MULTI DIMENSION IMPACT ACCOUNTING File: Characteristics-of-an-Economic-Activity.odp Peter Burgess (c) All rights reserved MDIA Characteristics of an ECONOMIC ACTIVITY
Jul 18, 2015
MULTI DIMENSION IMPACT ACCOUNTING
File: Characteristics-of-an-Economic-Activity.odp Peter Burgess (c) All rights reserved
MDIACharacteristics of an
ECONOMIC ACTIVITY
ECONOMIC ACTIVITY● Economic activity is everywhere;● Economic activity enables quality of life and standard of living;
● Economic activities use inputs … labor, materials, knowhow, natural resources;
● Economic activities produce products;● The process determines efficiency;● There are impacts because of resource use and waste generation;
● A part of the supply chain of products.
MULTI DIMENSION IMPACT ACCOUNTING
MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
Financial Accounts describe Economic Activity
Financial Costs
Financial Profit
Financial Revenues
FinancialBalance
Sheet
BOP
FinancialBalance
Sheet
EOP
MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
IN FINANCIAL OR MONEY TERMS
WHILE COMPLETELYIGNORING IMPACT
ON EVERYTHING ELSE
Financial Accounts describe Economic Activity
MULTI DIMENSION IMPACT ACCOUNTING
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
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
COSTS
MULTI DIMENSION IMPACT ACCOUNTING
Sun
ADD positive impact not accounted forBOP EOP
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
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
FINANCIAL P&L ACCOUNT
REVENUESProducts 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
MULTI DIMENSION IMPACT ACCOUNTING
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
Man BuiltStructures& Systems
NaturalCapital
Sun Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
FINANCIAL P&L ACCOUNT
REVENUESProducts 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
MULTI DIMENSION IMPACT ACCOUNTING
Sun
ACCOUNTING FOR EVERYTHINGBOP EOP
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
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
FINANCIAL P&L ACCOUNT
REVENUESProducts 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
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
Sun
BOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
EOP
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
MBSS
NaturalCapital
HumanCapital
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
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
MULTI DIMENSION IMPACT ACCOUNTING
File: MDIA-Framework-004-150411-WIP.odp Peter Burgess (c) All rights reserved
MULTI DIMENSION IMPACT ACCOUNTING
Sun
BOP EOP
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
Small decisions by people make all the differenceBOP EOP
Sun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
Small decisions by people make all the differenceBOP EOP
Sun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
Small decisions by people make all the differenceBOP EOP
Sun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun
Product
Place
Supply Chain
Process
Organization
Enablingenvironment
Society
MULTI DIMENSION IMPACT ACCOUNTING
Sun
Small decisions by people make all the differenceBOP EOP
Sun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
Small decisions by people make all the differenceBOP EOP
Sun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun
MULTI DIMENSION IMPACT ACCOUNTING
Sun
ACCOUNTING FOR EVERYTHINGBOP EOP
REVENUESProducts Sold X Price
VALUE to buyerEquals
HUMAN CAPITAL ADD
Wages and benefitsWhat value to
employee?
Pro-good expendituresWhat value to society?
TaxationFunds government.
Good 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
Man BuiltStructures& Systems
NaturalCapital
Sun Sun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
FINANCIAL P&L ACCOUNT
REVENUESProducts 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
MULTI DIMENSION IMPACT ACCOUNTING
Sun
From Financial Accounts to Impact on everythingBOP EOP
PRODUCT VALUE to buyer
Wages and benefitsValue to employee.
Pro-good expenditureValue to society.
Taxation funds government.
Good value to society.
Product use
Use of MBCFree use of thecommons andpublic services& infrastructure
Land use
Water use
Emissions
Waste water
Solid waste
Resource use
REVENUES/PROFITGood for Organization
Good for Owners
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun Sun
FinancialCapital
HumanCapital
Man BuiltCapital
NaturalCapital
Sun
FINANCIAL P&L ACCOUNT
Land - Habitat destructionEcoservice degradation
Resource depletion
Infrastructure use
Labor use
SC
IC
+HC
+HCEnergy use
MULTI DIMENSION IMPACT ACCOUNTING
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
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
COSTS
MULTI DIMENSION IMPACT ACCOUNTING
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
Man BuiltStructures& Systems
NaturalCapital
Sun SunSun
FinancialCapital
HumanCapital
Man BuiltStructures& Systems
NaturalCapital
Sun
COSTS