI DIMENSION IMPACT ACCOUNTING
Ignoring Externalities
The rule in conventional accounting is to ignore externalities.
If there is no money transaction there is nothing which is patently absurd in a world where natural resources are being depleted and the environment degraded by very large scale economic activities.
Not to mention the huge impact business has on society at large people.
MULTI DIMENSION IMPACT ACCOUNTING
But what measure to use for everything that affects human life and quality of life?
What measure to use to reflect impact on the environment the natural systems upon which everything depends including:The Carbon Cycle;
The Water Cycle;
Land use (including ecosystem services);
Various Nutrient Cycles.
MULTI DIMENSION IMPACT ACCOUNTING
Standards for Cost and Value
Conventional cost accounting often uses a framework of standard costs as a management tool.
The standard is the norm. Variations from the standard are identified and used to implement corrective action.
Impact accounting can be based on a system of standard values similar to standard costs.
MULTI DIMENSION IMPACT ACCOUNTING
QuantificationMeasuring facts is a vital step and this mean putting numbers on measurements. This is essential to enable good decision making.Money is used to measure profit and much to do withfinancial capital.
A measure is needed for everything to do with human life and quality of life human capital
Other measures are needed for:The Carbon Cycle;
The Water Cycle;
Land use (including ecosystem services);
Various Nutrient Cycles.
MULTI DIMENSION IMPACT ACCOUNTING
The next slide shows:
Niger Delta oil pollution this pollution from oil industry activities has ruined the lives of most of the indigenous people of the area, wrecked the local fishing resources but at NO COST to the oil companies which report high profits and high stock price valuations.
Externalities MUST be brought into account.
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
SunSunBOPFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunSunEOPFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunPROCESSOIL POLLUTION IN THE NIGER DELTA
The next graphic slide shows:
Beginning of period state BOP
and
End of period state EOP
MULTI DIMENSION IMPACT ACCOUNTING
Also, it shows ...
The makeup of STATE as follows:
Financial Capital
Human Capital
Man Built Capital
Natural Capital and
Sun
The activities between BOP and EOP change ALL these components of state.
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
SunSunBOPFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunSunEOPFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSun
And the next slide shows ...
A typical P&L account representing the activities that are taking place in the period:
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
SunFINANCIAL P&L ACCOUNTFinancial Accounts describe Economic Activity
REVENUESProducts Sold X PriceProducts Bought X PriceBOPEOPEnergy Bought X PriceEmployee BenefitsEmployee PayrollOther expendituresAsset use costsDepreciationFinancial expensesPro-good expendituresTaxationPROFITSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunCOSTS
MULTI DIMENSION IMPACT ACCOUNTING
SunBOPEOPSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunFINANCIAL ACCOUNTSDESCRIBE ECONOMICACTIVITY IN FINANCIALOR MONEY TERMSWHILE COMPLETELYIGNORING IMPACT ON EVERYTHING ELSE
Next 2 slides
The first slide is a simplified representation of the State Flow State idea for ALL elements of the Socio-Enviro-Economic System
The second slide shows what the conventionalmoney metrics measure just a tiny part ofeverything that matters.
MULTI DIMENSION IMPACT ACCOUNTING
* BOP EOP Beginning and End of Period
MULTI DIMENSION IMPACT ACCOUNTING
STATE - BOPSTATE - EOPPERIOD ACTIVITES
MULTI DIMENSION IMPACT ACCOUNTING
STATE - BOPSTATE - EOPPERIOD ACTIVITES
The next slides show how the data architecture has to work in order for IMPACT to be computed in a rigorous and logical way
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
SunFINANCIAL P&L ACCOUNTFinancial Accounts describe Economic Activity
REVENUESProducts Sold X PriceProducts Bought X PriceBOPEOPEnergy Bought X PriceEmployee BenefitsEmployee PayrollOther expendituresAsset use costsDepreciationFinancial expensesPro-good expendituresTaxationPROFITSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunCOSTS
MULTI DIMENSION IMPACT ACCOUNTING
