TVA-PRESENTATION-DRAFT-A ... This is a working draft of a presentation being prepared to promote the True Value Accounting initiative. This version will most likely change substantially before it is used.
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. Today I am going to talk
about the letter P …
TRUE VALUE ACCOUNTING
6. It is perhaps the most
important letter in the
English language.
TRUE VALUE ACCOUNTING
7. Many important words
relating to society, the
environment and the
economy we live in, start
with the letter P?
TRUE VALUE ACCOUNTING
8. PROFIT, the money
measure for business
performance and the
driver of stock market
valuation.
TRUE VALUE ACCOUNTING
9. Everything changes
when the PROGRESS of
PEOPLE becomes the
PURPOSE of economic
activity and business.
TRUE VALUE ACCOUNTING
10. We have one PLANET …
but we have ignored
environmental damage
caused by decisions that
focus on maximizing
PROFIT.
TRUE VALUE ACCOUNTING
11. TBL (Triple Bottom Line)* is an
initiative to put PROFIT,
PEOPLE, and PLANET
into business decisions.
* An idea promulgated by John Elkington in 1995
TRUE VALUE ACCOUNTING
12. PERSPECTIVE … things
look different depending
on where the viewer is
standing.
TRUE VALUE ACCOUNTING
21. If we change the main
priority from making
PROFIT for very few
investors to improving
Quality of Life for every
PERSON in the world ...
TRUE VALUE ACCOUNTING
22. … and doing so without
damage to the PLANET
as a whole and the
PLACES where there are
economic activities ...
TRUE VALUE ACCOUNTING
23. … then there will be
significant changes in
the decisions that get
made.
TRUE VALUE ACCOUNTING
24. The Quality of Life for
PEOPLE is enabled by
PRODUCTS (Goods and
Services)
TRUE VALUE ACCOUNTING
25. PRODUCTS are made by
PROCESSES, which are
used by organizations
and make PROFIT ...
TRUE VALUE ACCOUNTING
26. … but PROCESSES also
have an IMPACT on
PEOPLE who are on the
PAYROLL …
TRUE VALUE ACCOUNTING
27. … and PROCESSES also
have an IMPACT on the
PLACE and PLANET
caused by POLLUTION
TRUE VALUE ACCOUNTING
28. We live in a very complex
world with a connected
socio-enviro-economic
system that is not at all
well understood.
TRUE VALUE ACCOUNTING
30. How do you PLAN within
a complex system? What
has happened in the
past? What is the history?
TRUE VALUE ACCOUNTING
31. YELLOW:
The PEOPLE piece … Human Capital (HC)
DIRTY BROWN:
The ECONOMIC piece … Man Built Capital (MBC)
GREEN:
NATURE, ENVIRONMENT … Natural Capital (NC)
COLOR KEY
TRUE VALUE ACCOUNTING
32. AT THE START THERE WERE FEW PEOPLE,
LITTLE MAN BUILT CAPITAL AND PLENTY OF
NATURAL CAPITAL THAT WAS AVAILABLE
FOR EXPLOITATION.
TRUE VALUE ACCOUNTING
44. Trajectory to disaster!
Over time it looks
something like this.
Period 1-8 past and present
Period 9-12, a future scenario
TRUE VALUE ACCOUNTING
45. Period
1 2 3 4 5 6 7 8 9 10 11 12
HC
MBC
NC
TRUE VALUE ACCOUNTING
HC
MBC
NC
HC
MBC
NC
HC
MBC
NC
HC
MBC
NC
HC
MBC
NC
HC
MBC
NC
HC
MBC
NC
HC
MBC
NC
HC
MBC
NC
HC
MBC
NC
HC
MBC
NC
46. TRUE VALUE ACCOUNTING
Peter Drucker, a well known
management guru famously said:
“You can't manage
what you don't measure”
47. Because of this it is vital
to measure what matters,
everything that is really
important!
TRUE VALUE ACCOUNTING
48. MONEY as a measure is
problematic …
TRUE VALUE ACCOUNTING
50. A measure should not
change over time but
always be the same!
TRUE VALUE ACCOUNTING
51. The measure should not
change based on the
decisions of any person
or institution!
TRUE VALUE ACCOUNTING
52. GDP (Gross Domestic Product)
as a measure is also
problematic …
TRUE VALUE ACCOUNTING
53. Robert Kennedy spoke
out about the problems of
GDP as a measure in a
speech at the University
of Kansas in 1968.
