SIZE MATTERS 4 ... PERSPECTIVES A workshop at MIT to link mathematics with the realities of a very complex global integrated socio-enviro-economic system that has been very badly served by money as a metric and a dangerously simplified financial system.

1. TVA-p3-01-SIZE MATTERS-4-160220.odp Peter Burgess (c) All rights reserved
SIZE MATTERS
4- PERSPECTIVES
TRUE VALUE ACCOUNTING

2. TVA-p3-01-SIZE MATTERS-4-160124.odp Peter Burgess (c) All rights reserved
PERSPECTIVESMEASURING PROGRESS AND PERFORMANCE OF
THE SOCIO-ENVIO-ECONOMIC SYSTEM FROM
EVERY POINT OF VIEW
TRUE VALUE ACCOUNTING

3. 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
enable better metrics for the complex
socio-enviro-economic system that
we all live in. Metrics are powerful,
but they must be the right metrics.
TRUE VALUE ACCOUNTING

4. PERSPECTIVE ...
An object looks very different
depending on the position of the
observer. But it is the same object
nevertheless.
MULTI DIMENSION IMPACT ACCOUNTING

5. MULTI DIMENSION IMPACT ACCOUNTING
PERSPECTIVE

6. In the complex global socio-enviro-
economic system, multiple
PERSPECTIVES are essential ...
One perspective … that of the
business organization … is not
enough, but that is really all there is.
MULTI DIMENSION IMPACT ACCOUNTING

7. Multiple PERSPECTIVES are
essential, that of:
● the ORGANIZATION;
● PEOPLE;
● PROCESS;
● PRODUCT;
● PLACE;
● Natural Capital at the local level; and,
● Natural Capital at the global level.
MULTI DIMENSION IMPACT ACCOUNTING

8. TRIPLE BOTTOM LINE (TBL)
The idea of the Triple Bottom Line …
PROFIT, PEOPLE and PLANET has been
around since the 1990s*.
This is good, but while it broadens the
scope of the metrics it remains focused
on the performance and perspective of
the ORGANIZATION.
MULTI DIMENSION IMPACT ACCOUNTING
* When it was first described by John Elkington

9. THE CHALLENGE
The challenge is to have a data system
that is meaningful from every perspective
of the socio-enviro-economic-system.
Hence, the need for a data framework that
has Multi Dimensions and enables Multi
Perspectives
MULTI DIMENSION IMPACT ACCOUNTING

10. SOLUTION: True Value Accounting
TVA uses concepts from conventional
double entry accounting where there are
both Balance Sheet and Profit and Loss
Accounts.
The building block for TVA is similar …
State1 → Flow → Process → Flow → State2
… a scheme that can be applied to every
economic activity in any setting anywhere.
MULTI DIMENSION IMPACT ACCOUNTING

11. This TVA building block enables:
● Aggregation to enable summary
reporting; and
● Drill down to activities that are
relevant at every subsidiary
level down to the individual level.
MULTI DIMENSION IMPACT ACCOUNTING

12. SO …
How do we go from an economy where there is
a singular focus on PROFIT to something that
embraces ALL the dimensions of the global
complex socio-enviro-economic system?
How do these all come together as a single
coherent system?
MULTI DIMENSION IMPACT ACCOUNTING

13. 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?
What impacts on NATURAL CAPITAL?
How do these all come together as a single
coherent system?
MULTI DIMENSION IMPACT ACCOUNTING

14. How must the components of Man Built
Capital (MBC) be changed to get best
possible results?
How can people in organizations
collectively make better decisions?
How can people buying products make
better decisions?
MULTI DIMENSION IMPACT ACCOUNTING

15. Part of the answer is
BETTER METRICS
MULTI DIMENSION IMPACT ACCOUNTING

16. TVA tracks impact on
ALL* the components of
the system …
MULTI DIMENSION IMPACT ACCOUNTING
* Not just the money based financial metrics

17. MULTI DIMENSION IMPACT ACCOUNTING
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
MoneyFood Government Nature (life)
Sun
Nature (life)
Capital Market
Value
Water
Laws. Rules Nature (life)Land
Shelter
Infrastructure WaterClothes
Industry Nature (life)Air
Health
Mining Ecoservices
Education
EnergySkills
Waste
Recreation Retail
Culture
LogisticsReligion
Knowledge
Technology
Security
Energy
Mobility
Profit
More Elements of the MDIA Framework

18. 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
MULTI DIMENSION IMPACT ACCOUNTING

19. MULTI DIMENSION IMPACT ACCOUNTING
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
Making MDIA coherent with Socio-Enviro-Economic System
Human
Capital