SunADD positive impact not accounted for
BOPEOPREVENUESProducts Sold X PriceVALUE to buyerEqualsHUMAN CAPITAL ADDWages and benefitsWhat value to employee?Pro-good expendituresWhat value to society?TaxationWhat value to society?POSITIVE IMPACT NOTACCOUNTEDFORFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunFINANCIAL P&L ACCOUNTREVENUESProducts Sold X PriceProducts Bought X PriceEnergy Bought X PriceEmployee BenefitsEmployee PayrollOther expendituresAsset use costsDepreciationFinancial expensesPro-good expendituresTaxationPROFITCOSTS
MULTI DIMENSION IMPACT ACCOUNTING
SunDEDUCT negative impact not accounted for
BOPEOPFor products andenergy bought and this processFree use of thecommons andpublic services& infrastructureDegradationof landWater scarcityand degradationAir pollution:Impact on peopleAir pollution:Impact on climateAir pollution:Impact on peopleSolid wasteResourcedepletionEnvironmental DegradationNegativeimpactFile: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
FinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunFINANCIAL P&L ACCOUNTREVENUESProducts Sold X PriceProducts Bought X PriceEnergy Bought X PriceEmployee BenefitsEmployee PayrollOther expendituresAsset use costsDepreciationFinancial expensesPro-good expendituresTaxationPROFITCOSTS
MULTI DIMENSION IMPACT ACCOUNTING
SunACCOUNTING FOR EVERYTHING
BOPEOPREVENUESProducts Sold X PriceVALUE to buyerEqualsHUMAN CAPITAL ADDWages and benefitsWhat value to employee?Pro-good expendituresWhat value to society?TaxationWhat value to society?For products andenergy bought and this processFree use of thecommons andpublic services& infrastructureDegradationof landWater scarcityand degradationAir pollution:Impact on peopleAir pollution:Impact on climateAir pollution:Impact on peopleSolid wasteResourcedepletionEnvironmental DegradationPOSITIVE IMPACT NOTACCOUNTEDFORNegativeimpactFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunFINANCIAL P&L ACCOUNTREVENUESProducts Sold X PriceProducts Bought X PriceEnergy Bought X PriceEmployee BenefitsEmployee PayrollOther expendituresAsset use costsDepreciationFinancial expensesPro-good expendituresTaxationPROFITCOSTS
The next slide shows how the operations of a process:(1) through the money P&L report impact onthe money balance sheet of the operation;and,(2) through the IMPACT accounts report on the impact the operation is having onsociety and the environment.
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
SunBOPEOPSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSun
Financial Accounts describe Financial Impact
Financial CostsFinancial ProfitFinancial RevenuesFinancialBalance Sheet
BOPFinancialBalance Sheet
EOPImpact Accounts reflect Externalities
Balance SheetChangesImpact on InstitutionsImpact on PeopleImpact on SocietyImpact on PhysicalImpact on KnowledgeImpact on ResourcesImpact on EnvironmentImpact on EcoSystemBalance SheetChangesBalance SheetChangesBalance SheetChanges
MULTI DIMENSION IMPACT ACCOUNTING
SunBOPEOPSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSunSunSunFinancialCapitalHumanCapital Man BuiltCapitalNaturalCapitalSun
Financial Accounts describe Financial Impact
Financial CostsFinancial ProfitFinancial RevenuesFinancialBalance Sheet
BOPFinancialBalance Sheet
EOPImpact Accounts reflect Externalities
Balance SheetChangesImpact on InstitutionsImpact on PeopleImpact on SocietyImpact on PhysicalImpact on KnowledgeImpact on ResourcesImpact on EnvironmentImpact on EcoSystemBalance SheetChangesBalance SheetChangesBalance SheetChanges
SUPPLY CHAIN
MULTI DIMENSION IMPACT ACCOUNTING
SUPPLY CHAIN
The MONEY dimension of the supply chain isroutine; however
The IMPACT dimensions of the supply chain are rarely (so far, never) implemented in arigorous manner.
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
PRODUCT the SUPPLY CHAIN
Zero to startCosts this stageProfit this stagePrice this stageZero to startCosts this stageProfit this stagePrice Stage 1FINANCIAL ACCOUNTS FOR EACH STEP OF THE SUPPLY CHAINCost = Price stage 1Costs Stage 2Profit Stage 2
Cum Costs Cum ProfitPrice Stage 2Cost = Price stage 2Costs Stage 3Profit Stage 3
Cum Costs Cum ProfitPrice Stage 3Cost = Price stage 3Costs Stage 4Profit Stage 4
Cum Costs Cum ProfitPrice Stage 4Cost = Price stage 4Costs Stage 5Profit Stage 5
Cum Costs Cum ProfitPrice Stage 5Cost = Price stage 4Costs Stage 5Profit Stage 5
Cum Costs Cum ProfitPrice Stage 5ETC...
