The Global SOCIO-ENVIRO-ECONOMIC System is a complex system and a significant challenge to manage in an appropriate way. While there has been progress in improving quality of life for some people using the metrics of money, it has been done at the expense of some segments of society and at a huge cost to the environment , neither of which are part of the money metrics framework.
2. CONTEXT
This slideset is a Work-in-Progress
and will be updated from time to time.
It is part of a series that aims to
describe the extremely complex
socio-enviro-economic system that
we live in, and how better metrics will
make this system work better.
TRUE VALUE ACCOUNTING
4. Sustainable progress requires
decision making that optimizes for all
the segments of the system.
Metrics to optimize for company profit
performance and capital market value
ignoring externalities are not enough!
MULTI DIMENSION IMPACT ACCOUNTING
5. The next slide shows:
PEOPLE
MORE THAN 7 BILLION NOW AND GROWING
MULTI DIMENSION IMPACT ACCOUNTING
16. HISTORY …
HOW THE THREE SEGMENTS HAVE
CHANGED OVER TIME
MULTI DIMENSION IMPACT ACCOUNTING
17. YELLOW:
The PEOPLE piece … Human Capital (NC)
DIRTY BROWN:
The ECONOMIC piece … Man Built Capital (MBC)
GREEN:
NATURE, ENVIRONMENT … Natural Capital (NC)
MULTI DIMENSION IMPACT ACCOUNTING
COLOR KEY
18. AT THE START THERE WERE FEW
PEOPLE, LITTLE MAN BUILT CAPITAL
AND PLENTY OF UNEXPLOITED
NATURAL CAPITAL
MULTI DIMENSION IMPACT ACCOUNTING
29. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPSocio-Enviro-Economic System
30. To manage change there
have to be METRICS for
ALL the components of
the system.
MULTI DIMENSION IMPACT ACCOUNTING
31. This is the background for
MULTI DIMENSION
IMPACT ACCOUNTING
(MDIA)
MULTI DIMENSION IMPACT ACCOUNTING
32. MDIA tracks impact on
ALL* the components of
the system …
MULTI DIMENSION IMPACT ACCOUNTING
* Not just the money based financial metrics
33. MULTI DIMENSION IMPACT ACCOUNTING
Fundamentals of the Socio-Enviro-Economic System
Human
Capital
Man Built
Capital
Natural
Capital
34. MULTI DIMENSION IMPACT ACCOUNTING
Fundamentals of the Socio-Enviro-Economic System
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Man Built
Capital
Natural
Capital
Human
Capital
Split out Financial
Capital from other
components of
Man Built Capital
35. MULTI DIMENSION IMPACT ACCOUNTING
Fundamentals of the Socio-Enviro-Economic System
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSun
Man Built
Capital
Natural
Capital
Sun
Human
Capital
Add Sun … the
source of all energy
Split out Financial
Capital from other
components of
Man Built Capital
36. MULTI DIMENSION IMPACT ACCOUNTING
Fundamentals of the Socio-Enviro-Economic System
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
Man Built
Capital
Natural
Capital
Sun
Human
Capital
Add Sun … the
source of all energy
Split out Financial
Capital from other
components of
Man Built Capital
Reorder because
Financial Capital
metrics exist
37. MULTI DIMENSION IMPACT ACCOUNTING
Sun
Fundamentals of the Socio-Enviro-Economic SystemBOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOP
BOP = Beginning of Period STATE
EOP = End of Period STATE
PROGRESS is Change in STATE during the period.
ALL the elements of the BOP and EOP
STATES need to be quantified
38. MULTI DIMENSION IMPACT ACCOUNTING
Sun
Fundamentals of the Socio-Enviro-Economic SystemBOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOP
Any number of activities may take place during a period.
They may be extremely complex and interconnected, but
PROGRESS is still measured by CHANGE in STATE.
39. MULTI DIMENSION IMPACT ACCOUNTING
Sun
Fundamentals of the Socio-Enviro-Economic SystemBOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOP
PERFORMANCE is measured by relating PROGRESS
achieved with the RESOURCES consumed.
How much is Human Capital increased and how much
are Financial, Man Built and Natural Capital diminished
40. MULTI DIMENSION IMPACT ACCOUNTING
Sun
Fundamentals of the Socio-Enviro-Economic SystemBOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
Financial Capital … virtual masquerading as reality.
