Mdia p3-03-perspectives-150420

MULTI DIMENSION IMPACT ACCOUNTING

File: Characteristics-of-an-Economic-Activity.odp Peter Burgess (c) All rights reserved

MDIAPERSPECTIVES

TRIPLE BOTTOM LINE (TBL)This idea is that a company should not only be looking at 'profit' performance but also the impact on people and planet:● PROFIT;● PEOPLE;● PLANET.

This good, but this is ONLY from the PERSPECTIVE of the ORGANIZATION.


PERSPECTIVESA 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; and,● a PLACE perspective;



Putting PEOPLE at the Center


Putting ORGANIZATION at the Center


Putting PRODUCT at the Center


Putting PLACE at the Center

THE CHALLENGEThe 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.


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;

● a building block that will aggregate to enable summary reporting; and

● enable drill down to activities that are relevant at the individual level.

Conventional double entry accounting is very good for money transactions, but ignores non-money transactions and externalities!


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.


YELLOW: The PEOPLE piece

DIRTY BROWN: MBSS (MAN-BUILT STRUCTURES AND SYSTEMS)

GREEN:NATURAL CAPITAL, NATURE'S BOUNTY


Trajectory to disaster!

This must be changed to this …


PEOPLE progressing

MBSS efficient

PLANET healthy


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?


Part of the answer is BETTER METRICS


THE NEXT SLIDE SHOWS THE COMPONENTS OF THE SYSTEM by SEGMENT



ELEMENTS OF THE SYSTEM by SEGMENT

FinancialCapital

HumanCapital

Man BuiltStructures& Systems

NaturalCapital

Sun

FinancialCapital

HumanCapital

Man BuiltStructures & Systems

NaturalCapital

Money Food Government Nature (life)

Sun

Nature (life)

Capital Market Value

WaterLaws. Rules Nature (life)Land

ShelterInfrastructure WaterClothes

Industry Nature (life)AirHealth

Mining EcoservicesEducation

EnergySkillsWaste

Recreation RetailCulture

LogisticsReligionKnowledge

Technology

Security

Energy

Mobility

Profit

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


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


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.


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



Sun

FINANCIAL P&L ACCOUNT

Financial Accounts describe Economic Activity

REVENUESProducts 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

FinancialCapital

HumanCapital


NaturalCapital

Sun SunSun

FinancialCapital

HumanCapital


NaturalCapital

Sun

COSTS

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.



Sun

BOP EOP

Sun

FinancialCapital

HumanCapital


NaturalCapital

Sun SunSun

FinancialCapital

HumanCapital


NaturalCapital

Sun


Financial Costs

Financial Profit

Financial Revenues

FinancialBalance

Sheet

BOP

FinancialBalance

Sheet

EOP


Sun

BOP EOP

Sun

FinancialCapital

HumanCapital


NaturalCapital

Sun SunSun

FinancialCapital

HumanCapital


NaturalCapital

Sun

FINANCIAL ACCOUNTSDESCRIBE ECONOMIC

ACTIVITY IN FINANCIAL OR MONEY TERMS

WHILE COMPLETELYIGNORING IMPACT

ON EVERYTHING ELSE



Sun





BOP EOP


Employee Benefits

Employee Payroll

Other expenditures

Asset use costs

Depreciation

Financial expenses


Taxation

PROFITSun

FinancialCapital

HumanCapital


NaturalCapital

Sun SunSun

FinancialCapital

HumanCapital


NaturalCapital

Sun

COSTS


Sun

ADD positive impact not accounted forBOP EOP


VALUE to buyerEquals

HUMAN CAPITAL ADD

Wages and benefitsWhat value to

employee?

Pro-good expendituresWhat value to society?

TaxationWhat value to society?

POSITIVE IMPACT NOTACCOUNTED

FOR

FinancialCapital

HumanCapital


NaturalCapital

Sun Sun

FinancialCapital

HumanCapital


NaturalCapital

Sun





Employee Benefits

Employee Payroll

Other expenditures

Asset use costs

Depreciation

Financial expenses


Taxation

PROFIT

COSTS


Sun

DEDUCT negative impact not accounted forBOP EOP

For products andenergy bought

and this process

Free use of thecommons andpublic services& infrastructure

Degradationof land

Water scarcityand degradationAir pollution:

Impact on peopleAir pollution:

Impact on climate

Air pollution:Impact on people

Solid waste

Resourcedepletion

Environmental Degradation

Negativeimpact

File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved

FinancialCapital

HumanCapital


NaturalCapital

Sun Sun

FinancialCapital

HumanCapital


NaturalCapital

Sun





Employee Benefits

Employee Payroll

Other expenditures

Asset use costs

Depreciation

Financial expenses


Taxation

PROFIT

COSTS


Sun

ACCOUNTING FOR EVERYTHINGBOP EOP


VALUE to buyerEquals

HUMAN CAPITAL ADD

Wages and benefitsWhat value to

employee?

Pro-good expendituresWhat value to society?

TaxationWhat value to society?

For products andenergy bought

and this process

Free use of thecommons andpublic services& infrastructure

Degradationof land

Water scarcityand degradationAir pollution:

Impact on peopleAir pollution:

Impact on climate

Air pollution:Impact on people

Solid waste

Resourcedepletion

Environmental Degradation

POSITIVE IMPACT NOTACCOUNTED

FOR

Negativeimpact

FinancialCapital

HumanCapital


NaturalCapital

Sun Sun

FinancialCapital

HumanCapital


NaturalCapital

Sun





Employee Benefits

Employee Payroll

Other expenditures

Asset use costs

Depreciation

Financial expenses


Taxation

PROFIT

COSTS

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 PERIOD (EOP)

(3) … ALL THE ACTIVITIES OR FLOWS THAT HAD IMPACT AND CHANGED THE STATE (QUALITY OF LIFE) DURING THE PERIOD


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 PERIOD (EOP)

(3) … ALL THE ACTIVITIES OR FLOWS THAT HAD IMPACT AND CHANGED THE STATE OF THE PLACE DURING THE PERIOD


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 (EOP) (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.


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


Mdia p3-03-perspectives-150420

Data & Analytics

Transcript of Mdia p3-03-perspectives-150420