TrueValueMetrics ... Impact Accounting for the 21st Century


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Date: 2024-08-16 Page is: DBtxt001.php L07-11-MANAGEMENT-retired-190523

*TRUE VALUE METRICS*
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SECTION IV

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MANAGEMENT
MOVING THE NEEDLE ON IMPORTANT ISSUES
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Peter Drucker famously said you manage what you measure ...
	This is undoubtedly true ... in the corporate world, the components that go into making profit are measured intensely in order to improve profit performance ... and it works! Unfortunately, we don't do anything like the same amount of measuring in order to improve society and avoid degrading the environment ... and we don't have any easy way of talking about social performance and environmental performance in the same way that we are able to talk about corporate performance and investment portfolio performance. This has to change
We argue that you had better measure the right things

ABOUT THE TVM INITIATIVE
	Numbering the Triple Bottom Line Accounting for ALL the Capitals
*TRANSPARENCY* *and ACCOUNTABILITY* *METRICS TO MAKE THE WORLD A BETTER PLACE*
Uses the core concepts of conventional accountancy. Enhances the concepts to address the issue of social impact. Also incorporates the impacts linked to environmental changes. Considers multiple perspectives beyond the corporate reporting entity. Accounts for impacts of any activity on social, natural and economic capitals.
Accounts for energy use in processes and embedded in products. Acccounts for social impact associated with profile of payroll. Accounts for impacts that have material impact on sustainability.

	Data at the Center		Data Everywhere
These schematics were drawn around 1995 early in the days of electronic data collection. What was expensive then, has now become relatively low cost. However, the challenge remains to make use of data in a meaningful way so that better decision get made.

ACCOUNTING FOR EVERYTHING THAT MATTERS
THE TRENDS ARE CATASTROPHIC
ACCOUNTING FOR SOCIAL, ECONOMIC AND NATURAL CAPITALS
COLOR CODE	DISTANT PAST	PRESENT NOT GOOD	FUTURE COLLAPSE
What science shows is that nature is the foundation for everything. Most of the time there is a complex natural balance or equilibrium, but periodically it gets out of balance and many changes take place very rapidly until another equilibrium is found. Because of humankind's economic activity we have arrived at a tipping point and the equilibrium has been disturbed. It is impossible to predict what future the changes will be .,.. but we do know that there will be massive change and it is unlikly that humankind will have the capacity to do very much about it. BE WARNED! GDP growth will aggravate this crisis, not solve it, but smart policy and technological investment and deployment might mitigate the problem significantly. Inaction is criminal.
Aggregated Socio-Enviro-Economic Trends
What has been happening ... What needs to happen in the immediate future
THE WHOLE SYSTEM	THE ACTUAL PAST	A NO CHANGE FUTURE	A BETTER FUTURE

More and more DEPLETION and DEGRADATION of NATURAL CAPITAL is UNSUSTAINABLE
⚫ Productivity and profits have increased ECONOMIC CAPITAL substantially over decades. ⚫ Meanwhile massive increase in inequality has compromised SOCIAL CAPITAL. ⚫ Most industrial activity has resulted in dangerous degradation of NATURAL CAPITAL. ⚫ Continuing in this way is an existential risk. There is a scientific consensus that massive changes are essential. ⚫ A better way is essential ... a system that enables prosperity without environmental damage

THERE IS AN IMPORTANT IDEA IN ACCOUNTANCY THAT IS VERY POWERFUL
Balance sheet improvement over time is progress. Measure the changes, and you measure progress.
NO CHANGE IN BALANCE SHEET STEADY STATE	GROWTH IN THE BALANCE SHEET POSITIVE PROGRESS / VALUEADD	DIMINUTION OF THE BALANCE SHEET VALUE DESTRUCTION

CONVENTIONAL ACCOUNTANCY IS WELL ESTABLISHED
Good accounting embraces both P&L Accounts and Balance Sheet Accounts
Profit and Loss Account (P&L A/C)	P&L A/C with Balance Sheets

TVM Enhanced Accounting also embraces the impacts on externalities
Add Good Impact	Deduct Bad Impact	Report both Good and Bad

Enhancing the Profit and Loss Account
Adding in the BAD impacts	Adding in the GOOD impacts

Combined Financial Impact plus the Externalities

Only Financial / Only Entity	Enhanced / Only Entity	Enhanced plus impact on State

Profit and Loss Account with Enhancement
Conventional Entity Focus	TVM Enhanced Focus with Externalities

TVM Enhanced Focus with ALL the CAPITALS

ALL ACTIVITIES (PROCESSES) CHANGE ALL CAPITALS (STATE)
These reflect more and more detail about the framing and inclusion of externalities

THIS IS BASIS FOR ACCOUNTING FOR EVERYTHING
Everything is summarized along the same lines as a financial consolidation
Enhanced Reporting for any Entity	Which also may look like this

Processes / Entities adding up to a PRODUCT

Processes / Entities adding up to a PLACE

Processes / Entities adding up to an ORGANIZATION

Various elements adding up for a PERSON

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SITE NAVIGATION ... NAVBAR MENU

SITE
NAV

CONTEXT
ISSUES
POSSIBILITIES

HOW THE
WORLD
WORKS

SECTOR
PROCESS
IMPACT

STATE
ALL THE
CAPITALS

ACTORS
PEOPLE
ORGANIZATIONS

PRODUCTS
STUFF
CONSUMPTION

PLACE
COMMUNITIES
COUNTRIES

PEOPLE
QUALITY
OF LIFE

NATURE
SOURCE of
all VALUE

ECONOMY
MONEY
LIQUIDITY

TRUEVALUE
DATA at
the CENTER

ABOUT
VISION
STRATEGY

INPAGE >>>			(1) How the World Works	(2) STATE - All Capitals	(3) FLOW - Activities	(4) MANAGEMENT
SITE NAVIGATION >>>	SITE-NAVIGATION	(0) TVM-BRIEF	(1) How the World Works	(2) STATE - All Capitals	(3) FLOW - Activities	(4) MANAGEMENT

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TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative. It has been funded by family and friends. TVM is a 'big idea' that has the potential to be a game changer. The goal is for it to remain an open access initiative.

WE WANT TO MAINTAIN AN OPEN KNOWLEDGE MODEL		A MODEST DONATION WILL HELP MAKE THAT HAPPEN
The information on this website may only be used for socio-enviro-economic performance analysis, education and limited low profit purposes Copyright © 2005-2021 Peter Burgess. All rights reserved.