Mdia p3-03-perspectives-150420

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Mdia p3-03-perspectives-150420

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Mdia p3-03-perspectives-150420

  1. 1. MULTI DIMENSION IMPACT ACCOUNTING File: Characteristics-of-an-Economic-Activity.odp Peter Burgess (c) All rights reserved MDIA PERSPECTIVES
  2. 2. TRIPLE BOTTOM LINE (TBL) This idea of the TBL is that a company should not only be looking at the 'profit' performance but also impact on people and planet: ● PROFIT; ● PEOPLE; ● PLANET. This good, but it is only the perspective of the ORGANIZATION. MULTI DIMENSION IMPACT ACCOUNTING
  3. 3. PERSPECTIVES A unique object can look very different depending on the position of the observer. Our socio-enviro-economic-system is complex and multiple perspectives are needed: ● a PEOPLE perspective; ● an ORGANIZATION perspective; ● a PRODUCT perspective; ● a PLACE perspective; ● etc. MULTI DIMENSION IMPACT ACCOUNTING
  4. 4. MULTI DIMENSION IMPACT ACCOUNTING Putting PEOPLE at the Center
  5. 5. MULTI DIMENSION IMPACT ACCOUNTING Putting ORGANIZATION at the Center
  6. 6. MULTI DIMENSION IMPACT ACCOUNTING Putting PRODUCT at the Center
  7. 7. MULTI DIMENSION IMPACT ACCOUNTING Putting PLACE at the Center
  8. 8. THE CHALLENGE The challenge is to have a data system that is meaningful no matter what aspect of the socio-enviro-economic-system is being measured, and no matter what perspective is in play. Hence, the need for a Multi Dimension and Multi Perspective data framework. MULTI DIMENSION IMPACT ACCOUNTING
  9. 9. THE METRIC SOLUTION ● MDIA is borrows from conventional double entry accounting where there are Balance Sheet and Profit and Loss Accounts. ● The building block for MDIA is similar: … State1-Flow-Process-Flow-State2 that can be applied to every economic activity in any setting anywhere. Conventional double entry accounting is very good for money transactions, but ignores non- money transactions and externalities! MULTI DIMENSION IMPACT ACCOUNTING
  10. 10. THE METRIC SOLUTION (cont.) ● This MDIA building block will aggregate to enable summary reporting; and ● enable drill down to activities that are relevant at any and all subsidiary levels down to the individual level. MULTI DIMENSION IMPACT ACCOUNTING
  11. 11. SOCIO-ENVIRO-ECONOMIC ● SOCIO is a PEOPLE perspective. Everything should result in people progressing. ● ENVIRO is about NATURE and the ultimate source of everything that people can ever have; and, ● ECONOMIC is the man built structures and systems (MBSS) that have been built to enable progress. MULTI DIMENSION IMPACT ACCOUNTING
  12. 12. YELLOW: The PEOPLE piece DIRTY BROWN: MBSS (MAN-BUILT STRUCTURES AND SYSTEMS) GREEN: NATURAL CAPITAL, NATURE'S BOUNTY MULTI DIMENSION IMPACT ACCOUNTING
  13. 13. MULTI DIMENSION IMPACT ACCOUNTING
  14. 14. MULTI DIMENSION IMPACT ACCOUNTING
  15. 15. MULTI DIMENSION IMPACT ACCOUNTING
  16. 16. MULTI DIMENSION IMPACT ACCOUNTING
  17. 17. MULTI DIMENSION IMPACT ACCOUNTING
  18. 18. MULTI DIMENSION IMPACT ACCOUNTING
  19. 19. Trajectory to disaster! This must be changed to give this … MULTI DIMENSION IMPACT ACCOUNTING
  20. 20. MULTI DIMENSION IMPACT ACCOUNTING
  21. 21. PEOPLE progressing MBSS efficient PLANET healthy MULTI DIMENSION IMPACT ACCOUNTING
  22. 22. SO … What is the PEOPLE perspective? What is the ORGANIZATION perspective? What is the PRODUCT perspective? What is the PLACE perspective? How must the MBSS be changed to get the best possible results? How can PEOPLE make better decisions? MULTI DIMENSION IMPACT ACCOUNTING
  23. 23. Part of the answer is BETTER METRICS MULTI DIMENSION IMPACT ACCOUNTING
  24. 24. The next slide shows the components of the system by segment MULTI DIMENSION IMPACT ACCOUNTING
  25. 25. MULTI DIMENSION IMPACT ACCOUNTING ELEMENTS OF THE SYSTEM by SEGMENT Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun Financial Capital Human Capital Man Built Structures & Systems Natural Capital MoneyFood Government Nature (life) Sun Nature (life) Capital Market Value Water Laws. Rules Nature (life)Land Shelter Infrastructure WaterClothes Industry Nature (life)Air Health Mining Ecoservices Education EnergySkills Waste Recreation Retail Culture LogisticsReligion Knowledge Technology Security Energy Mobility Profit
  26. 26. Note that FINANCIAL CAPITAL has been separated out from the other parts of the MBSS segment Note also the addition of SUN to enable metrics about renewables MULTI DIMENSION IMPACT ACCOUNTING
