MultiCapital Scorecard

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= concept and book

The Concept

= "The MCS is the world’s first and only context-based triple bottom line accounting system and is specifically adaptable to the reporting requirements of Benefit Corporation Statutes in the U.S. and elsewhere". [1]

Description

"The MultiCapital Scorecard (MCS) is a free and open-source management tool (a public good) that organizations can use to measure, manage and report their performance in a fully integrated (Triple Bottom Line) way. In principle, the MCS is based on the idea that performance is best understood in terms of what an organization’s impacts on vital capitals are relative to organization-specific and context-based sustainability norms. Managing performance, therefore, boils down to managing impacts on vital capitals, a basic tenet of Multicapitalism.

The main theory of performance behind the MCS, then, is that in order to perform well, an organization must not put either the sufficiency of vital capitals or the well-being of stakeholders who depend on them at risk. In the case of internal economic/financial capitals, for example, the relevant norms or standards might consist of sector-specific targets for not-less-than returns on equity (lower limits); for human, social/relationship or constructed capitals, they might take the form of not-less-than levels of capital production and/or maintenance (again, lower limits); and for natural capitals, they will typically consist of not-more-than levels of consumption (upper limits). And because performance also depends on both local and global circumstances that will almost always vary by organization, the MCS is context-based — no two organizations are alike and performance accounting in the new economy should be oriented accordingly.

Indeed, the MCS is the world’s first and only context-based integrated measurement, management and reporting system that makes it possible to assess performance across all aspects of the Triple Bottom Line in terms of impacts on vital capitals. It is the only system extant, that is, that can help answer the questions all organizations should be asking themselves: How much is enough to be sustainable, and are we?" (https://www.multicapitalscorecard.com/multicapital-scorecard/?)

Process

Mark W. McElroy:

• A context-based approach to TBL measurement and reporting (defines company-specific standards of performance on a bottom-up basis)


  • A three-step process:
    1. Scoping and Materiality – Identify duties and obligations for what an organization’s impacts on vital capitals must be in order to be sustainable; results in identification of related Areas of Impact (AOIs)
    2. AOI Development – Define company-specific goals and standards of performance for each AOI, context-based metrics and associated data collection protocols
    3. Scorecard Implementation – Operationalize Scorecard in order to measure, manage and report performance "

Discussion

"Ever since the term Triple Bottom Line (TBL) was first introduced by John Elkington in 1997, managers in organizations have been looking for ways to do it – that is, to operationalize the measurement and reporting of organizational performance in all of its dimensions: social, economic and environmental.

Many attempts have been made to implement the TBL, including the Global Reporting Initiative (GRI), the world’s leading sustainability reporting standard. Most such efforts have fallen short, however, largely because of their failure to adequately address Sustainability Context. GRI itself suffers from this shortcoming. Indeed, Sustainability Context is indispensable for measurement and management, too, not just reporting. It requires that social, economic and ecological thresholds in the world be taken explicitly into account when attempting to assess the performance of organizations. Integrated reporting, that is, must be context- and thresholds-based.

The sustainability of water use, for example, cannot be ascertained without first determining how much water is available in a particular place and how much of it should be assigned to a specific user. A rate of use can then be compared to a sustainable rate of supply. Sustainability thresholds can similarly be defined for other areas of impact, including social and economic ones. Performance, in turn, can then be assessed in consistent integrated terms. The MCS makes this possible." (http://www.multicapitalscorecard.com/MultiCapital_Scorecard_Intro.pdf)



The Book

  • Book: The MultiCapital Scorecard.By Martin Thomas and Mark McElroy. Chelsea Green Publishing, 2017.

"The Consultants Martin Thomas and Mark McElroy have developed a format that provides a practical way to oversee such expansive sustainability. You choose what you wish to measure – what you feel is important – and even the weights you want to give to the various items. But they provide, thorough their MultiCapital Scorecard, a means for managing and evaluating that broader view of the organization.

It’s an important book because when you fall short of sustainability – an unpalatable workplace, polluting the environment, or being unproductive and winding up in the financial red – you are eroding capital, be it societal or corporate, and that’s destructive. And even if you find a multicapital approach wrongheaded or the authors’ system too elaborate, the method may include useful ideas you can borrow for your own situation." (https://www.theglobeandmail.com/report-on-business/careers/management/the-multicapital-scorecard-a-practical-guide-to-sustainability/article33849941/)

More Information

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