20. Things change over time …
STATE* changes
MULTI DIMENSION IMPACT ACCOUNTING
* Think the 'State of the Union' message that the President
of the United States delivers each year to Congress

21. MULTI DIMENSION IMPACT ACCOUNTING
There must be clarity about STATE and
FLOW … or in accounting terms, the
BALANCE SHEET and the PROFIT AND
LOSS ACCOUNT.
PROGRESS is change in STATE …

22. MULTI DIMENSION IMPACT ACCOUNTING
POSITIVE PROGRESS

23. Integrate this idea into the multi
capital TVA framework …
MULTI DIMENSION IMPACT ACCOUNTING

24. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
Economic Activity
or
Process
Transformation --->

25. Practically every organization on the
planet has financial accounts that
record money transactions and
report money related performance …
MULTI DIMENSION IMPACT ACCOUNTING

26. Financial accounts describe
economic activity in money or
financial terms while completely
ignoring impact on everything else
MULTI DIMENSION IMPACT ACCOUNTING

27. MULTI DIMENSION IMPACT ACCOUNTING
FINANCIAL
P&L ACCOUNT
Financial Accounts describe Economic Activity
REVENUES
Products Sold X Price
Products Bought X Price
Energy Bought X Price
Employee Benefits
Employee Payroll
Other expenditures
Asset use costs
Depreciation
Financial expenses
Pro-good expenditures
Taxation
PROFIT
COSTS

28. The next slides show how IMPACT
must be incorporated into the data
architecture …
MULTI DIMENSION IMPACT ACCOUNTING

29. MULTI DIMENSION IMPACT ACCOUNTING
ADD positive impact not accounted for
REVENUES
Products Sold X Price
VALUE to buyer
Equals
HUMAN CAPITAL ADD
Wages and benefits
What value to
employee?
Pro-good expenditures
What value to society?
Taxation
What value to society?
POSITIVE
IMPACT NOT
ACCOUNTED
FOR
FINANCIAL
P&L ACCOUNT
REVENUES
Products Sold X Price
Products Bought X Price
Energy Bought X Price
Employee Benefits
Employee Payroll
Other expenditures
Asset use costs
Depreciation
Financial expenses
Pro-good expenditures
Taxation
PROFIT
COSTS

30. MULTI DIMENSION IMPACT ACCOUNTING
DEDUCT negative impact not accounted for
For products and
energy bought
and this process
Free use of the
commons and
public services
& infrastructure
Degradation
of land
Water scarcity
and degradation
Air pollution:
Impact on people
Air pollution:
Impact on climate
Air pollution:
Impact on people
Solid waste
Resource
depletion
Environmental
Degradation
Negative
impact
FINANCIAL
P&L ACCOUNT
REVENUES
Products Sold X Price
Products Bought X Price
Energy Bought X Price
Employee Benefits
Employee Payroll
Other expenditures
Asset use costs
Depreciation
Financial expenses
Pro-good expenditures
Taxation
PROFIT
COSTS

31. MULTI DIMENSION IMPACT ACCOUNTING
ACCOUNTING FOR EVERYTHING
REVENUES
Products Sold X Price
VALUE to buyer
Equals
HUMAN CAPITAL ADD
Wages and benefits
What value to
employee?
Pro-good expenditures
What value to society?
Taxation
What value to society?
For products and
energy bought
and this process
Free use of the
commons and
public services
& infrastructure
Degradation
of land
Water scarcity
and degradation
Air pollution:
Impact on people
Air pollution:
Impact on climate
Air pollution:
Impact on people
Solid waste
Resource
depletion
Environmental
Degradation
POSITIVE
IMPACT NOT
ACCOUNTED
FOR
Negative
impact
FINANCIAL
P&L ACCOUNT
REVENUES
Products Sold X Price
Products Bought X Price
Energy Bought X Price
Employee Benefits
Employee Payroll
Other expenditures
Asset use costs
Depreciation
Financial expenses
Pro-good expenditures
Taxation
PROFIT
COSTS

32. Because of the way double entry
accounting works … the operating
accounts (P&L) for an economic
activity or process result in changes
to the Balance Sheet of the entity …
MULTI DIMENSION IMPACT ACCOUNTING

33. MULTI DIMENSION IMPACT ACCOUNTING
Financial Accounts describe Economic Activity
Financial Costs
Financial Profit
Financial Revenues
Financial
Balance
Sheet
BOP
Financial
Balance
Sheet
EOP

34. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
Financial Accounts describe Economic Activity
Financial Costs
Financial Profit
Financial Revenues
Financial
Balance
Sheet
BOP
Financial
Balance
Sheet
EOP

35. Economic operations also have
IMPACTS on human capital (people),
on man built capital (MBC) and
natural capital (environment / planet)
… but these are outside the
'reporting boundary' for the entity.
MULTI DIMENSION IMPACT ACCOUNTING

