mdia p3-01-core-concepts-150420
TRANSCRIPT
MULTI DIMENSION IMPACT ACCOUNTING
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
MDIACore Concepts
MDIA CORE CONCEPTSUses key concepts from accountancy;● Double Entry
● Balance Sheets and the Profit and Loss Account● State, Process and Flow;● State, Progress and Performance;● Cost, Price and Value;● Quantification and Standard Value;● Data at the Center;● Feedback;● Beyond the Reporting Entity.
MULTI DIMENSION IMPACT ACCOUNTING
Double Entry Accounting
● Double Entry Accounting is the core strength of a good accounting system;
● Every money transaction impacts two accounts; and the system as a whole is always in balance;
●
MULTI DIMENSION IMPACT ACCOUNTING
State, Progess and Performance● State is the Balance Sheet of the entity at a moment in time;
● Progress may be measured by comparing the Balance Sheet changes between the beginning and the end of the period;
● Performance is a measurement that relates Progess to the resources consumed.
MULTI DIMENSION IMPACT ACCOUNTING
Cost, Price and Value● There should be clarity about what is cost and what is price;
● A buy/sell transaction takes place at a price; ● The buy price becomes the buyer's cost;● There is a lot of data about price, but relatively little accessible data about cost;
● Value is a very important idea, but quantified data about value is missing;
● Money based cost, price and value ignore everything about impact on people and planet.
MULTI DIMENSION IMPACT ACCOUNTING
Quantification / Standard Value
● Quantification● Standard Value;●
MULTI DIMENSION IMPACT ACCOUNTING
Amazing complexity … ● Global North/Global South/Community
● Big Organizations - National and International / Small communities
● Elements of Society: National level and community
MULTI DIMENSION IMPACT ACCOUNTING
Feedback● Feedback is best when it is fast and very focused on practical actionable response
● In this example feedback happens in the small community BEFORE the data reaches city, state, national and international big data systems
MULTI DIMENSION IMPACT ACCOUNTING
Malaria in the community● Get data / facts about malaria in the community● This becomes the STATE – BOP*● PLAN malaria control interventions● IMPLEMENT malaria control interventions● Get data about costs● Get data / facts about resulting malaria in the community
● This becomes the resulting STATE EOP*● Assess change from BOP to EOP
MULTI DIMENSION IMPACT ACCOUNTING
* BOP – EOP … Beginning and End of Period
Next 2 slides● The first slide is a simplified representation of the State – Flow – State idea for ALL elements of the Socio-Enviro-Economic System
● The second slide shows what the conventional money metrics measure … just a tiny part of everything that matters.
MULTI DIMENSION IMPACT ACCOUNTING
* BOP – EOP … Beginning and End of Period
MULTI DIMENSION IMPACT ACCOUNTING
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
The makeup of: ● Human Capital;● Financial Capital;● MBSS*; and ● Natural Capital
MULTI DIMENSION IMPACT ACCOUNTING
* MBSS – Man Built Structures and Systems
MULTI DIMENSION IMPACT ACCOUNTING
ELEMENTS OF THE SYSTEM by SEGMENT
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
FinancialCapital
HumanCapital
Man BuiltStructures & Systems
NaturalCapital
MoneyFood 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
STATE – FLOW (activities) – STATE ● Financial Capital;● Human Capital;● MBSS*;● Natural Capital;● Sun
MULTI DIMENSION IMPACT ACCOUNTING
* MBSS – Man Built Structures and Systems
MULTI DIMENSION IMPACT ACCOUNTING
ResourceDepletion
EnvironmentDegradation
ImprovesQoL
Super RichAffluent
BoP
Industrial
MiningEnergy
GovernmentNot-for-ProfitPaperwork
Banking
WaterAir
EcoServicesHabitat
Law
MineralsEnergy
Land
ImprovesEnvironment
MaintainsNatural
Capital andremediates
ProducesProducts
ImprovesQoL
FinancialProgress
Renewables
WasteCreation
Super RichAffluent
BoP
Industrial
MiningEnergy
GovernmentNot-for-ProfitPaperwork
Banking
WaterAir
EcoServicesHabitat
Law
MineralsEnergy
Land
Sun
STATE - BOP
Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun Sun
STATE - EOP
Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
CompromisesSociety
ActivitiesBad Impact Good Impact
The next 4 slidesSTATE BOP … ACTIVITY ACCOUNTING … STATE EOP
● Financial accounting:● Financial accounting plus GOOD impacts;● Financial accounting minus BAD impacts;● Financial accounting with BOTH impacts.
