1. MDIA The Global SOCIO-ENVIRO-ECONOMIC System MULTI DIMENSION IMPACT ACCOUNTING File: MDIA-p3-01-3-SOCIO-ENVIRO-ECONOMIC-150619.odp Peter Burgess (c) All rights reserved 2. MULTI DIMENSION IMPACT ACCOUNTING WORK-IN-PROGRESS. SLIDESET STILL IN DEVELOPMENT. UPDATES WILL BE POSTED OVER THE NEXT SEVERAL WEEKS 3. Socio-Enviro-Economic or PEOPLE, ENVIRONMENT and MAN-BUILT CAPITAL MULTI DIMENSION IMPACT ACCOUNTING 4. Sustainable progress requires decision making that optimizes for all the segments of the system. Metrics to optimize for company profit performance and capital market value ignoring externalities are not enough! MULTI DIMENSION IMPACT ACCOUNTING 5. The next slide shows: PEOPLE MORE THAN 7 BILLION NOW AND GROWING MULTI DIMENSION IMPACT ACCOUNTING 6. MULTI DIMENSION IMPACT ACCOUNTING 7. The next slide shows: ENVIRONMENT SUN, PLANET EARTH, FAUNA and FLORA MULTI DIMENSION IMPACT ACCOUNTING 8. MULTI DIMENSION IMPACT ACCOUNTING 9. The next slides shows: MAN-BUILT CAPITAL GOVERNMENT, LAW, CITIES, INDUSTRY AND A LOT MORE MULTI DIMENSION IMPACT ACCOUNTING 10. MULTI DIMENSION IMPACT ACCOUNTING 11. MULTI DIMENSION IMPACT ACCOUNTING 12. MULTI DIMENSION IMPACT ACCOUNTING 13. MULTI DIMENSION IMPACT ACCOUNTING 14. MULTI DIMENSION IMPACT ACCOUNTING 15. MULTI DIMENSION IMPACT ACCOUNTING 16. HISTORY HOW THE THREE SEGMENTS HAVE CHANGED OVER TIME MULTI DIMENSION IMPACT ACCOUNTING 17. YELLOW: The PEOPLE piece Human Capital (NC) DIRTY BROWN: The ECONOMIC piece Man Built Capital (MBC) GREEN: NATURE, ENVIRONMENT Natural Capital (NC) MULTI DIMENSION IMPACT ACCOUNTING COLOR KEY 18. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital 19. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital 20. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital 21. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital 22. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital 23. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital 24. Trajectory to disaster! This must be changed to this MULTI DIMENSION IMPACT ACCOUNTING 25. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital 26. PEOPLE progressing MBC* efficient PLANET healthy MULTI DIMENSION IMPACT ACCOUNTING * Man Built Capital Man Built Structures and Systems 27. To manage change there have to be METRICS for ALL the components of the system. MULTI DIMENSION IMPACT ACCOUNTING 28. This is the background for MULTI DIMENSION IMPACT ACCOUNTING (MDIA) MULTI DIMENSION IMPACT ACCOUNTING 29. MDIA tracks impact on ALL* the components of the system MULTI DIMENSION IMPACT ACCOUNTING * Not just the money based financial metrics 30. MULTI DIMENSION IMPACT ACCOUNTING Fundamentals of the Socio-Enviro-Economic System Human Capital Man Built Capital Natural Capital 31. MULTI DIMENSION IMPACT ACCOUNTING Fundamentals of the Socio-Enviro-Economic System Financial Capital Human Capital Man Built Capital Natural Capital Man Built Capital Natural Capital Human Capital Split out Financial Capital from other components of Man Built Capital 32. MULTI DIMENSION IMPACT ACCOUNTING Fundamentals of the Socio-Enviro-Economic System Financial Capital Human Capital Man Built Capital Natural Capital SunSun Man Built Capital Natural Capital Sun Human Capital Add Sun the source of all energy Split out Financial Capital from other components of Man Built Capital 33. MULTI DIMENSION IMPACT ACCOUNTING Fundamentals of the Socio-Enviro-Economic System Financial Capital Human Capital Man Built Capital Natural Capital SunSun Financial Capital Human Capital Man Built Capital Natural Capital SunSunSun Man Built Capital Natural Capital Sun Human Capital Add Sun the source of all energy Split out Financial Capital from other components of Man Built Capital Reorder because Financial Capital metrics exist 34. MULTI DIMENSION IMPACT ACCOUNTING Sun Fundamentals of the Socio-Enviro-Economic SystemBOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOP BOP = Beginning of Period STATE EOP = End of Period STATE PROGRESS is Change in STATE during the period. ALL the elements of the BOP and EOP STATES need to be quantified 35. MULTI DIMENSION IMPACT ACCOUNTING Sun Fundamentals of the Socio-Enviro-Economic SystemBOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOP Any number of activities may take place during a period. They may be extremely complex and interconnected, but PROGRESS is still measured by CHANGE in STATE. 