mdia p3-03-perspectives-150420

MULTI DIMENSION IMPACT ACCOUNTING

File: MDIA-p3-01-PERSPECTIVES-150420.odp Peter Burgess (c) All rights reserved

MDIAPERSPECTIVES

TRIPLE BOTTOM LINE (TBL)This idea of the TBL is that a company should not only be looking at the 'profit' performance but also impact on people and planet:● PROFIT;● PEOPLE;● PLANET.

This is good, but it is only the perspective of the ORGANIZATION.


PERSPECTIVESA unique object can look very different depending on the position of the observer.

Multiple perspectives are essential:● a PEOPLE perspective;● an ORGANIZATION perspective;● a PRODUCT perspective; ● a PLACE perspective;● etc.


PERSPECTIVESThe next slide is very simplistic … but the top view of this solid object has the object looking like an ellipse while the side views show the object as a rectangle with different lengths depending on which side is being observed.



SIDE VIEW

TOP VIEW

SIDE VIEW

The next 4 slides● Graphic with PEOPLE at the center● With ORGANIZATION at the center;● With PRODUCT at the center; ● With PLACE at the center.



Putting PEOPLE at the Center


Putting ORGANIZATION at the Center


Putting PRODUCT at the Center


Putting PLACE at the Center

THE CHALLENGEThe challenge is to have a data system that is meaningful from every perspective of the socio-enviro-economic-system.

Hence, the need for a Multi Dimension and Multi Perspective data framework.


THE TVM-MDIA SOLUTION● MDIA uses concepts from conventional double entry accounting where there are both Balance Sheet and Profit and Loss Accounts.

● The building block for MDIA is similar: … State1-Flow-Process-Flow-State2 that can be applied to every economic activity in any setting anywhere.


THE METRICS SOLUTION (cont.)

● This MDIA building block will aggregate to enable summary reporting; and

● enable drill down to activities that are relevant at any and all subsidiary levels down to the individual level.


SOCIO-ENVIRO-ECONOMIC● SOCIO is a PEOPLE perspective. Everything should result in people progressing.

● ENVIRO is about NATURE and the ultimate source of everything that people can ever have; and,

● ECONOMIC is the man built structures and systems (MBSS) that have been built to enable progress.


YELLOW: The PEOPLE piece … Human Capital (NC)

DIRTY BROWN: The ECONOMIC piece … Man Built Capital (MBC)

GREEN:NATURE, ENVIRONMENT … Natural Capital (NC)


COLOR KEY

Trajectory to disaster!

This must be changed to give this …


PEOPLE progressing

MBC* efficient

PLANET healthy


* MBC – Man Built Capital

SO …What is the PEOPLE perspective?What is the ORGANIZATION perspective?What is the PRODUCT perspective? What is the PROCESS perspective?What is the PLACE perspective?

How do these all come together as a single coherent system?


How must the components of MBC be changed to get best possible results?

How can PEOPLE make better decisions?


Part of the answer is BETTER METRICS


The next slide shows the components of the system by segment



ELEMENTS OF THE SYSTEM by SEGMENT

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

MoneyFood Government Nature (life)

Sun

Nature (life)

Capital Market Value

WaterLaws. Rules Nature (life)Land

ShelterInfrastructure WaterClothes

Industry Nature (life)AirHealth

Mining EcoservicesEducation

EnergySkillsWaste

Recreation RetailCulture

LogisticsReligionKnowledge

Technology

Security

Energy

Mobility

Profit

Note that FINANCIAL CAPITAL has been separated out from the other parts of the MBC segment

Note also the addition of SUN to enable metrics about renewables


THE NEXT SLIDE SHOWS:

(1) … STATE at the Beginning of the Period (BOP)

(2) … STATE at the End of Period (EOP)

(3) … a financial profit and loss about the economic activity or flow that links the two states



Sun

FINANCIAL P&L ACCOUNT

Financial Accounts describe Economic Activity

REVENUESProducts Sold X Price

Products Bought X Price

BOP EOP

Energy Bought X Price

Employee Benefits

Employee Payroll

Other expenditures

Asset use costs

Depreciation

Financial expenses

Pro-good expenditures

Taxation

PROFITSun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun SunSun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun

COSTS

But the financial accounts are only about money transactions, nothing about impact on people and planet and externalities ignored!

Financial accounts are mostly from the perspective of an organization and for investors.