MULTI DIMENSION IMPACT ACCOUNTING
MBCNaturalCapitalHumanCapitalPRODUCT the SUPPLY CHAIN
ADJUSTMENTS TO REFLECT IMPACT (EXTERNALITIES)Zero to startCosts this stageProfit this stagePrice this stageZero to startCosts this stageProfit this stagePrice Stage 1FINANCIAL ACCOUNTS EACH STEP OF THE SUPPLY CHAINCost = Price stage 1Costs Stage 2Profit Stage 2
ImpactStage 1ImpactStage 1ImpactStage 1
Cum Costs Cum ProfitPrice Stage 2ImpactStage 2ImpactStage 2ImpactStage 2Cum ImpactCum ImpactCum ImpactCost = Price stage 2Costs Stage 3Profit Stage 3
Cum Costs Cum ProfitPrice Stage 3ImpactStage 3ImpactStage 3ImpactStage 3Cum ImpactCum ImpactCum ImpactFinancialDimension
COMPANY
MULTI DIMENSION IMPACT ACCOUNTING
To manage for profit AND impact we need to apply this framework for analysis in these ways:
for the ORGANIZATION as a whole;
for discrete UNITS of the ORGANIZATION;
for PROCESSES used in transformation;
for PRODUCTS through their life cycle;
for PEOPLE and their quality of life;
for PLACE and how place impacts Human Capitaland interacts with Natural Capital.
MULTI DIMENSION IMPACT ACCOUNTING
It is optimizing for ALL of these things that will result in the best possible socio-enviro-economic system performance and the best Triple Bottom Line results.
MULTI DIMENSION IMPACT ACCOUNTING
Companies, corporate organizations, are the most efficient way to implement transformation.
Applied technology, systems thinking and cost accounting are very highly developed and the results amazing.
MULTI DIMENSION IMPACT ACCOUNTING
In a typical business setting:Profits are maximized.
Company valuations are high.
Products are abundant.
Society has more employment but alsomore unemployment.
Environment is being degraded andthere is resource depletion.
MULTI DIMENSION IMPACT ACCOUNTING
Everything a company does has an impact not only on the profit of the enterprise but also on society (people) and the natural world / environment (planet)
MULTI DIMENSION IMPACT ACCOUNTING
Material Costs
Money profit accounting material costs are a cost to the business and earnings are reduced by high material costs. Supply chain and outsourcing reduce costs and improve profit.
Impact accounting The impacts as materials flow through the supply chain must be brought into account as the material is transformed, and then carried forward in the new products.
MULTI DIMENSION IMPACT ACCOUNTING
Energy Costs
Money profit accounting energy costs are a cost to the business and earnings are reduced by high energy costs.
Impact accounting There are very substantial environmental costs associated with energy from carbon based fuels. There is also the cost of resource depletion. Energy impacts in the supply chain should be accounted for.
MULTI DIMENSION IMPACT ACCOUNTING
Employees and PayrollMoney profit accounting payroll is a cost to the business and earnings are reduced by higher payroll and benefit costs. Higher wages might mean higher productivity and be good for profit.
Impact accounting There is a direct benefit to the employees and their families with higher wages, but in addition there is a multiplier effect in the community as this money is spent.
MULTI DIMENSION IMPACT ACCOUNTING
Advertising and Public RelationsMoney profit accounting these costs ae justified because successful advertising and PR increases revenues and profit.
Impact accounting With impact accounting, the indirect impact of increased sales on society and the environment may be brought in to account. For some people more is better. For the more wealthy the impact of more is almost totally related to more damage to environment.
MULTI DIMENSION IMPACT ACCOUNTING
Workplace conditionsMoney profit accounting low cost, low safety working conditions might result in short term profit maximization but the risks are high especially if the cost of reputational damage is included.
Impact accounting The impact of poor workplace conditions should be accounted for throughout the supply chain and brought into the trucost of the product.
MULTI DIMENSION IMPACT ACCOUNTING
Use of physical assets
Money profit accounting this is usually accounted for by a depreciation charge which reduces profit and provides for deterioration of the physical asset.
Impact accounting There is a not only the physical plant owned by the company but also the public infrastructure that is being used which should be brought into account.
MULTI DIMENSION IMPACT ACCOUNTING
Payment of taxesMoney profit accounting taxation reduces business earnings available to the owners.
Impact accounting There is a benefit to Institutional Capital (i.e. Government) because they have revenues to pay for government programs.
MULTI DIMENSION IMPACT ACCOUNTING
Pro-Good expenditures
Money profit accounting pro-good expenditures reduce business earnings available to owners. In many situations they are done to reduce taxes
Impact accounting There may be a reputational benefit that feeds back to the company. These expenditures can be of great benefit to individuals and society and should be brought into account.
MULTI DIMENSION IMPACT ACCOUNTING
Life Cycle Assessment for Profit
Many business initiatives are 'profitable'. Applying some of the concepts of life cycle assessment (LCA) to profit will clarify what profit is good for society and the environment and what profit is anti-social and doing damage to the environment.
MULTI DIMENSION IMPACT ACCOUNTING
LCA for Profit example:
The oil industry In Saudi Arabia is very profitable low cost oil and relatively high international prices.