36. MULTI DIMENSION IMPACT ACCOUNTING Sun Fundamentals of the Socio-Enviro-Economic SystemBOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOP PERFORMANCE is measured by relating PROGRESS achieved with the RESOURCES consumed. How much is Human Capital increased and how much are Financial, Man Built and Natural Capital diminished 37. MULTI DIMENSION IMPACT ACCOUNTING Sun Fundamentals of the Socio-Enviro-Economic SystemBOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun Financial Capital virtual masquerading as reality. Human Capital PEOPLE are complex, because we originated through nature, but our inventions are simple. Man Built Capital is so simplistic compared to Natural Capital. While in some part amazing, it is very crude compared to what is the norm in Natural Capital. In the end it is Natural Capital that is going to determine everything. NC is infinitely complex and resilient and will outlast everything Man Built and People are unlikely to survive in a future mass extinction that is quite certain. The source of ALL energy to drive the system EOP 38. MDIA builds on double entry and the concept of state and flow MULTI DIMENSION IMPACT ACCOUNTING 39. MULTI DIMENSION IMPACT ACCOUNTING These 3 slides explain the concept of STATE and FLOW or in accounting terms, the BALANCE SHEET / PROFIT AND LOSS relationship 40. MULTI DIMENSION IMPACT ACCOUNTING STEADY STATE 41. MULTI DIMENSION IMPACT ACCOUNTING POSITIVE PROGRESS 42. MULTI DIMENSION IMPACT ACCOUNTING DETERIORATION OF STATE 43. These reflect Steady state; Positive progress; and Deterioration of state MULTI DIMENSION IMPACT ACCOUNTING 44. No information about activities is needed in order to measure PROGRESS only measures about changes in STATE MULTI DIMENSION IMPACT ACCOUNTING 45. State, Progress and Performance State is the Balance Sheet of the entity at a moment in time; Progress is measured by comparing Balance Sheet changes between the beginning and the end of the period; Performance is a measurement that relates Progress to the resources consumed. MULTI DIMENSION IMPACT ACCOUNTING 46. MULTI DIMENSION IMPACT ACCOUNTING EFFICIENCY AND EFFECTIVENESS 47. MULTI DIMENSION IMPACT ACCOUNTING Sun STATE Beginning of Period - BOP STATE End of Period - EOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun FLOWS* ACTIVITIES* PROCESSES* * Any amount of complexity STATE remains simple 48. MULTI DIMENSION IMPACT ACCOUNTING Sun Fundamentals of the Socio-Enviro-Economic SystemBOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun Financial Capital virtual masquerading as reality. Human Capital PEOPLE are complex, because we originated through nature, but our inventions are simple. Man Built Capital is so simplistic compared to Natural Capital. While in some part amazing, it is very crude compared to what is the norm in Natural Capital. In the end it is Natural Capital that is going to determine everything. NC is infinitely complex and resilient and will outlast everything Man Built and People are unlikely to survive in a future mass extinction that is quite certain. The source of ALL energy to drive the system EOP 49. A fundamental reality The origin of all FINANCIAL WEALTH has been NATURAL CAPITAL facilitated by a lot of human energy and man built knowledge, structures and systems. MULTI DIMENSION IMPACT ACCOUNTING 50. MULTI DIMENSION IMPACT ACCOUNTING ELEMENTS OF THE SYSTEM by SEGMENT Financial Capital Human Capital Man Built Structures & Systems Natural Capital Sun Financial Capital Human Capital Man Built Structures & Systems Natural Capital Money FoodGovernmentNature (life) Sun Nature (life) Capital Market Value Water Laws. RulesNature (life)Land Shelter InfrastructureWater Clothes IndustryNature (life)Air Health MiningEcoservices Education Energy Skills Waste RecreationRetail Culture Logistics Religion Knowledge Technology Security Energy Mobility Profit 51. Managing in a complex system is a challenge The best practice it to drive decision making with the best / quickest data about progress and performance and at the most granular level this is the essence of the MDIA data architecture. MULTI DIMENSION IMPACT ACCOUNTING 52. 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 (peterbnyc@gmail.com). Please put something relevant and catchy in the subject line. MULTI DIMENSION IMPACT ACCOUNTING 53. Some links and contact information: 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 for MDIA slidesets http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0200-Burgess-p3-Slidesets MULTI DIMENSION IMPACT ACCOUNTING