Sun

BOP EOP

Sun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun SunSun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun


Financial Costs

Financial Profit

Financial Revenues

FinancialBalance

Sheet

BOP

FinancialBalance

Sheet

EOP


Sun

BOP EOP

Sun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun SunSun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun

FINANCIAL ACCOUNTSDESCRIBE ECONOMIC

ACTIVITY IN FINANCIAL OR MONEY TERMS

WHILE COMPLETELYIGNORING IMPACT

ON EVERYTHING ELSE



Sun





BOP EOP


Employee Benefits

Employee Payroll

Other expenditures

Asset use costs

Depreciation

Financial expenses


Taxation

PROFITSun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun SunSun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun

COSTS


Sun

ADD positive impact not accounted forBOP EOP


VALUE to buyerEquals

HUMAN CAPITAL ADD

Wages and benefitsWhat value to

employee?

Pro-good expendituresWhat value to society?

TaxationWhat value to society?

POSITIVE IMPACT NOTACCOUNTED

FOR

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun Sun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun





Employee Benefits

Employee Payroll

Other expenditures

Asset use costs

Depreciation

Financial expenses


Taxation

PROFIT

COSTS


Sun

DEDUCT negative impact not accounted forBOP EOP

For products andenergy bought

and this process

Free use of thecommons andpublic services& infrastructure

Degradationof land

Water scarcityand degradationAir pollution:

Impact on peopleAir pollution:

Impact on climate

Air pollution:Impact on people

Solid waste

Resourcedepletion

Environmental Degradation

Negativeimpact

File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun Sun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun





Employee Benefits

Employee Payroll

Other expenditures

Asset use costs

Depreciation

Financial expenses


Taxation

PROFIT

COSTS


Sun

ACCOUNTING FOR EVERYTHINGBOP EOP


VALUE to buyerEquals

HUMAN CAPITAL ADD

Wages and benefitsWhat value to

employee?

Pro-good expendituresWhat value to society?

TaxationWhat value to society?

For products andenergy bought

and this process

Free use of thecommons andpublic services& infrastructure

Degradationof land

Water scarcityand degradationAir pollution:

Impact on peopleAir pollution:

Impact on climate

Air pollution:Impact on people

Solid waste

Resourcedepletion

Environmental Degradation

POSITIVE IMPACT NOTACCOUNTED

FOR

Negativeimpact

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun Sun

FinancialCapital

HumanCapital

Man BuiltCapital

NaturalCapital

Sun





Employee Benefits

Employee Payroll

Other expenditures

Asset use costs

Depreciation

Financial expenses


Taxation

PROFIT

COSTS

This framework needs to be applied to everything: ● for ORGANIZATIONS (PROFIT);● for PEOPLE;● for PLACE … and ENVIRONMENT;● for PRODUCT.

Also: ● for SUPPLY CHAIN;● for PROCESS.


This framework needs to be applied as a ORGANIZATION and investor view:

(1) … STATE (balance sheet) at the Beginning of the Period (BOP)

(2) … STATE (balance sheet ) at the End of the Period (EOP)

(3) … all the activities or flows that had impact and changed the state (balance sheet) during the period


This framework needs to be applied as a PEOPLE perspective:

(1) … STATE (quality of life) at the Beginning of the Period (BOP)

(2) … STATE (quality of life) at the End of the Period (EOP)

(3) … all the activities or flows that had impact and changed the state (quality of life) during the period


This framework needs to be applied as a PLACE perspective:

(1) … state of the place at the Beginning of the Period (BOP)

(2) … state of the place at the End of the Period (EOP)

(3) … all the activities or flows that had impact and changed the state of the place during the period


FOR A PRODUCT

PRODUCT, that is goods and services, is the link that connects everything AND helps deliver Quality of Life for PEOPLE

A product flows through a life cycle that includes supply chain, use, and post use waste chain.

In the process there is impact on people, place and organization … and there is impact on people, profit and planet.


FOR SUPPLY CHAIN

SUPPLY CHAIN is an integral part of the history of a PRODUCT.

A product flows through a life cycle that includes supply chain, use, and post use waste chain.

Every stage of the supply chain should be managed, and for that there have to be metrics for each of the stages of the supply chain.

Price, cost and profit must be supplemented by metrics for good impact and bad impact at each stage.


FOR PROCESS

PROCESS is an integral part of each stage of the SUPPLY CHAIN.

Efficiency and effectiveness of PROCESSES determine the progress and performance of the socio-enviro-economic system.

Technology has been used to reduce the cost of processes, but less effort has been used to improve the impact of process on PEOPLE and PLANET.



The TrueValueMetrics website

http://truevaluemetrics.org/

mdia p3-03-perspectives-150420

Data & Analytics

people perspective

organization perspective

product perspective

place perspective

profit people planet

tvmmdia solution mdia

mbc man

capital mbc green