1. MDIA WHY? WHAT? HOW? MULTI DIMENSION IMPACT ACCOUNTING 2. MULTI DIMENSION IMPACT ACCOUNTING WORK-IN-PROGRESS. SLIDESET STILL IN DEVELOPMENT. UPDATES WILL BE POSTED OVER THE NEXT SEVERAL WEEKS 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 4. Corporate money profit performance over the past fifty years has been impressive MULTI DIMENSION IMPACT ACCOUNTING 5. But labor income over the past fifty years not so good MULTI DIMENSION IMPACT ACCOUNTING 6. WHY? MULTI DIMENSION IMPACT ACCOUNTING 7. The following slides show some important trends! MULTI DIMENSION IMPACT ACCOUNTING 8. MULTI DIMENSION IMPACT ACCOUNTING 9. MULTI DIMENSION IMPACT ACCOUNTING 10. MULTI DIMENSION IMPACT ACCOUNTING 11. MULTI DIMENSION IMPACT ACCOUNTING 12. MULTI DIMENSION IMPACT ACCOUNTING 13. Corporate money profit performance over the past fifty years has been impressive MULTI DIMENSION IMPACT ACCOUNTING 14. Huge recent economic growth but a finite planet! MULTI DIMENSION IMPACT ACCOUNTING 15. MULTI DIMENSION IMPACT ACCOUNTING 16. MULTI DIMENSION IMPACT ACCOUNTING 17. MULTI DIMENSION IMPACT ACCOUNTING 18. MDIA Why? More reason! MULTI DIMENSION IMPACT ACCOUNTING 19. YELLOW: The PEOPLE piece Human Capital (HC) DIRTY BROWN: The ECONOMIC piece Man Built Capital (MBC) GREEN: NATURE, ENVIRONMENT Natural Capital (NC) MULTI DIMENSION IMPACT ACCOUNTING COLOR KEY 20. MULTI DIMENSION IMPACT ACCOUNTING 21. MULTI DIMENSION IMPACT ACCOUNTING 22. MULTI DIMENSION IMPACT ACCOUNTING 23. MULTI DIMENSION IMPACT ACCOUNTING 24. MULTI DIMENSION IMPACT ACCOUNTING 25. MULTI DIMENSION IMPACT ACCOUNTING 26. Trajectory to disaster! This must be changed to this MULTI DIMENSION IMPACT ACCOUNTING 27. MULTI DIMENSION IMPACT ACCOUNTING 28. PEOPLE progressing MBC* efficient PLANET healthy MULTI DIMENSION IMPACT ACCOUNTING * MBC Man Built Capital 29. MDIA What? MULTI DIMENSION IMPACT ACCOUNTING 30. MDIA is ETRICS The double entry idea is very powerful: MULTI DIMENSION IMPACT ACCOUNTING 31. MDIA MULTI DIMENSION IMPACT ACCOUNTING is a system of metrics to enable better management of everything that matters. MULTI DIMENSION IMPACT ACCOUNTING 32. MDIA MULTI DIMENSION IMPACT ACCOUNTING It is an extension of conventional accounting and builds on the amazing power of the double entry system MULTI DIMENSION IMPACT ACCOUNTING 33. State B/S Flow P&L New State B/S MULTI DIMENSION IMPACT ACCOUNTING 34. MULTI DIMENSION IMPACT ACCOUNTING 35. MULTI DIMENSION IMPACT ACCOUNTING 36. MULTI DIMENSION IMPACT ACCOUNTING 37. Put STATE side by side and there is a very useful time series: MULTI DIMENSION IMPACT ACCOUNTING 38. MULTI DIMENSION IMPACT ACCOUNTING 39. Add more detail into the STATE FLOW STATE model and it might look something like this: MULTI DIMENSION IMPACT ACCOUNTING 40. MULTI DIMENSION IMPACT ACCOUNTING STATE - BOP STATE - EOPPERIOD ACTIVITES 41. PROBLEM! Conventional Accounting only measures this part of the total system: MULTI DIMENSION IMPACT ACCOUNTING 42. MULTI DIMENSION IMPACT ACCOUNTING STATE - BOP STATE - EOPPERIOD ACTIVITES 43. Conventional money profit accounting works very well for financial performance that is impact on corporate profits and stock value. MULTI DIMENSION IMPACT ACCOUNTING 44. MDIA How? MULTI DIMENSION IMPACT ACCOUNTING 45. 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 46. 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 47. 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 48. 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 49. 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 50. 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 51. 