TRUE VALUE ACCOUNTING
54. "Too much and for too long, we seemed to have surrendered personal excellence
and community values in the mere accumulation of material things. Our Gross
National Product, now, is over $800 billion dollars a year, but that Gross National
Product - if we judge the United States of America by that - that Gross National
Product counts air pollution and cigarette advertising, and ambulances to clear
our highways of carnage. It counts special locks for our doors and the jails for the
people who break them. It counts the destruction of the redwood and the loss of
our natural wonder in chaotic sprawl. It counts napalm and counts nuclear
warheads and armored cars for the police to fight the riots in our cities. It counts
Whitman's rifle and Speck's knife, and the television programs which glorify
violence in order to sell toys to our children. Yet the gross national product does
not allow for the health of our children, the quality of their education or the joy of
their play. It does not include the beauty of our poetry or the strength of our
marriages, the intelligence of our public debate or the integrity of our public
officials. It measures neither our wit nor our courage, neither our wisdom nor our
learning, neither our compassion nor our devotion to our country, it measures
everything in short, except that which makes life worthwhile. And it can tell us
everything about America except why we are proud that we are Americans."
TRUE VALUE ACCOUNTING
55. There are other metrics:
●Genuine Progress Indicator (GPI)
●Gross National Happiness (GNH)
●Human Development Index (HDX)
●Quality of Life Index (QLX)
●The Legatum Prosperity Index (LPX)
●The Happy Planet Index 2.0 (HPX)
TRUE VALUE ACCOUNTING
56. These measures show a
less favorable rate of
improvement than GDP …
for example GDP -v- GPI
TRUE VALUE ACCOUNTING
58. The essential of a good
unit of measure is that it
is always the same …
In the USA, the National Institute for Standards
and Technology (NIST) is an authority in this
regard … see:
http://physics.nist.gov/cuu/Units/current.html
TRUE VALUE ACCOUNTING
60. Almost all the benefit of
PRODUCTIVITY has gone
to owners … almost none
to workers
TRUE VALUE ACCOUNTING
61. This from Robert Reich,
Secretary of Labor in the
1990s, shows pay rose
with productivity until
1969 … and then it didn't
MULTI DIMENSION IMPACT ACCOUNTING
65. I argue that we need to
have better metrics.
TRUE VALUE ACCOUNTING
66. So … Data at the Center
● Used to plan
● Used to organize
● Used to implement
● Used to monitor progress
● Used to monitor cost effectiveness
● Used to plan follow up next steps
TRUE VALUE ACCOUNTING
90. TVA
TRUE VALUE ACCOUNTING
An extension of conventional
double entry accounting that
has been used for more than
800 years for money profit
accountability.
TRUE VALUE ACCOUNTING
91. Accountancy Concepts:
● Double Entry Accounting;
● State, Process and Flow;
● State, Progress and Performance;
● Cost, Price and Value;
● Quantification;
● Standard Value;
● Data at the Center;
● Feedback;
● Reporting Boundaries;
● Consolidation Rules.
TRUE VALUE ACCOUNTING
93. PROGRESS is how much
better now than before.
It is change in STATE from the
Beginning of the Period (BOP)
to the End of Period (EOP)
TRUE VALUE ACCOUNTING
104. Fundamentals of the Socio-Enviro-Economic System
Human
Capital
Man Built
Capital
Natural
Capital
Hum
an
Capital
Man
Built Capital
Natural Capital
TRUE VALUE ACCOUNTING
105. Fundamentals of the Socio-Enviro-Economic System
Human
Capital
Man Built
Capital
Natural
Capital
TRUE VALUE ACCOUNTING
106. 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
TRUE VALUE ACCOUNTING
107. 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
TRUE VALUE ACCOUNTING
108. 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
TRUE VALUE ACCOUNTING
109. 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
TRUE VALUE ACCOUNTING
110. 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.
TRUE VALUE ACCOUNTING
111. 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
TRUE VALUE ACCOUNTING
112. 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
TRUE VALUE ACCOUNTING
113. Double entry accounting
has a BALANCE SHEET
that provides a way to
report STATE, and the
CHANGE in STATE.
TRUE VALUE ACCOUNTING
119. The end result is that the
wrong decisions are
being made by people in
almost every corner of
the world.
TRUE VALUE ACCOUNTING
120. … wrong decisions in
every part of the global
socio-enviro-economic
system.
TRUE VALUE ACCOUNTING
121. Effectively all financial
wealth has been created
by systemic exploitation
of nature, knowledge and
exploitation of working
people.
TRUE VALUE ACCOUNTING
122. TVA
TRUE VALUE ACCOUNTING
Moving from Financial to Impact Accounting
STATE BOP … ACTIVITY ACCOUNTING … STATE EOP
TRUE VALUE ACCOUNTING
123. Moving from Financial to Impact Accounting
STATE BOP … ACTIVITY ACCOUNTING … STATE EOP
● Financial accounting;
● P&L and Balance Sheets (BOP and EOP);
● Financial accounting plus GOOD impacts;
● Financial accounting minus BAD impacts;
● Financial accounting with BOTH impacts;
● Bringing in IMPACTS on externalities;
● Expanding the REPORTING ENVELOPE;
● Accounting for IMPACT on ALL capitals.
