TrueValueMetrics ... Impact Accounting for the 21st Century

Date: 2024-12-21 Page is: DBtxt003.php txt00021546

ACTIVISM ... INSURANCE SECTOR INSURE OUR FUTURE Links to newsletters from the INSURE OUR FUTURE activism initiative Burgess COMMENTARY I have been interested in 'management' since the very beginning of my career. The most effective framework for 'management' is the one that is enabled by 'double entry accountancy'. The logic of double entry accountancy has been around for hundreds of years and was used to enable the 'merchant adventurers' since the 15th century and most likely before that. Double entry accountancy helped to enable the financing of the industrial revolution in the last 200 years, getting a big boost when this sort of accounting was mandated by government in order to stop entrepreneurs lying about the performance and promise of their ventures. Conventional financial accounting and the independent financial audit has served well for more than a century, but has become less and less 'fit for purpose' over the last forty years or so. Back in 1900 the population of the world was around 1.7 billion people. By around 2010 this population had increased to 7.1 billion. Over the same time period production and consumption per person had doubled or tripled and the environment became more and more compromised. Over time, productivity improved and profits increased. This was reflected in conventional financial reporting and reflected in stock valuations. There was no associated measurement and reporting of social and environmental impact though it was clear for all to see that there were serious impactsa that should not be ignored. Back in 1952 ... I think it was ... there was a massive 'smog' in the UK. Smog is a mix of smoke particulates and normal fog. Little was visible beyond a few yards. This massive smog covered the whole of England for several days and killed thousands who had weak respiratory systems. In the aftermath. the British government enacted draconian anti-pollution laws including banning open coal fires in houses unless they were burning 'smokeless' fuel. Prior to this, it was conventional wisdom that it would be impossible to pass laws in the UK to address coal fire pollution ... but it was done in the aftermath of the 'Killer Smog' and achieved a big improvement in respiratory health. In recent decades, a few companies have become serious about getting the right balance between profit, people and planet ... the triple bottom line (TBL) described in the 1990s by John Elkington. Mostlly companies pay lip-service to such goals and some aggressively practice disinformation. Better metrics are a must. TrueValueMetrics.org (TVM) uses a similar framing to the TBL ... social, environmental and economic ... to expand the framing used in conventional financial reporting that is all about the profit of an economic reporting entity like a corporation to a framing for all activities by all actors all the time, everywhere that impact the state of society, the state of the environment and the state of the economy (and the entities making up the economy). Perhaps one of the more important aspects of TVM is that the accounting and the reporting should not be done by the reporting entity, but independently. The reporting entity does not get to choose what is reported, but an interested ... and maybe independent ... outsider gets to choose what is important to address in the context of all the actors involved. The activist community could have s substantially increased impact if they were to use management metrics along the lines of TVM more strategically. There was a time in my career when there was a lot of talk about different management methods: one that functioned rather like a squeexed balloon and other management systems that had the characteristic of a ratchet. In the first case a lot of effort, but no sustained change. In the second case, the effort deliverd improvement that lasted. Peter Burgess
INSURE OUR FUTURE NEWS ALERTS The Insure our Future campaign calls on insurance companies to stop underwriting and investing in climate-destroying fossil fuel projects. Our news alerts and monthly bulletins share campaign highlights and other breaking news on climate, fossil fuels, and the insurance industry. It is aimed at environmental activists, insurance professionals, sustainability analysts, journalists and other interested audiences. Past issues are available below: 08/25/2021 – Societe Generale finds ending oil & gas insurance adds shareholder value 06/17/2021 – International pressure escalates on insurers of Trans Mountain pipeline 04/14/2021 – Lloyd’s pressured with launch of Insure Our Future website 03/11/2021 – Leading European insurers back LNG, report finds 02/04/2021 – Coal exit policies increase insurers’ shareholder value 12/02/2020 – 2020 Scorecard on Insurance, Fossil Fuels & Climate Change 10/30/2020 – Climate campaigners target insurers at Liberty & Lloyd’s 09/01/2020 – Lloyd’s must wash its hands of coal and tar sands 08/06/2020 – Insurers peeling away from Adani and Trans Mountain 06/18/2020 – Insurers must unfriend oil and gas, campaigners say 06/11/2020 – Insurers behind Adani coal mine exposed 04/27/2020 – New York calls on insurers to ditch coal 03/04/2020 – Will Marsh drop Adani? 01/16/2020 – What will BlackRock’s move mean for insurers? 12/02/2019 – 2019 scorecard on insurance, coal & climate change 10/21/2019 – Coal insurers under pressure from actuarial students 10/16/2019 – Axis Capital exits coal and tar sands 09/17/2019 – AIG Faces moment of truth on the Adani project 08/13/2019 – Insurers exposed in coal and tar sands projects 07/02/2019 – Breakthrough: An assessment of the first US coal exit policy 06/18/2019 – Will Asian insurers move away from coal? 05/16/2019 – Pressure increases on US insurers to act on coal & tar sands 04/26/2019 – QBE, Hannover Re and Talanx join coal exit train 03/14/2019 – Mapfre and Uniqa join the coal exit train 02/22/2019 – Coal insurance: the next domino falls 01/23/2019 – First major US insurer takes action on coal 12/03/2018 – New report scores insurers on coal and climate 11/09/2018 – BREAKING: Generali boards coal exit train 10/16/2018 – The IPCC Report, Coal and Insurance 09/13/2018 – Insure Our Future Campaign Launched in the U.S. 08/16/2018 – Insurance industry sweats under summer scrutiny 07/17/2018 – The incredible shrinking coal insurance market © 2021 Insure Our Future. All Rights Reserved.

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