  27. 27. THE METRIC SOLUTION ● The building block for MDIA is the idea of State1-Flow-Process-Flow-State2 that can be applied to every economic activity; ● It will aggregate to enable summary reporting; and ● It will enable drill down to activities that are relevant at the individual level; ● It will function for every PERSPECTIVE. MULTI DIMENSION IMPACT ACCOUNTING
  28. 28. THE NEXT SLIDE SHOWS: (1) … STATE at the Beginning of the Period (BOP) (2) … STATE at the End of Period (EOP) (3) … a financial profit and loss about the economic activity or flow that links the two states MULTI DIMENSION IMPACT ACCOUNTING
  29. 29. MULTI DIMENSION IMPACT ACCOUNTING Sun FINANCIAL P&L ACCOUNT Financial Accounts describe Economic Activity REVENUES Products Sold X Price Products Bought X Price BOP EOP Energy Bought X Price Employee Benefits Employee Payroll Other expenditures Asset use costs Depreciation Financial expenses Pro-good expenditures Taxation PROFITSun Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun SunSun Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun COSTS
  30. 30. But the financial accounts are only about money transactions, nothing about impact on people and planet and externalities ignored! Financial accounts are also from the perspective of the organization. MULTI DIMENSION IMPACT ACCOUNTING
  31. 31. 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
  32. 32. 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 IN FINANCIAL OR MONEY TERMS WHILE COMPLETELY IGNORING IMPACT ON EVERYTHING ELSE Financial Accounts describe Economic Activity
  33. 33. MULTI DIMENSION IMPACT ACCOUNTING Sun FINANCIAL P&L ACCOUNT Financial Accounts describe Economic Activity REVENUES Products Sold X Price Products Bought X Price BOP EOP Energy Bought X Price Employee Benefits Employee Payroll Other expenditures Asset use costs Depreciation Financial expenses Pro-good expenditures Taxation PROFITSun Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun SunSun Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun COSTS
  34. 34. MULTI DIMENSION IMPACT ACCOUNTING Sun ADD positive impact not accounted forBOP 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 What value to society? POSITIVE IMPACT NOT ACCOUNTED FOR Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun Sun Financial Capital Human Capital Man Built Structures & Systems 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
  35. 35. MULTI DIMENSION IMPACT ACCOUNTING Sun DEDUCT negative impact not accounted forBOP 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 File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun Sun Financial Capital Human Capital Man Built Structures & Systems 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
  36. 36. MULTI DIMENSION IMPACT ACCOUNTING Sun ACCOUNTING FOR EVERYTHINGBOP 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 What 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 Structures & Systems Natural Capital Sun Sun Financial Capital Human Capital Man Built Structures & Systems 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
  37. 37. This framework needs to be applied as a PEOPLE perspective: (1) … STATE (quality of life) at the Beginning of the Period (BOP) (2) … STATE (quality of life) at the End of the Period (EOP) (3) … all the activities or flows that had impact and changed the state (quality of life) during the period MULTI DIMENSION IMPACT ACCOUNTING
  38. 38. This framework needs to be applied as a PLACE perspective: (1) … state of the place at the Beginning of the Period (BOP) (2) … state of the place at the End of the Period (EOP) (3) … all the activities or flows that had impact and changed the state of the place during the period MULTI DIMENSION IMPACT ACCOUNTING
  39. 39. FOR A PRODUCT THERE IS: (1) … STATE of the PRODUCT at the Beginning of the Period (BOP) (2) … STATE of the PRODUCT at the End of Period (3) … all the activities or flows associated with the product that have impacts and changed state during the period A product flows through a life cycle that includes supply chain, use, and post use waste chain. In the process there is impact on people, place and organization … and there is impact on people, profit and planet. MULTI DIMENSION IMPACT ACCOUNTING
  40. 40. FOR A PRODUCT A product flows through a life cycle that includes supply chain, use, and post use waste chain. In the process there is impact on people, place and organization … and there is impact on people, profit and planet. PRODUCT, that is goods and services, is the link that connects everything AND helps deliver Quality of Life for PEOPLE MULTI DIMENSION IMPACT ACCOUNTING

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