Human Capital … PEOPLE … are complex, because we
originated through nature, but our inventions are simple.
Man Built Capital is so simplistic compared to Natural
Capital. While in some part amazing, it is very crude
compared to what is the norm in Natural Capital.
In the end it is Natural Capital that is going to determine
everything. NC is infinitely complex and resilient and will
outlast everything Man Built … and People are unlikely to
survive in a future mass extinction that is quite certain.
The source of ALL energy to drive the system
EOP
41. MDIA builds on double
entry and the concept of
state and flow …
MULTI DIMENSION IMPACT ACCOUNTING
42. 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 …
46. These reflect …
● Steady state;
● Positive progress; and
● Deterioration of state
MULTI DIMENSION IMPACT ACCOUNTING
47. No information about activities is needed in
order to measure PROGRESS
… only measures about changes in STATE
MULTI DIMENSION IMPACT ACCOUNTING
48. State, Progress and Performance
● State is the Balance Sheet of the entity at a
moment in time;
● Progress is measured by comparing Balance
Sheet changes between the beginning and the
end of the period;
● Performance is a measurement that relates
Progress to the resources consumed.
MULTI DIMENSION IMPACT ACCOUNTING
50. MULTI DIMENSION IMPACT ACCOUNTING
Sun
STATE … Beginning of Period - BOP STATE … End of Period - EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
FLOWS*
ACTIVITIES*
PROCESSES*
* Any amount of complexity … STATE remains simple
51. MULTI DIMENSION IMPACT ACCOUNTING
Sun
Fundamentals of the Socio-Enviro-Economic SystemBOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
Financial Capital … virtual masquerading as reality.
Human Capital … PEOPLE … are complex, because we
originated through nature, but our inventions are simple.
Man Built Capital is so simplistic compared to Natural
Capital. While in some part amazing, it is very crude
compared to what is the norm in Natural Capital.
In the end it is Natural Capital that is going to determine
everything. NC is infinitely complex and resilient and will
outlast everything Man Built … and People are unlikely to
survive in a future mass extinction that is quite certain.
The source of ALL energy to drive the system
EOP
52. A fundamental reality …
The origin of all FINANCIAL WEALTH
has been NATURAL CAPITAL facilitated
by a lot of human energy and man built
knowledge, structures and systems.
MULTI DIMENSION IMPACT ACCOUNTING
53. MULTI DIMENSION IMPACT ACCOUNTING
ELEMENTS OF THE SYSTEM by SEGMENT
Financial
Capital
Human
Capital
Man Built
Structures
& Systems
Natural
Capital
Sun
Financial
Capital
Human
Capital
Man Built
Structures & Systems
Natural
Capital
Money FoodGovernmentNature (life)
Sun
Nature (life)
Capital Market
Value
Water
Laws. RulesNature (life)Land
Shelter
InfrastructureWater Clothes
IndustryNature (life)Air
Health
MiningEcoservices
Education
Energy Skills
Waste
RecreationRetail
Culture
Logistics Religion
Knowledge
Technology
Security
Energy
Mobility
Profit
54. The system is complex …
MULTI DIMENSION IMPACT ACCOUNTING
55. MULTI DIMENSION IMPACT ACCOUNTING
Sun
Complex system … competing agendas
Sun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
56. Managing in a complex
system is a challenge …
The best practice it to drive decision
making with the best / quickest data
about progress and performance and at
the most granular level … this is the
essence of the MDIA data architecture.
MULTI DIMENSION IMPACT ACCOUNTING
57. REMINDER
This slideset is A WORK-IN-PROGRESS. It will be
upgraded periodically. It is part of a series of more than
100 slidesets. Navigation to these is available here:
FEEDBACK is welcome. Please email to Peter Burgess …
peterbnyc@gmail.com … with a catchy phrase in the
subject line so that it gets attention, and please identify
the specific slideset(s) involved.
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3
TRUE VALUE ACCOUNTING
58. THANK YOU
Some links and contact information:
Email Peter Burgess … peterbnyc@gmail.com
Peter Burgess LinkedIn profile
https://www.linkedin.com/in/peterburgess1
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TRUE VALUE ACCOUNTING