MDIA ... Multi Dimension Impact Accounting ... takes into consideration the impact of everything, not just money. MDIA helps to change the decision dynamic so that social and environmental impact is taken into consideration as well as the impact on profit and financial capital. Stakeholders are increasingly aware of the negative externalities that are associated the creation of financial wealth and investors will be well advised to take note.

1. MULTI DIMENSION IMPACT ACCOUNTING
File: MDIA-p3-FINANCIAL-CAPITAL-150702-160606.odp Peter Burgess (c) All rights reserved
MDIA
FINANCIAL CAPITAL

2. CONTEXT
This slideset is a Work-in-Progress
and will be updated from time to time.
It is part of a series that aims to
enable better metrics for the complex
socio-enviro-economic system that
we all live in. Metrics are powerful,
but they must be the right metrics.
TRUE VALUE ACCOUNTING

3. The PURPOSE of all economic activity is
to enable an improved Quality of Life and
Standard of Living for PEOPLE.
➔ More MONEY and more STUFF has been the
proxy for a better quality of life and standard of
living.
➔ This has been one of the drivers of the
Western style consumer economy.
MULTI DIMENSION IMPACT ACCOUNTING

4. The metric for FINANCIAL CAPITAL is
MONEY.
But MONEY is not a good measure.
The value of MONEY is determined by
markets … and markets do nothing
more than respond to supply and
demand.
Worse … nothing more than a change
in sentiment will change the value of
money!
MULTI DIMENSION IMPACT ACCOUNTING

5. What is the origin of WEALTH?
All wealth has its origin with NATURAL
CAPITAL … and specifically the
energy of the SUN.
Over time people have converted
various forms of NATURAL CAPITAL to
what may be referred to as MAN BUILT
CAPITAL and in turn this has become
owned by PEOPLE.
MULTI DIMENSION IMPACT ACCOUNTING

6. Banks and Banking
Banks and banking are an important part
of the economic system
… but they are only the lubricant for the
system, they are neither the fuel nor the
engine.
MULTI DIMENSION IMPACT ACCOUNTING

7. Where do bank profits come
from?
They are fees for services … paid by
other entities in the socio-enviro-
economic system that are making profits
in their own sphere of activity.
A strong resilient economy is one where
there is a high proportion of 'real' activity
and less of merely financial transactional
activity.
MULTI DIMENSION IMPACT ACCOUNTING

8. Central Banks and Money
Central Banks now serve to 'back' the
financial system in the absence of any
other backing.
They have unusual powers including the
'creation' of money.
They cannot, however, do magic!
They will be well served by better metrics
that take 'everything' of importance into
account.
MULTI DIMENSION IMPACT ACCOUNTING

9. Capital Markets & Stock Value
Something has happened over the past
50 years to enable stock prices to
become more and more disconnected
from balance sheet values.
What this means is that a small amount of
real investment can get translated into a
much larger amount of financial wealth.
In the bigger scheme of things this is a
fiction … in other words a 'bubble'!
MULTI DIMENSION IMPACT ACCOUNTING

10. Economic metrics and
performance
In the early days of spreadsheets in the
1980s users got a calculation warning
'circular reference unresolved' when the
formulae were producing wrong results. I
often think that modern economic data
are giving us wrong results without
sending use the warning about the
entrenched problems of circular metrics!
MULTI DIMENSION IMPACT ACCOUNTING

11. The singular goal of increasing
financial capital is misplaced.
'Capitalism' has proved to be a powerful
tool that has enabled key investments to
be made for more than 200 years.
It is a system that should be refined in
order to optimize socio-enviro-economic
performance in the 21st century.
MULTI DIMENSION IMPACT ACCOUNTING

12. How to refine 'capitalism'?
To refine 'capitalism', the powerful metrics
of profit that provides motivation that
strengthens Financial Capital should be
modified so that there are metrics that
give incentive to improving impact on
Human Capital and Natural Capital as
well.
MULTI DIMENSION IMPACT ACCOUNTING

13. REMINDER
This slideset is A WORK-IN-PROGRESS. It will be
upgraded periodically. It is part of a series of more than
100 slidesets. Navigation to these is available here:
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3
More about the True Value Metrics initiative is at:
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0100-MainNav
FEEDBACK is welcome. Please email to Peter Burgess …
peterbnyc@gmail.com … with a catchy phrase in the
subject line so that it gets attention, and please identify
the specific slideset(s) or webpage involved.
TRUE VALUE ACCOUNTING

14. THANK YOU
Some links and contact information:
Email 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 to other resources:
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0100-MainNav#1
TRUE VALUE ACCOUNTING