MULTI DIMENSION IMPACT ACCOUNTING
File: MDIA-p3-13-0-PRODUCT-150705.odp Peter Burgess (c) All rights reserved
MDIA
PRODUCT...
MULTI DIMENSION IMPACT ACCOUNTING
WORK-IN-PROGRESS.
SLIDESET STILL IN DEVELOPMENT.
UPDATES WILL BE POSTED OVER
THE NEXT SE...
PRODUCT
● Used by people to live their lives
● Made by companies
● Inputs to economic activities
● Outputs from economic a...
PRODUCT … GOOD
Gives people the opportunity to have
a good quality of life and standard of
living
The production of produc...
PRODUCT … BAD
The life cycle of a product almost
always has a significant negative
impact on resource depletion,
environme...
MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun Su...
The next slides show how the data
design architecture has to work in
order for IMPACT to be computed in
a rigorous and log...
MULTI DIMENSION IMPACT ACCOUNTING
Sun
FINANCIAL
P&L ACCOUNT
Financial Accounts describe Economic Activity
REVENUES
Product...
MULTI DIMENSION IMPACT ACCOUNTING
Sun
ADD positive impact not accounted forBOP EOP
REVENUES
Products Sold X Price
VALUE to...
MULTI DIMENSION IMPACT ACCOUNTING
Sun
DEDUCT negative impact not accounted forBOP EOP
For products and
energy bought
and t...
MULTI DIMENSION IMPACT ACCOUNTING
Sun
ACCOUNTING FOR EVERYTHINGBOP EOP
REVENUES
Products Sold X Price
VALUE to buyer
Equal...
When money accounting is used to
manage the supply chain it looks
something like this:
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
PRODUCT … the SUPPLY CHAIN
Zero to start
Costs this stage
Profit this stage
Price this s...
When IMPACT accounting is used to
manage the supply chain it looks
something like this:
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
MBSS
Natural
Capital
Human
Capital
PRODUCT … the SUPPLY CHAIN
IMPACT ACCOUNTING ADJUSTME...
The next slide shows …
… how the money P&L report describes the
impact of the money transactions on the
money balance shee...
MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun Su...
A better framework for reporting
would be this …
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun Su...
So think of all this miniaturized:
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
Sun
Every single PROCESS has IMPACT on EVERYTHINGBOP EOP
Sun
Financial
Capital
Human
Cap...
And then becoming part of the
supply chain:
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
Sun
PRODUCT made by one PROCESSBOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Cap...
MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun Su...
So using impact accounting the
numbers aggregate in this way:
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
MBSS
Natural
Capital
Human
Capital
PRODUCT … the SUPPLY CHAIN
ADJUSTMENTS TO REFLECT IMP...
Most companies are going to make
decisions about product based on
profit …
MULTI DIMENSION IMPACT ACCOUNTING
And most people are going to make
the 'buy' or 'not to buy' decision
based on VALUE …
MULTI DIMENSION IMPACT ACCOUNTING
Increasingly VALUE is a function of:
(1) Price relative to the utility of
the product
(2) The life cycle environmental and...
From the company perspective, in
the end, it is people that are going to
make the key decisions about the
profit potential...
ADVERTISING does not message the
inconvenient truth that the IMPACT
of more sales is more stress on the
environment and in...
TRUTH IN ADVERTISING should
mean that the information is correct
not only in a legalistic sense, but
also in terms of mess...
BETTER PRODUCTS are going to be
one of the big ways in which the
PROGRESS and PERFORMANCE of
the SOCIO-ENVIRO-ECONOMIC
SYS...
For the buyer, the buy decision is
driven by money and impact factors
that include:
●
Money price to buy
● Money costs dur...
The business world makes knowing
about price very easy.
Conversely, information about life
cycle social and environmental
...
In the end, it is going to be PEOPLE
making 'buy' or 'not to buy' decisions
about PRODUCTS that is going to
change everyth...
Follow up: Request for Feedback
Getting these ideas fleshed out into a clear, simple but
comprehensive structure is a big ...
Some links and contact information:
Peter Burgess … peterbnyc@gmail.com
Peter Burgess LinkedIn profile
https://www.linkedi...
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Mdia p3-13-0-product-150705

  1. 1. MULTI DIMENSION IMPACT ACCOUNTING File: MDIA-p3-13-0-PRODUCT-150705.odp Peter Burgess (c) All rights reserved MDIA PRODUCT GOODS AND SERVICES FOR QUALITY OF LIFE
  2. 2. MULTI DIMENSION IMPACT ACCOUNTING WORK-IN-PROGRESS. SLIDESET STILL IN DEVELOPMENT. UPDATES WILL BE POSTED OVER THE NEXT SEVERAL WEEKS
  3. 3. PRODUCT ● Used by people to live their lives ● Made by companies ● Inputs to economic activities ● Outputs from economic activities ● Flows through a supply chain ● Has impact during use ● Has impact post use in the waste chain ● Product links everything MULTI DIMENSION IMPACT ACCOUNTING
  4. 4. PRODUCT … GOOD Gives people the opportunity to have a good quality of life and standard of living The production of product gives people jobs. MULTI DIMENSION IMPACT ACCOUNTING
  5. 5. PRODUCT … BAD The life cycle of a product almost always has a significant negative impact on resource depletion, environmental degradation and loss of ecosystem service capacity. MULTI DIMENSION IMPACT ACCOUNTING
  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 FINANCIAL ACCOUNTS DESCRIBE ECONOMIC ACTIVITY IN FINANCIAL OR MONEY TERMS WHILE COMPLETELY IGNORING IMPACT ON EVERYTHING ELSE
  7. 7. The next slides show how the data design architecture has to work in order for IMPACT to be computed in a rigorous and logical way … MULTI DIMENSION IMPACT ACCOUNTING
  8. 8. 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 Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun COSTS
  9. 9. 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 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
  10. 10. 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 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
  11. 11. 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 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
  12. 12. When money accounting is used to manage the supply chain it looks something like this: MULTI DIMENSION IMPACT ACCOUNTING
  13. 13. MULTI DIMENSION IMPACT ACCOUNTING PRODUCT … the SUPPLY CHAIN 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 Cost = Price stage 3 Costs Stage 4 Profit Stage 4 Cum Costs Cum Profit Price Stage 4 Cost = Price stage 4 Costs Stage 5 Profit Stage 5 Cum Costs Cum Profit Price Stage 5 Cost = Price stage 4 Costs Stage 5 Profit Stage 5 Cum Costs Cum Profit Price Stage 5 ETC...
