This document discusses the need for better metrics to account for societal and environmental impacts, not just financial profits. It argues that current accounting focuses too much on maximizing profits, which has led to strong corporate and GDP growth but declining wages and worsening environment issues over the past 50 years. It proposes a system called multi-dimensional impact accounting to develop metrics that also account for impacts on people, planet and long-term sustainability, not just short-term profits.
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TVA p3-01 WHY SOCIETY NEEDS BETTER METRICS
1. True Value Accounting
WHY SOCIETY NEEDS
BETTER METRICS
File: MDIA-p3-01-1-WHY-151102.odp Peter Burgess (c) All rights reserved
TRUE VALUE ACCOUNTING
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
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
3. The GOAL is to design and
deploy a system of metrics for
management that accounts for
impact on people and planet as
rigorously as double entry
accounting accounts for money
transactions that impact profit
MULTI DIMENSION IMPACT ACCOUNTING
8. This is an unsustainable
trajectory for our complex global
socio-enviro-economic system
MULTI DIMENSION IMPACT ACCOUNTING
9. SOCIO … PEOPLE
ENVIRO … PLANET
ECONOMIC … MAN BUILT CAPITAL
MULTI DIMENSION IMPACT ACCOUNTING
10. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPSOCIO - PEOPLE
11. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPSOCIO - PEOPLE
12. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPENVIRO - PLANET
13. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPENVIRO - PLANET
14. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPECONOMIC – MAN BUILT CAPITAL
15. MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPECONOMIC – MAN BUILT CAPITAL
16. The balance between PEOPLE,
PLANET and PROFIT is most
likely unsustainable …
MULTI DIMENSION IMPACT ACCOUNTING
17. The following slides reflect what
has happened over the past
millions of years …
MULTI DIMENSION IMPACT ACCOUNTING
18. YELLOW:
The PEOPLE piece … Human Capital (NC)
DIRTY BROWN:
The ECONOMIC piece … Man Built Capital (MBC)
GREEN:
NATURE, ENVIRONMENT … Natural Capital (NC)
MULTI DIMENSION IMPACT ACCOUNTING
COLOR KEY
28. For the past 50 years, using
conventional metrics, the system
has optimized for performance of
FINANCIAL CAPITAL but while
ignoring everything else ...
MULTI DIMENSION IMPACT ACCOUNTING
29. ECONOMIC GROWTH 1970 to 2011
CORPORATE PROFITS ...
GDP …
LABOR INCOME ...
MULTI DIMENSION IMPACT ACCOUNTING
3,600%
1,500%
1,100%
33. In the 1950s and 1960s wages and
salaries were gaining moderately
while profits were declining. Since
the 1980s profits have increased
strongly while wages and salaries
have been decreasing as a share of
GDP.
MULTI DIMENSION IMPACT ACCOUNTING
35. Robert Reich … former Secretary
of Labor in the 1990s … shows pay
rose with productivity until 1969
and then it didn't ...
MULTI DIMENSION IMPACT ACCOUNTING
39. … but this is an average that does
not mean very much …
MULTI DIMENSION IMPACT ACCOUNTING
40. Rich countries and rich people
have increased their income and
wealth much more significantly
than poor countries and poor
people as these data for the USA
and the UK show ...
MULTI DIMENSION IMPACT ACCOUNTING
42. … but the metrics are not getting it
right …
MULTI DIMENSION IMPACT ACCOUNTING
43. The growth in GDP for the USA
over the period from 1945 to the
present has been phenomenal …
but the HAPPINESS of Americans
has deteriorated in this time.
MULTI DIMENSION IMPACT ACCOUNTING
44. Corporate money profit performance over
the past fifty years has been impressive
MULTI DIMENSION IMPACT ACCOUNTING
45. The growth in GDP also has a
strong correlation with increasing
stress on planetary resources and
the environment.
MULTI DIMENSION IMPACT ACCOUNTING
46. The growth in global population is
not as serious a problem as the
growth in GDP …
MULTI DIMENSION IMPACT ACCOUNTING
49. There has been an amazing
improvement in productivity over
the past 40 years … and almost all
the benefits derived from the
increases in productivity have
accrued to owners.
MULTI DIMENSION IMPACT ACCOUNTING
50. This is what Business Schools
teach … and they do it very well.
MULTI DIMENSION IMPACT ACCOUNTING
51. In order for the socio-enviro-
economic system to be optimized
for people and planet and profit, an
improved system of metrics is an
absolutely essential prerequisite.
MULTI DIMENSION IMPACT ACCOUNTING
52. … and this is what Multi Dimension
Impact Accounting (MDIA) is all
about.
MULTI DIMENSION IMPACT ACCOUNTING
53. 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
54. 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