Mdia p3-03-perspectives-150420

MULTI DIMENSION IMPACT ACCOUNTING
File: MDIA-p3-01-PERSPECTIVES-150420.odp Peter Burgess (c) All rights reserved
MDIA
PERSPECTIVES

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 is good, but it is only the perspective
of the ORGANIZATION.

PERSPECTIVES
A unique object can look very different
depending on the position of the observer.
Multiple perspectives are essential:
● a PEOPLE perspective;
● an ORGANIZATION perspective;
● a PRODUCT perspective;
● a PLACE perspective;
● etc.

PERSPECTIVES
The next slide is very simplistic … but the
top view of this solid object has the object
looking like an ellipse while the side views
show the object as a rectangle with
different lengths depending on which side
is being observed.

SIDE VIEW
TOP VIEW
S
I
D
E
V
I
E
W

The next 4 slides
● Graphic with PEOPLE at the center
● With ORGANIZATION at the center;
● With PRODUCT at the center;
● With PLACE at the center.

Putting PEOPLE at the Center

Putting ORGANIZATION at the Center

Putting PRODUCT at the Center

Putting PLACE at the Center

THE CHALLENGE
The challenge is to have a data system
that is meaningful from every perspective
of the socio-enviro-economic-system.
Hence, the need for a Multi Dimension
and Multi Perspective data framework.

THE TVM-MDIA SOLUTION
● MDIA uses concepts from conventional
double entry accounting where there
are both 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.

THE METRICS 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.

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 … Human Capital (NC)
DIRTY BROWN:
The ECONOMIC piece … Man Built Capital (MBC)
GREEN:
NATURE, ENVIRONMENT … Natural Capital (NC)
COLOR KEY

Trajectory to disaster!
This must be changed
to give this …

PEOPLE progressing
MBC* efficient
PLANET healthy
* MBC – Man Built Capital

SO …
What is the PEOPLE perspective?
What is the ORGANIZATION perspective?
What is the PRODUCT perspective?
What is the PROCESS perspective?
What is the PLACE perspective?
How do these all come together as
a single coherent system?

How must the components of MBC
be changed to get 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
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
Financial
Capital
Human
Capital
Man Built
Capital
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

Note that FINANCIAL CAPITAL has
been separated out from the other
parts of the MBC segment
Note also the addition of SUN to
enable metrics about renewables

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
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

But the financial accounts are only
about money transactions, nothing
about impact on people and planet
and externalities ignored!
Financial accounts are mostly from
the perspective of an organization
and for investors.

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 Costs
Financial Profit
Financial Revenues
Financial
Balance
Sheet
BOP
Financial
Balance
Sheet
EOP

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

Sun
ADD positive impact not accounted forBOP EOP
REVENUES
VALUE to buyer
Equals
HUMAN CAPITAL ADD
Wages and benefits
What value to
employee?
What value to society?
Taxation
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
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 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
Employee Benefits
Employee Payroll
Other expenditures
Asset use costs
Depreciation
Financial expenses
Taxation
PROFIT
COSTS

Sun
ACCOUNTING FOR EVERYTHINGBOP EOP
REVENUES
VALUE to buyer
Equals
HUMAN CAPITAL ADD
Wages and benefits
What value to
employee?
Taxation
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
Employee Benefits
Employee Payroll
Other expenditures
Asset use costs
Depreciation
Financial expenses
Taxation
PROFIT
COSTS

This framework needs to be applied to
everything:
● for ORGANIZATIONS (PROFIT);
● for PEOPLE;
● for PLACE … and ENVIRONMENT;
● for PRODUCT.
Also:
● for SUPPLY CHAIN;
● for PROCESS.

This framework needs to be applied as a
ORGANIZATION and investor view:
(1) … STATE (balance sheet) at the Beginning
of the Period (BOP)
(2) … STATE (balance sheet ) at the End of
the Period (EOP)
(3) … all the activities or flows that had impact
and changed the state (balance sheet)
during the period

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)
and changed the state (quality of life)
during the period

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)
and changed the state of the place during
the period

FOR A PRODUCT
PRODUCT, that is goods and services, is the
link that connects everything AND helps deliver
Quality of Life for PEOPLE
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 SUPPLY CHAIN
SUPPLY CHAIN is an integral part of the history
of a PRODUCT.
A product flows through a life cycle that includes
supply chain, use, and post use waste chain.
Every stage of the supply chain should be
managed, and for that there have to be metrics
for each of the stages of the supply chain.
Price, cost and profit must be supplemented by
metrics for good impact and bad impact at each
stage.

FOR PROCESS
PROCESS is an integral part of each stage of
the SUPPLY CHAIN.
Efficiency and effectiveness of PROCESSES
determine the progress and performance of the
socio-enviro-economic system.
Technology has been used to reduce the cost of
processes, but less effort has been used to
improve the impact of process on PEOPLE and
PLANET.

The TrueValueMetrics website

Mdia p3-03-perspectives-150420

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