36. MULTI DIMENSION IMPACT ACCOUNTING
Financial Accounts describe Financial Impact
Financial Costs
Financial Profit
Financial Revenues
Financial
Balance
Sheet
BOP
Financial
Balance
Sheet
EOP
Impact Accounts reflect Externalities
Balance
Sheet
Changes
Impact on Institutions
Impact on People
Impact on Society
Impact on Physical
Impact on Knowledge
Impact on Resources
Impact on Environment
Impact on EcoSystem
Balance
Sheet
Changes
Balance
Sheet
Changes
Balance
Sheet
Changes

37. Integrated accounting for IMPACT
requires the reporting boundary to
extend to all the extremities of the
system in one coherent system as
shown in this next graphic …
MULTI DIMENSION IMPACT ACCOUNTING

38. MULTI DIMENSION IMPACT ACCOUNTING
Financial Accounts describe Financial Impact
Financial Costs
Financial Profit
Financial Revenues
Financial
Balance
Sheet
BOP
Financial
Balance
Sheet
EOP
Impact Accounts reflect Externalities
Balance
Sheet
Changes
Impact on Institutions
Impact on People
Impact on Society
Impact on Physical
Impact on Knowledge
Impact on Resources
Impact on Environment
Impact on EcoSystem
Balance
Sheet
Changes
Balance
Sheet
Changes
Balance
Sheet
Changes

39. A world with just one economic
activity will look like this …
MULTI DIMENSION IMPACT ACCOUNTING

40. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
Financial Accounts describe Financial Impact
Financial Costs
Financial Profit
Financial Revenues
Financial
Balance
Sheet
BOP
Financial
Balance
Sheet
EOP
Impact Accounts reflect Externalities
Balance
Sheet
Changes
Impact on Institutions
Impact on People
Impact on Society
Impact on Physical
Impact on Knowledge
Impact on Resources
Impact on Environment
Impact on EcoSystem
Balance
Sheet
Changes
Balance
Sheet
Changes
Balance
Sheet
Changes

41. Or like this …
MULTI DIMENSION IMPACT ACCOUNTING

42. MULTI DIMENSION IMPACT ACCOUNTING
Sun
Every single PROCESS has IMPACT on EVERYTHINGBOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun

43. MULTI DIMENSION IMPACT ACCOUNTING
Financial Accounts describe Financial Impact
Financial Costs
Financial Profit
Financial Revenues
Financial
Balance
Sheet
BOP
Financial
Balance
Sheet
EOP
Impact Accounts reflect Externalities
Balance
Sheet
Changes
Impact on Institutions
Impact on People
Impact on Society
Impact on Physical
Impact on Knowledge
Impact on Resources
Impact on Environment
Impact on EcoSystem
Balance
Sheet
Changes
Balance
Sheet
Changes
Balance
Sheet
Changes
Where this ... represents this ...

44. The ORGANIZATION perspective ...
The operations of an organization are the
aggregation of all the economic activities or
operations of the organization. For money
accounting there are established rules how this
consolidation is done. Similar rules are needed
for the aggregation of impact for the organization.
MULTI DIMENSION IMPACT ACCOUNTING

45. A world with no economic activity is
represented by this …
MULTI DIMENSION IMPACT ACCOUNTING

46. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun

47. SO …
the ORGANIZATION is represented in
this way …
MULTI DIMENSION IMPACT ACCOUNTING

48. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
ORGANIZATION
with one operation

49. An organization with many
operations looks like this …
MULTI DIMENSION IMPACT ACCOUNTING

50. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
ORGANIZATION
with many operations

51. And a PRODUCT aggregates in a
very similar way …
MULTI DIMENSION IMPACT ACCOUNTING

52. MULTI DIMENSION IMPACT ACCOUNTING
Sun
PRODUCT made by one PROCESSBOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun

53. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
PRODUCT
PRODUCT … the result of a SUPPLY CHAIN … with
series of PROCESSES

54. The money accounting presentation
of the SUPPLY CHAIN may have this
form …
MULTI DIMENSION IMPACT ACCOUNTING

55. MULTI DIMENSION IMPACT ACCOUNTING
MBC
Natural
Capital
Human
Capital
PRODUCT … the SUPPLY CHAIN
EXTERNALITIES IGNORED
Zero to start
Costs this stage
Profit this stage
Price this stage
Zero to start
Costs this stage
Profit this stage
Price Stage 1
FINANCIAL ACCOUNTS EACH STEP OF THE SUPPLY CHAIN
Cost =
Price stage 1
Costs Stage 2
Profit Stage 2
Cum Costs
Cum Profit
Price Stage 2
Cost =
Price stage 2
Costs Stage 3
Profit Stage 3
Cum Costs
Cum Profit
Price Stage 3
Financial
Dimension
ETC...
The supply chain optimizes through the interaction of
price for the buyer and profit for the seller … impact
on externalities is not part of the equation.