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
Sun
FINANCIAL ACCOUNTS
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
Profit
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
FINANCIAL ACCOUNTS
ADD positive impact not accounted for
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
Profit
REVENUESProducts Sold X Price
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
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
FINANCIAL ACCOUNTS
DEDUCT negative impact not accounted for
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
Profit
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
Man BuiltStructures& Systems
NaturalCapital
Sun Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
FINANCIAL ACCOUNTS
ACCOUNTING FOR EVERYTHING
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
Profit
REVENUESProducts Sold X Price
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
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
ACTIVITIES OF AN INDIVIDUAL
Input ofHumanCapital:
Time, Effort,Skill, Ability, Knowledge
ImprovesSociety
ImprovesMBSS
Pro GoodActivities
Buy and UsePRODUCTS
e.g. Food, EnergyShelter, Transport
Pro MoneyActivities
e.g. Paid Work
Non-ImpactRecreation
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
ImprovesQoL andHumanCapital
WASTELiquidGasesSolids
NaturalCapital
Depleted
MaybeimprovesFC in HC
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
INPUTS ACTIVITIES BADImpact
State-EOPState-BOP
GOODImpact
Use ofMBSS
Use ofNaturalCapital
Use of Solar
MULTI DIMENSION IMPACT ACCOUNTING
Job-Money Work
Housing
Health
Time
Skills
Income
Recreation
Education
ProGood Work
Energy
PLUS opportunities
Improvessociety
Food
Clothes
ResourceDepletion
EnvironmentalDegradation
BOP EOPThe Individual
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
Sun
BOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
PERSONALASSETS
Energy
Health
Enjoyment
Skills
Experience
Family
Shelter
Friends
Money
Stuff
QUALITYOF LIFE
Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
PERSONALASSETS
Energy
Health
Enjoyment
Skills
Experience
Family
Shelter
Friends
Money
Stuff
QUALITYOF LIFE
PRODUCTSuse MBSS
PRODUCTSImpact NC
PRODUCTSUse
MBSS
PRODUCTSimprove QOL
MULTI DIMENSION IMPACT ACCOUNTING
Sun
FOODActivities
IndividualQoL
IndividualQoL
Use of Pesticides
Use of Land
The IMPACT of FOOD
Use of Water
Use of Fertilizers
Air Pollution
Use of Growth Hormonesand Antibiotics
Use of Energy
Use of Equipment
Use of Labor Inputs
Money Price
Money Profit
Money Cost
True Value
Value Add
True Cost
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
Sun
BOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
EOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
LAND USE
Sustainable agricultureWater purification
About LAND USE
Wetlands
Intensive monoculture
Coastal mangrove
Urban infrastructure
Roads, Parking Lots
There is a limited amount of landThere are multiple possible uses
Money Profit
Land is a factorin improving
human capital, producing goods
and services, locating MBSS,and providingvery criticalecosystemservices
Suburban sprawl
Housing
Tropical forestHabitat
Industrial operations
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
Sun
BOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
EOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
WATER USE
Food productionuses water
Beverage productionuses water
About WATER USE
Water is essential to LIFENothing is more important
Household wateruse essential
Industrial processesuse water
Rainfall and freshwater are abundant
in some placesbut not everywhere
Household wastealso pollutes
Waste water pollutionfrom processesa critical issue
Important forall processes to
treat water beforedischarge
Water is abundant,but most has toomuch dissolved
salts to be potable
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
Sun
BOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
EOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
EMISSIONS
SO2 … acid rain
CO2-Greenhouse Gas
About ATMOSPHERIC POLLUTION
Air pollution has many forms, all of which are more or less detrimental to people and planet
Particulates
MH4-Methane-GHG
Some emissionshave a direct
impact on health
Nitrous oxides
Freon-ozone layerdamage
Some emissionsare greenhouse
gases that causeglobal warming
The atmosphere is not an infinite free
dump for undesirableand toxic emissions
All emissionshave a cost
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
Sun
BOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
EOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
MBSSMan-BuiltStructures& Systems
Sun
NaturalCapital
FINANCIAL ACCOUNTSHuman
Capital
MBSSMan-BuiltStructures& Systems
Sun
NaturalCapital
HumanCapital
Economic Activity … Process Accounts
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
Profit
REVENUESProducts Sold X Price
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
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
MULTI DIMENSION IMPACT ACCOUNTING
Sun
FINANCIAL ACCOUNTS
Economic Activity … Process Accounts
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
Profit
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
MBSS
NaturalCapital
HumanCapital
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
ImpactStage 1
ImpactStage 1
ImpactStage 1
Cum Costs
Cum Profit
Price Stage 2
ImpactStage 2
ImpactStage 2
ImpactStage 2
Cum Impact
Cum Impact
Cum Impact
Cost = Price stage 2
Costs Stage 3
Profit Stage 3
Cum Costs
Cum Profit
Price Stage 3
ImpactStage 3
ImpactStage 3
ImpactStage 3
Cum Impact
Cum Impact
Cum Impact
FinancialDimension
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
MULTI DIMENSION IMPACT ACCOUNTING
MBSS
NaturalCapital
HumanCapital
PLACE … Where people live and work … where impact can be seen
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
ImpactStage 1
ImpactStage 1
ImpactStage 1
FinancialDimension
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
MULTI DIMENSION IMPACT ACCOUNTING
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved