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. MULTI DIMENSION IMPACT ACCOUNTING WORK-IN-PROGRESS. SLIDESET
STILL IN DEVELOPMENT. UPDATES WILL BE POSTED OVER THE NEXT SEVERAL
WEEKS
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. 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. 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. 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. 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. 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. 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. 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. 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. When money accounting is used to manage the supply chain it
looks something like this: MULTI DIMENSION IMPACT ACCOUNTING
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. When IMPACT accounting is used to manage the supply chain
it looks something like this: MULTI DIMENSION IMPACT
ACCOUNTING
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. 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. 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. A better framework for reporting would be this MULTI
DIMENSION IMPACT ACCOUNTING
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. So think of all this miniaturized: MULTI DIMENSION IMPACT
ACCOUNTING
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. And then becoming part of the supply chain: MULTI DIMENSION
IMPACT ACCOUNTING
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. 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. So using impact accounting the numbers aggregate in this
way: MULTI DIMENSION IMPACT ACCOUNTING
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. Most companies are going to make decisions about product
based on profit MULTI DIMENSION IMPACT ACCOUNTING
28. And most people are going to make the 'buy' or 'not to buy'
decision based on VALUE MULTI DIMENSION IMPACT ACCOUNTING
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. 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. 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. 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. 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. 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. 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. 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. 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 ([email protected]). Please put something relevant
and catchy in the subject line. MULTI DIMENSION IMPACT
ACCOUNTING
38. Some links and contact information: Peter Burgess
[email protected] 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
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MULTI DIMENSION IMPACT ACCOUNTING