MultiCapital Accounting

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= "the performance of a society or organization is best understood in terms of what its impacts on vital capitals are, and with specific reference to their limits". [1]

URL = http://www.multicapitalscorecard.com

Contextual Citation

"Performance instead is assessed relative to what an organization’s impacts on Vital Capitals must be in order to be sustainable – socially, economically environmentally – with the units of measurement being determined by each capital." (http://www.multicapitalscorecard.com/MultiCapital_Scorecard_Intro.pdf)


Description

Mark W. McElroy:

"Arguably the most pervasive principle found in the 100+ year old literature on sustainability

– That the performance of a society or organization is best understood in terms of what its impacts on vital capitals are, and with specific reference to their limits

– Vital capitals: natural, human, social, constructed, intellectual and economic "

(http://www.sustainableorganizations.org/Multiple_Capital_Accounting.pdf)

Characteristics

MCA now also standards-based

International Integrated Reporting Council (IIRC)

“Integrated thinking is the active consideration by an organization of the relationships between its various operating and functional units and the capitals that the organization uses or affects.” (http://www.sustainableorganizations.org/Multiple_Capital_Accounting.pdf)


Sustainability Accounting Standards Board (SASB)

“Material sustainability issues arise in industries that rely on common capitals as a source of value creation, beyond financial or manufactured capital … Common capitals, as used in this Framework, include natural capital … and human capital.” (http://www.sustainableorganizations.org/Multiple_Capital_Accounting.pdf)


Global Initiative for Sustainability Ratings (GISR)

“Leading reporting initiatives such as IIRC and SASB include references to multiple, or ‘vital,’ capitals. GISR embraces the multiple capitals framework as well.” (http://www.sustainableorganizations.org/Multiple_Capital_Accounting.pdf)


Typology

"There are arguably two schools of thought or broad approaches as to how MCA should be done:

1. Market Value (MV)

• MV school is about measuring and monetizing intangibles and externalities as a basis for explaining market caps and the ability to create $ value

• Market Value School

– First, this is arguably the IIRC’s school of thought because it stresses measurement, management and reporting of capital impacts primarily for the benefit of shareholders

– Prominent illustrations of this approach include the EP&L method (pioneered at Puma); the TIMM method (proprietary PwC tool); and Ernst & Young’s approach to Integrated Reporting

– Forthcoming Natural Capital Protocol may also fit in here




2. Triple Bottom Line (TBL)

• TBL school, by contrast, is about assessing impacts on vital capitals as a basis for determining the overall performance of organizations

• Triple Bottom Line School – So far only one method extant: the MultiCapital Scorecard • A capital-, context-based and open-source TBL system • Early users include Ben & Jerry’s, New Chapter and Cabot "

(http://www.sustainableorganizations.org/Multiple_Capital_Accounting.pdf)

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