The 'profit flow' has enabled expenditures that have built most everything in modern Saudi Arabia and funded important social initiatives like education.
A very positive LCA outcome
MULTI DIMENSION IMPACT ACCOUNTING
Another LCA for Profit example:
Addictive drugs are very profitable. There is a strong demand for the products of the illegal drug trade and profits are high.
Some of this 'profit flow' is used to ensure that addiction continues and to ensure that the authorities lose in their attempts to control and eliminate the trade.
A very negative LCA outcome
MULTI DIMENSION IMPACT ACCOUNTING
Product design
Money profit accounting Good product design can enable higher prices and reduce costs. This is good for profit.
Impact accounting Good product design can also reduce negative impact throughout the supply chain, use and post use waste chain.
This is important.
MULTI DIMENSION IMPACT ACCOUNTING
Process
Money profit accounting The process used in transformation is a determinant of cost and therefore has an impact on profit.
Impact accounting Good performance in processes enables lower impact on resource depletion and environmental degradation.
This is important.
MULTI DIMENSION IMPACT ACCOUNTING
Customer
Money profit accounting The customer buys product which creates revenue which is a component of profit. More sales made to customers the better
Impact accounting People need some goods to satisfy needs. Quality of life is not merely about more 'stuff'. Some customers are short of both money and the things they need, but many customers with money have excess stuff and are simply adding to WASTE
MULTI DIMENSION IMPACT ACCOUNTING
Informed customer in controlMoney profit accounting Advertising is used to inform the customer in a manner that is totally related to selling the company's products. The more the better. Good for profit.
Impact accounting When customers are well informed about products and the IMPACT that products have on their own quality of life and on everything else, it is customers that will be in control and make the difference.
MULTI DIMENSION IMPACT ACCOUNTING
PEOPLE
MULTI DIMENSION IMPACT ACCOUNTING
PEOPLE
In the end, progress and performance should be evaluated based on the impact economic activity has had on people (society) together with the long term impact on the environment (planet).
MULTI DIMENSION IMPACT ACCOUNTING
People
Money profit accounting There is money profit accounting for person. To a great extent money and wealth have become proxies for success.
Impact accounting With impact accounting for the person, there is more clarity about the performance of the person and their role in making society and the world a better place.
MULTI DIMENSION IMPACT ACCOUNTING
PLACE
MULTI DIMENSION IMPACT ACCOUNTING
PLACE
Everything happens in a place. Impact accounting has a special relevance in a place. The place is always there. Bad actors can be identified and held accountable. Trends can be observed over time.
MULTI DIMENSION IMPACT ACCOUNTING
Place
Money profit accounting There is no money profit accounting for place. There is merely an assumption that economic activity is good for the place, no matter what.
Impact accounting The place is the best way to organize impact accounting about everything. It is where the idea of PLANET has some reality. There can be accountability for all actors in the socio-enviro-economic system and impact on the environment observed.
MULTI DIMENSION IMPACT ACCOUNTING
Most governments around the world are short of money
There is a revenue problem with too low taxes, too many loopholes and simply failure to pay taxes.
There is also an expenditure problem with government performance extremely inefficient.
MULTI DIMENSION IMPACT ACCOUNTING
QUANTIFICATIONANDSTANDARD VALUES
MULTI DIMENSION IMPACT ACCOUNTING
Money
Money is an important metric but seriously flawed in many ways.
It is too entrenched to be changed very much in the short run but it must be complemented with other units of measure (UOM).
MULTI DIMENSION IMPACT ACCOUNTING
UOM for Life and Quality of Life
A key characteristic of this UOM must be that a life has value no matter who the person is.
It is too entrenched to be changed very much in the short run but it must be complemented with other units of measure (UOM).
MULTI DIMENSION IMPACT ACCOUNTING
Moving forward Request for collaboration
Money is part of a complex socio-enviro-economic system. While it works it does not work as well as it should, nor as well as it could. The work of MDIA is to enable this complex system to work better.
MDIA needs to be a team effort. Join in and help to make the world a better place. Please get in touch.
Peter Burgess [email protected]
MULTI DIMENSION IMPACT ACCOUNTING
Thank you ...
A big thank you to the Madinah Institute for Leadership and Entrepreneurship (MILE) for hosting this webinar.
Some links and contact information:
Peter Burgess [email protected]
Peter Burgess LinkedIn profilehttps://www.linkedin.com/in/peterburgess1
Link to TrueValueMetrics.org websitehttp://www.truevaluemetrics.org/
Link to navigation for MDIA slidesetshttp://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0200-Burgess-p3-Slidesets
MULTI DIMENSION IMPACT ACCOUNTING