TVA p3 00 WASTE 151010

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WASTE is one of the biggest opportunities for improved performance in the modern SOCIO-ENVIRO-ECONOMIC system. Waste does not have much of a cost in conventional accounting, but the true cost of waste taking into account the impact on the environment, the huge.

The conventional incentives for better performance encourage consumption, but only measure this at the point of sale ... the waste all the way through the product life cycle are ignored.

Cleaning up the processes so that there is no production of waste should be a priority ... a getting consumers not to waste in another thing that needs to be done.

Waste is causing untold pollution on land, in rivers and now also in the oceans. This is not the way man built systems should be functioning, and it must be fixed.

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TVA p3 00 WASTE 151010

  1. 1. File: TVA-p3-00-WASTE-151010.odp Peter Burgess (c) All rights reserved WASTE HUGE OPPORTUNITY FOR A BETTER PERFORMING SYSTEM TRUE VALUE ACCOUNTING
  2. 2. 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 describe the extremely complex socio-enviro-economic system that we live in, and how better metrics will make this system work better. TRUE VALUE ACCOUNTING
  3. 3. WASTE exists because: … the system is out of control; … people are thoughtless and lazy; … production process technology has not been designed to minimize waste; … companies hold themselves accountable for costs but not about impact on the environment. MULTI DIMENSION IMPACT ACCOUNTING
  4. 4. 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 Land Fill
  5. 5. 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 Food Waste
  6. 6. 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 Electronic Waste
  7. 7. 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 Plastic bottles
  8. 8. 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 Plastic bottles
  9. 9. 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 Plastic waste
  10. 10. 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 Beach waste
  11. 11. MULTI DIMENSION IMPACT ACCOUNTING Sun Obsolete Military Aircraft Sun BOP Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun EOP Financial Capital Human Capital Man Built Capital Natural Capital Sun
  12. 12. MULTI DIMENSION IMPACT ACCOUNTING Sun Obsolete Military Aircraft Sun BOP Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun EOP Financial Capital Human Capital Man Built Capital Natural Capital Sun
  13. 13. COMPANIES MAKE WASTE … by how their PRODUCTS are designed; … by how they use advertising to get people to buy more than they need; … by how their performance metrics are all about REVENUES and PROFIT without considering PEOPLE and PLANET. MULTI DIMENSION IMPACT ACCOUNTING
  14. 14. PROCESSES produce WASTE … the processes that transform inputs into products produce more or less waste; … the use of fossil fuels to produce energy results in waste (gaseous emissions, ash, etc.) MULTI DIMENSION IMPACT ACCOUNTING
  15. 15. PRODUCT results in WASTE … the design of a PRODUCT has a role in reducing waste; … decisions about manufacturing PROCESS and SUPPLY CHAIN have a role in reducing waste; … decisions about PRODUCT PACKAGING have a role in reducing waste. MULTI DIMENSION IMPACT ACCOUNTING
  16. 16. PEOPLE MAKE WASTE … by how they buy PRODUCTS without any reference to the related waste; … by how they buy and use PRODUCTS with little consideration to the matter of waste; … by how they discard PRODUCTS after use; … by buying too much; … by throwing away half used products; … by sloppy recycling or none at all. MULTI DIMENSION IMPACT ACCOUNTING
  17. 17. SYSTEMIC ISSUES … conventional metrics ignore all costs of waste; … there are few incentives to reduce waste; … recycling is usually inconvenient; … more sales produce more PROFIT, while issue of more waste is ignored. MULTI DIMENSION IMPACT ACCOUNTING
  18. 18. ATMOSPHERIC WASTES The atmosphere is a convenient dumping ground. There are many components: ... Greenhouse gases; ... Particulates; ... Sulphur dioxide and acid rain; ... Nitrous oxides and automobile pollution; ... Natural atmospheric pollution (e.g.volcanoes); ... Aerosol propellants. MULTI DIMENSION IMPACT ACCOUNTING
  19. 19. GREENHOUSE GASES The Kyoto Protocol covers emissions of these six main greenhouse gases: ... Carbon dioxide (CO2); ... Methane (CH4); ... Nitrous oxide (N2O); ... Hydrofluorocarbons (HFCs); ... Perfluorocarbons (PFCs); and ... Sulphur hexafluoride (SF6). SHAME: The US did not sign the accord and Canada subsequently withdrew its agreement MULTI DIMENSION IMPACT ACCOUNTING
  20. 20. WASTEWATER If wastewater from PROCESS contains toxins the IMPACT on the environment can be significant, long lasting and difficult to remediate. e.g. Abandoned mines will pollute water for decades after they are abandoned, killing fish and vegetation in the downstream watershed. MULTI DIMENSION IMPACT ACCOUNTING