  14. 14. When IMPACT accounting is used to manage the supply chain it looks something like this: MULTI DIMENSION IMPACT ACCOUNTING
  15. 15. MULTI DIMENSION IMPACT ACCOUNTING MBSS Natural Capital Human Capital PRODUCT … the SUPPLY CHAIN IMPACT ACCOUNTING ADJUSTMENTS Zero to start Costs this stage Profit this stage Price this stage FINANCIAL ACCOUNTS 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 File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
  16. 16. The next slide shows … … how the money P&L report describes the impact of the money transactions on the money balance sheet of the operation … … while the IMPACTS of the operations on society and the environment are ignored because they are outside the reporting envelope. MULTI DIMENSION IMPACT ACCOUNTING
  17. 17. 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
  18. 18. A better framework for reporting would be this … MULTI DIMENSION IMPACT ACCOUNTING
  19. 19. 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
  20. 20. So think of all this miniaturized: MULTI DIMENSION IMPACT ACCOUNTING
  21. 21. MULTI DIMENSION IMPACT ACCOUNTING Sun Every single PROCESS has IMPACT on EVERYTHINGBOP EOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun
  22. 22. And then becoming part of the supply chain: MULTI DIMENSION IMPACT ACCOUNTING
  23. 23. MULTI DIMENSION IMPACT ACCOUNTING Sun PRODUCT made by one PROCESSBOP EOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun
  24. 24. 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 PRODUCT PRODUCT … the result of a SUPPLY CHAIN … with series of PROCESSES
  25. 25. So using impact accounting the numbers aggregate in this way: MULTI DIMENSION IMPACT ACCOUNTING
  26. 26. 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
  27. 27. Most companies are going to make decisions about product based on profit … MULTI DIMENSION IMPACT ACCOUNTING
  28. 28. And most people are going to make the 'buy' or 'not to buy' decision based on VALUE … MULTI DIMENSION IMPACT ACCOUNTING
  29. 29. Increasingly VALUE is a function of: (1) Price relative to the utility of the product (2) The life cycle environmental and social impact of the product MULTI DIMENSION IMPACT ACCOUNTING
  30. 30. From the company perspective, in the end, it is people that are going to make the key decisions about the profit potential of a product. When they don't buy there is no profit MULTI DIMENSION IMPACT ACCOUNTING
  31. 31. ADVERTISING does not message the inconvenient truth that the IMPACT of more sales is more stress on the environment and in certain cases a more problematic situation for the customer. MULTI DIMENSION IMPACT ACCOUNTING
  32. 32. TRUTH IN ADVERTISING should mean that the information is correct not only in a legalistic sense, but also in terms of messaging ALL that matters for a better world. MULTI DIMENSION IMPACT ACCOUNTING
  33. 33. BETTER PRODUCTS are going to be one of the big ways in which the PROGRESS and PERFORMANCE of the SOCIO-ENVIRO-ECONOMIC SYSTEM is going to be improved. MULTI DIMENSION IMPACT ACCOUNTING
  34. 34. For the buyer, the buy decision is driven by money and impact factors that include: ● Money price to buy ● Money costs during use ● End of use money value ● Beneficial impact for the user ● Life cycle social impact ● Life cycle environmental impact MULTI DIMENSION IMPACT ACCOUNTING
  35. 35. The business world makes knowing about price very easy. Conversely, information about life cycle social and environmental impact is very difficult to find. MULTI DIMENSION IMPACT ACCOUNTING
  36. 36. In the end, it is going to be PEOPLE making 'buy' or 'not to buy' decisions about PRODUCTS that is going to change everything MULTI DIMENSION IMPACT ACCOUNTING
  37. 37. Follow up: Request for Feedback Getting these ideas fleshed out into a clear, simple but comprehensive structure is a big job and remains a work-in- progress. Many organizations are making progress with this, but there is no broad universal framework yet that will enable all the pieces to come together and work efficiently. I would like to get feedback from anyone and everyone to help move this initiative forward. While I have some clear concepts about much of this architecture, there are many details that I do not know enough about and need help. So, please feel free to contact me (peterbnyc@gmail.com). Please put something relevant and catchy in the subject line. MULTI DIMENSION IMPACT ACCOUNTING
  38. 38. Some links and contact information: 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 for MDIA slidesets http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0200-Burgess-p3-Slidesets MULTI DIMENSION IMPACT ACCOUNTING

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