TrueValueMetrics ... Impact Accounting for the 21st Century

Date: 2024-12-21 Page is: DBtxt003.php txt00003941

DEVELOPMENT OF TVM MANAGEMENT METRICS DATA ABOUT WHERE WE ARE Peter Burgess Working Draft October 2012 Peter Burgess COMMENTARY This is a draft from 2012 ... more than 10 years ago. In some ways it will appear that there has been little progress in this time, but that is not entirely true. Personally, I am far from satisfied with progress ... but I am hopeful that there is a growing ecosystem of improving management metrics that have some of the characteristics that are central to the TVM framework. I am in the middle of a major review of older TVM material in order to make it more accessible to anyone who is interested. It is a big project with well over 20,000 web pages to be reviewed! Peter Burgess ... June 2022
Metrics ... The central questions Q1 … Where are we at this point in time In January every year the President of the United States stands before Congress and delivers a speech 'The State of the Union' which is a report about 'where we are at this point in time'. Of course everything in Washington is also a political statement … but the essence of the presentation is to report on the 'state' of the nation. Reporting on 'state is the first step in getting accountability and in measuring p[rogress and performance Before it is possible to report on 'state' it is necessary to measure 'state'. Some aspects of 'state' are relatively simple. In money profit accounting the 'blanace sheet is a big part of reporting 'state'. A balance sheet prepared using the generally accepted money profit accounting construct includes all the elements that have been affected by money transactions in the reporting entity. A balance sheet prepared in the TrueValueMetrics framework also includes all the elements that are important for society, the economy and the environment. These elements may not be 'owned' by a business entity but they change as a result of activities of the business activity and the 'state' of these elements is a legitimate concern of the business entity and its stakeholders and observers. Some of the elements are: The payroll The supply chain The supply capacity The impacted resources The energy The water The waste The carbon The air Toxins An investment analyst will look at a corporate balance sheet, but goes beyond this to look at the 'state' of the business and how the 'state' of the business should be incorporated into the value of the business over and above … or below … what is reported in the money profit balance sheet. The TrueValueMetrics framework uses a 'balance sheet' that combines money profit elements with elements that relate to all aspects of impact on all stakeholders. In summary there are the following sections: Economic impacts Money profits … for financial investors Wages ... for working people Production activity Consumption activity Tax regime Social impacts … that address people's quality of life Disposable income Wage multiplier … within communities Not-for-Profit charity Environmental impacts ... that have effect on natural resources and systems Energy Water Minerals Lumber GHGs Biodiversity

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