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 52. MULTI DIMENSION IMPACT ACCOUNTING The first step is to design and develop a data architecture that is congruent with the realities of the modern global socio-enviro-economic system 53. Quality of Life and Standard of Living for PEOPLE should be measured with a system that is just as powerful. MULTI DIMENSION IMPACT ACCOUNTING 54. Resource Depletion should be measured rigorously and incorporated into all aspects of Impact Accounting. MULTI DIMENSION IMPACT ACCOUNTING 55. Ecosystem Services and Bio- Degradation should be measured rigorously and incorporated into all aspects of Impact Accounting. MULTI DIMENSION IMPACT ACCOUNTING 56. MULTI DIMENSION IMPACT ACCOUNTING The data architecture is already in a relatively complete form. 57. MULTI DIMENSION IMPACT ACCOUNTING A massive amount of scientific data already exists and needs to be mapped to the MDIA data architecture. 58. MULTI DIMENSION IMPACT ACCOUNTING New units of measure need to be defined so that scientific data may be converted into these units of measure. 59. MULTI DIMENSION IMPACT ACCOUNTING A characteristic of these new units of measure is that they will enable complex details to be summarized easily for reporting and substantive discussion by the media. 60. MULTI DIMENSION IMPACT ACCOUNTING The system will also facilitate drill-down to a granular level so that better decisions can be made by everyone taking into account not only the price and profit but also the associated impacts on society (people) and the environment (planet). 61. MULTI DIMENSION IMPACT ACCOUNTING These new units of measure will NOT merely be a market monetization of an element. They will be new units that have the properties of all physical measures. 62. MULTI DIMENSION IMPACT ACCOUNTING Standard Values need to be established for EVERYTHING. 63. MULTI DIMENSION IMPACT ACCOUNTING Standard Values have much the same characeristics as Standard Costs in commercial cost accounting. 64. MULTI DIMENSION IMPACT ACCOUNTING In cost accounting Standard Costs are a way massively to simplify costing without losing much, if any, of the utility of the cost accounting information. 65. MULTI DIMENSION IMPACT ACCOUNTING Data about PRODUCTS needs to be organized. The IMPACT of every PRODUCT in the market should be 'a click away'. 66. MULTI DIMENSION IMPACT ACCOUNTING Data about the choices PEOPLE make needs to be organized so that there may be ways for PEOPLE to earn rewards for making choices that are good for themselves, the society and the enviroment. 67. MULTI DIMENSION IMPACT ACCOUNTING Data business performance will include IMPACT as rigorously as there is accounting for PROFIT. 68. MULTI DIMENSION IMPACT ACCOUNTING PROCESS is also an element of the data architecture. There should be Standards for all processes. 69. MULTI DIMENSION IMPACT ACCOUNTING SUPPLY CHAIN may be built up from PROCESS standards. 70. MULTI DIMENSION IMPACT ACCOUNTING COMPANIES have financial accounts. MDIA standards may be used to convert financial accounts to impact accounts. 71. But to what end? Business managers have powerful metrics to optimize PROFIT performance and the perceived VALUE of the company. Conventional business metrics only focus on the performance of the company from the PERSPECTIVE of the COMPANY and its OWNERS, not at all from any of the other perspectives. MULTI DIMENSION IMPACT ACCOUNTING 72. Conventional business metrics are inadequate because they ignore important externalities like The negative impact on PEOPLE: Efficiency means more production for less labor; Less labor is a negative for employees (society); Cost of occupational health and safety ignored. The negative impact on the ENVIRONMENT Race to avoid environmental regulation; Costs to the environment are ignored; Impact on PLACE. MULTI DIMENSION IMPACT ACCOUNTING 73. MULTI DIMENSION IMPACT ACCOUNTING With impact accounting for COMPANIES and also with impact accounting for PLACES it is less and less likely that corporate misbehavior will have zero cost. Nothing will be out of sight! 74. MULTI DIMENSION IMPACT ACCOUNTING Operating units of companies and entities in the supply chain can be held to account based on information originating in a PLACE 75. MULTI DIMENSION IMPACT ACCOUNTING Accountability is a public matter 76. 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 77. 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