TRUE VALUE ACCOUNTING
124. FINANCIAL
ACCOUNTS
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
TRUE VALUE ACCOUNTING
125. FINANCIAL ACCOUNTS OF AN ENTERPRISE
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
Cash
Current Assets
Fixed Assets
Intangible Assets
TOTAL ASSETS
Current Liabilities
Long Term Debt
Owners' Equity
Cash
Current Assets
Fixed Assets
Intangible Assets
TOTAL ASSETS
Current Liabilities
Long Term Debt
Owners' Equity
Balance Sheet
BOP
Balance Sheet
EOP
TRUE VALUE ACCOUNTING
126. FINANCIAL
ACCOUNTS
ADD positive impact not accounted for
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
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
TRUE VALUE ACCOUNTING
127. FINANCIAL
ACCOUNTS
DEDUCT negative impact not accounted for
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
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
TRUE VALUE ACCOUNTING
128. FINANCIAL
ACCOUNTS
ACCOUNTING FOR EVERYTHING
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
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
TRUE VALUE ACCOUNTING
129. 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
TRUE VALUE ACCOUNTING
130. Financial Accounts describe Financial Impact
Impact Accounts reflect Externalities
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
TRUE VALUE 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
131. 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
Impact Accounts reflect Externalities
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
TRUE VALUE 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
132. True Value Accounting is
a coherent system that
works everywhere in the
socio-enviro-economic
system.
TRUE VALUE ACCOUNTING
138. A fundamental reality …
All FINANCIAL WEALTH has been created
by human energy together with man built
knowledge, structures and systems and
exploiting NATURAL CAPITAL in an
unsustainable way.
TRUE VALUE ACCOUNTING
139. ELEMENTS OF THE SYSTEM by SEGMENT
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
Financial
Capital
Human
Capital
Man Built
Structures & Systems
Natural
Capital
Money Food 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
TRUE VALUE ACCOUNTING
140. Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
TRUE VALUE ACCOUNTING
FINANCIAL CAPITAL
… virtual masquerading as reality.
As a measure, money is fatally flawed.
The problem is compounded with GDP which ignores almost everything that makes life
worth living. Corporations are high performance in making profit, but issues like social
impact and environmental impact are not measured in a meaningful way and therefore
Ignored.
142. TRUE VALUE ACCOUNTING
Man Built Capital … Structures and Systems
Man Built Capital is simple compared to Natural Capital. It has become very powerful over
the past 300 years but at the expense of natural capital and social capital
Government
Laws
Infrastructure
Industry
Mining
Energy
Waste
Mobility
Logistics
Retail
Knowledge
Technology
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
143. Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
TRUE VALUE ACCOUNTING
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.
Nature (life)
Millions and millions of miracles, and we only know a small part of it all.
Land
The place where natural systems function, but also where man built processes and structures
Water
Essential to life, man built processes and the natural cycles that sustain nature
Bio-diversity
That has made nature the miracle it is, and fundamental to the functioning of the complex system
Air pollution
Has impact directly on human health and the functioning of many of the systems of nature
Eco-system services
The myriad of natural recycling mechanisms that serve to keep everything in nature in balance.
Air GHG
Atmospheric processes that regulate climate and the cycles of many critical compounds
145. A world with just one economic
activity will look like this …
MULTI DIMENSION IMPACT ACCOUNTING
146. 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
147. Or like this …
MULTI DIMENSION IMPACT ACCOUNTING
148. 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
149. 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 ...
150. 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
151. A world with no economic activity is
represented by this …
MULTI DIMENSION IMPACT ACCOUNTING
152. 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
153. SO …
the ORGANIZATION is represented in
this way …
MULTI DIMENSION IMPACT ACCOUNTING
154. 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
155. An organization with many
operations looks like this …
MULTI DIMENSION IMPACT ACCOUNTING
156. 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
157. And a PRODUCT aggregates in a
very similar way …
MULTI DIMENSION IMPACT ACCOUNTING
158. 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
159. 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
160. The money accounting presentation
of the SUPPLY CHAIN may have this
form …
MULTI DIMENSION IMPACT ACCOUNTING
161. 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.
162. … and the IMPACT ACCOUNTING for
the SUPPLY CHAIN needs to look
something like this …
MULTI DIMENSION IMPACT ACCOUNTING
163. 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
164. The progress and performance of a
PLACE is also a result of the
aggregation of many economic
activities …
MULTI DIMENSION IMPACT ACCOUNTING
165. 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
166. 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
167. 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
168. 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
169. 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
170. Small decisions by people make all
the difference
MULTI DIMENSION IMPACT ACCOUNTING
171. 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
172. FINAL WORD
There are more dimensions than just
money!
There are more perspectives than
just the corporate organization!
MULTI DIMENSION IMPACT ACCOUNTING
173. 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
174. 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
183. TRUE VALUE ACCOUNTING
The dairy herd of farmer Mike Gorton make their way home for milking at his farm
near Macclesfield in Cheshire, England. (Photo: Christopher Furlong/Getty Images)