56. … and the IMPACT ACCOUNTING for
the SUPPLY CHAIN needs to look
something like this …
MULTI DIMENSION IMPACT ACCOUNTING

57. MULTI DIMENSION IMPACT ACCOUNTING
MBSS
Natural
Capital
Human
Capital
PRODUCT … the SUPPLY CHAIN
ADJUSTMENTS TO REFLECT IMPACT (EXTERNALITIES)
Zero to start
Costs this stage
Profit this stage
Price this stage
Zero to start
Costs this stage
Profit this stage
Price Stage 1
FINANCIAL ACCOUNTS EACH STEP OF THE SUPPLY CHAIN
Cost =
Price stage 1
Costs Stage 2
Profit Stage 2
Impact
Stage 1
Impact
Stage 1
Impact
Stage 1
Cum Costs
Cum Profit
Price Stage 2
Impact
Stage 2
Impact
Stage 2
Impact
Stage 2
Cum
Impact
Cum
Impact
Cum
Impact
Cost =
Price stage 2
Costs Stage 3
Profit Stage 3
Cum Costs
Cum Profit
Price Stage 3
Impact
Stage 3
Impact
Stage 3
Impact
Stage 3
Cum
Impact
Cum
Impact
Cum
Impact
Financial
Dimension

58. The progress and performance of a
PLACE is also a result of the
aggregation of many economic
activities …
MULTI DIMENSION IMPACT ACCOUNTING

59. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
PLACE
with many economic activities

60. Quality of Life for PEOPLE is
determined by:
Everything that is in the PLACE.
The availability and flow of PRODUCTS.
Access to OPPORTUNITIES (typically
associated with an ORGANIZATION and
availability jobs).
MULTI DIMENSION IMPACT ACCOUNTING

61. Not to mention Natural Capital that
continues to have the capacity to
support everything that enables our
socio-enviro-economic system to
function!
MULTI DIMENSION IMPACT ACCOUNTING

62. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
PLACE
with many economic activities
PEOPLE
Quality of Life
PLACE is
important
PRODUCTS
are important
to satisfy needs
and for quality
of life
ORGANIZATION
for jobs is
important
ORGANIZATION
with one operation

63. PEOPLE need easy access to data
that will improve the decisions they
make …
● for themselves;
● for society; and
● for the environment.
MULTI DIMENSION IMPACT ACCOUNTING

64. Small decisions by people make all
the difference
MULTI DIMENSION IMPACT ACCOUNTING

65. MULTI DIMENSION IMPACT ACCOUNTING
Sun
Small decisions by people make all the differenceBOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
Product
Place
Supply Chain
Process
Organization
Enabling
environment
Society

66. FINAL WORD
There are more dimensions than just
money!
There are more perspectives than
just the corporate organization!
MULTI DIMENSION IMPACT ACCOUNTING

67. Almost all the data that are easily
accessible for PEOPLE are those that
have the corporate purpose of selling
more product ...
… no matter what the impact on
PEOPLE, PLANET or PLACE
MULTI DIMENSION IMPACT ACCOUNTING

68. Better metrics are essential!
MULTI DIMENSION IMPACT ACCOUNTING

69. MULTI DIMENSION IMPACT ACCOUNTING
Sun
PERSPECTIVE
Sun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun

70. THIS SLIDESET IS 4 OF 5
SIZE MATTERS 1 … OVERVIEW
http://www.slideshare.net/PeterBurgess2/size-matters1
SIZE MATTERS 2 … KEY CONCEPTS
http://www.slideshare.net/PeterBurgess2/size-matters2
SIZE MATTERS 3 … SYSTEM CYCLES
http://www.slideshare.net/PeterBurgess2/size-matters3
SIZE MATTERS 4 … PERSPECTIVES
SIZE MATTERS 5 … IMPACTS
http://www.slideshare.net/PeterBurgess2/size-matters5
TRUE VALUE ACCOUNTING

71. 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:
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3
More about the True Value Metrics initiative is at:
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0100-MainNav
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) or webpage involved.
TRUE VALUE ACCOUNTING

72. THANK YOU
Some links and contact information:
Email Peter Burgess … peterbnyc@gmail.com
Peter Burgess LinkedIn profile
https://www.linkedin.com/in/peterburgess1
Link to TrueValueMetrics.org website
http://www.truevaluemetrics.org/
Link to navigation to other resources:
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0100-MainNav#1
TRUE VALUE ACCOUNTING