Global Systems Accounting

Submitted by admin on 29. April 2022 - 19:40

Global Systems Accounting

(last updated 30 April 2022)


To replace purely financial measures of wealth and development, a new approach to global non-financial accounting is being developed to directly measure progress towards environmental sustainability and human well-being.

SUMMARY

• A new system of global accounts for the common good relevant to human and natural well-being is being developed using relevant science-based non-financial units of account.

• Nine initial indicator forms of capital are identified to respect both the planetary environmental boundaries of the global commons and the minimum human and social standards for the common well-being of all humanity.

• These accounts could become the basis to internalise environmental and social externalities, leading to global taxes or fines on damaging activities and supporting payments for social contributions and environmental regeneration in the common interest, in an integrated dynamic global system aiming for human and natural well-being and sustainability.

• Development of these accounting systems will provide the basis for the gradual replacement of the present economic paradigm and financial system which values only monetary wealth and GDP.


Basic working paper by Arthur Dahl

Webinar presentation by Arthur Dahl on 8 December 2021 for ebbf (40 minutes)

Slides of Arthur Dahl’s presentation


THE PROCESS

After an initial IEF blog by Arthur Dahl on 7 November 2021 (https://iefworld.org/node/1200), and his 8 December webinar, this new approach to Global Systems Accounting is being developed in a partnership and collective effort of the International Environment Forum (IEF) and ebbf – Ethical Business Building the Future https://www.ebbf.org. Working groups for each accounting dimension with multiple contributors are being managed by ebbf over various platforms, summarised at https://www.ebbf.org/global-systems-accounting, and including an ebbf Mighty Network open to ebbf members. The initial results will be presented at the ebbf Annual Conference in Lisbon on 12-15 May 2022, and in an associated event at the Stockholm150 International Meeting on 3 June 2022.


NINE DIMENSIONS OF ACCOUNTING

Environmental accounting

Our planetary environment is the foundation for all life and natural resources, but we are now exceeding planetary boundaries and system stability, and eroding the resource base upon which we depend, representing existential risks to our future. Accounts measuring our energy and climate imbalances through carbon flows, our management of biodiversity, and global contamination by pollutants, would target the most critical risks.

1. Carbon (energy)

Accounting for the full carbon cycle including both the release of fossil carbon and the capture and sequestration of excess atmospheric carbon would both monitor global heating and climate change, and the flow of solar energy and carbon sequestration through photosynthesis supporting all life on the planet, aiming to bring carbon accounts back into balance.

Relevant to Sustainable Development Goal 13 climate action

Go to the Carbon (energy) page

2. Biodiversity

While the complex systems of living things feed us and provide extensive ecosystem services, these are not presently valued. Accounts directly in species and ecosystems could encourage the protection and regeneration of the natural systems essential for our survival.

Relevant to Sustainable Development Goals 14 life below water and 15 life on land

Go to the Biodiversity page

3. Pollution

A clean environment is essential for human health and environmental stability. We need to quantify environmental pollution by the thousands of chemicals and man-made materials to identify their sources, pathways and impacts, measuring their true cost and driving reduction and remediation.

Relevant to Sustainable Development Goals 6 clean water, 7 clean energy, 12 production and consumption

Go to the Pollution page


Human well-being accounting

Measuring poverty in terms of income per capita is not a true measure of human subsistence and well-being, when the physical characteristics can be measured directly in more objective accounting for basic needs and the resulting good health.

4. Minimum living standard (poverty)

Every human being should have adequate shelter, clean water and sanitation, a source of energy and basic security as the ideal capital, with any deficiency a source of debt to be addressed.

Relevant to Sustainable Development Goals 1 no poverty, 6 water, 7 energy, 10 reducing inequalities, 11 cities and communities (housing)

Go to the Minimum living standard page

5. Food

Food is essential for life, so food accounts should include measuring the planetary capacity to produce enough food for all, how it is distributed to meet everyone’s nutritional needs, while eliminating food waste and ensuring an adequate income to all farmers and fishers.

Relevant to Sustainable Development Goal 2 Zero Hunger

Go to the Food page

6. Health

Since good health is essential to human well-being and to enable all to contribute productively to society at each stage in life, health accounts should treat this as health capital, with all factors damaging health increasing health debt.

Relevant to Sustainable Development Goal 3 Good Health

Go to the Health page


Social accounting

Humans are a social species, so accounting is needed for individual contributions to society through work and service, and for the intangible knowledge dimensions of science, technology, art and culture and their transmission through education. Finally effective individuals and institutions function through values and spiritual capital, accounted through performance measures.

7. Work and service

Every human being has a capacity to contribute to the wealth and well-being of society, so we need accounts to measure how we use this capacity for work and service, whether in paid employment or in other contributions to society, with all barriers, from unemployment to discrimination as forms of work debt depriving society of potential wealth.

Relevant to Sustainable Development Goal 8 decent work

Go to the Work and service page

8. Knowledge and education

A society is often defined by its knowledge and information dimensions of science, technology, art and culture. These are intangible yet highly significant, and increase in value the more they are shared, requiring different forms of accounting. Furthermore their operational impact comes from their acquisition and use by people, their incorporation in objects or institutions, and their transmission through education.

Relevant to Sustainable Development Goal 4 Quality education

Go to the Knowledge and education page

9. Spiritual capital and values

The most basic level of a system is the rules by which it is organized and operates. In human systems and communities, effective individuals and institutions function through values and spiritual capital, accounted for indirectly through performance measures.

Relevant to Sustainable Development Goal 16 peace, justice and strong institutions (in part)

Go to the Spiritual capital page


Last updated 30 April 2022