  21. 21. WASTE associated with ENERGY Air pollution has a bad impact on health and wellness, e.g.; … Urban smog containing particulates and noxious compounds creates respiratory problems … rural cooking on open fires. Water pollution … bad impact; … Polluted water carries many water borne diseases including cholera, dysentery and others; Solid Waste; … Dangerous toxins in solid waste migrate into the supply chain for food and leach into the groundwater. MULTI DIMENSION IMPACT ACCOUNTING
  22. 22. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP EOP Sun Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun SunSun Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun Financial accounting describes economic activity in money terms while completely ignoring impact on everything else
  23. 23. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP EOP Sun Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun SunSun Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun Financial Accounts describe Economic Activity Financial Costs Financial Profit Financial Revenues Financial Balance Sheet BOP Financial Balance Sheet EOP
  24. 24. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP EOP Financial Capital Human Capital Man Built Capital Natural Capital Sun Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun 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 FINANCIAL ACCOUNTING
  25. 25. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP EOP 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 Funds government. Good value to society. POSITIVE IMPACT NOT ACCOUNTED FOR Financial Capital Human Capital Man Built Capital Natural Capital Sun Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun 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 FINANCIAL ACCOUNTING PLUS GOOD IMPACT
  26. 26. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP EOP 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 Capital Human Capital Man Built Capital Natural Capital Sun Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun 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 FINANCIAL ACCOUNTING LESS BAD IMPACT
  27. 27. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP EOP 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 Funds government. Good 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 Capital Human Capital Man Built Capital Natural Capital Sun Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun 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 FINANCIAL ACCOUNTING PLUS GOOD & BAD
  28. 28. The next slide shows how the operations of a process: (1) through the money P&L report impact on the money balance sheet of the operation; and, (2) through the IMPACT accounts report on the impact the operation is having on society and the environment. MULTI DIMENSION IMPACT ACCOUNTING
  29. 29. 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
  30. 30. 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
  31. 31. 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 University Recycling
  32. 32. SUPPLY CHAIN / LIFE CYCLE ... There is waste at every stage of the supply chain; ... Waste happens in every production process; ... Waste happens during the use of a product; ... Waste happens when a product is thrown away. MULTI DIMENSION IMPACT ACCOUNTING
  33. 33. SUPPLY CHAIN ● The supply chain is a key part of the modern economy; ● Supply chain has enabled much of the low cost high profit performance of business that is now the norm; ● Supply chain optimizes for profit; ● With prevailing laws, regulation and metrics, optimizing for profit results in a race to the bottom for social and environmental impact MULTI DIMENSION IMPACT ACCOUNTING
  34. 34. SUPPLY CHAIN ● The supply chain works when each stage of the chain is profitable; ● The system works by every stage aiming for maximum profit; ● Entities with the most negotiating power make the most profit; ● However, the financial profit goal excludes important impact issues that are increasingly important. MULTI DIMENSION IMPACT ACCOUNTING
  35. 35. 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.
  36. 36. 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
  37. 37. PROBLEM … no waste impact metrics … only money metrics. ... The prevailing money profit metrics only measure the money cost of production and money revenues … components of profit performance; ... There is nothing of equivalent power to feedback the impact of waste into the business performance metrics. MULTI DIMENSION IMPACT ACCOUNTING
  38. 38. SOLUTION … must have waste impact metrics ... ... at each stage of the PRODUCT life cycle; ... for all the entities involved in the supply chain / life cycle, including post use recycling; … for all the PROCESSES in the supply chain; … for all the PEOPLE who buy and junk (waste); … for all the PLACES where waste is processed. MULTI DIMENSION IMPACT ACCOUNTING
  39. 39. 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: 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) involved. http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3 TRUE VALUE ACCOUNTING
  40. 40. 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

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