Changes to Business Accounting Practices


#1

This is not my own idea, and unfortunately I do not know the name of the man who presented it. In the early 1990s I attended an Expo in Los Angeles that was about alternative energies. It was the sort of Expo that had both lectures and an exhibit floor with everything from solar systems to non-toxic cleaning products. I attended one lecture where a gentleman presented the idea that we change the way business keep their books.

He explained some of the basic concepts of accounting practices, how they evolved over the years prior to and after the industrial revolution. And he suggested that today we need accounting practices to respond to a new Revolution that takes the earth’s resources and community’s environments into account. He proposed that businesses need to record resources and environmental impacts as Liabilities - to be held on the books until the impacts were insignificant or cleared. If a business had to record a Liability on their books for using resource A (rather than simply transfer it as an Asset because it’s part of their inventory, which is what happens today), they might be financially motivated to look for more economical and sustainable solutions.

He also suggested that the only businesses that might even consider this to be a good idea would be the insurance industry because they will be the ones to pay for the detrimental impacts of the choices business were making regarding resource use and environmental impacts, and the ultimate impact on climate.

I wish I could remember this man’s name, and I wish he’d had a larger audience over the years for sharing his idea. I haven’t seen it discussed since, but I believe it’s time we revamp accounting practices to more accurately reflect the idea of Doughnut Economics.


#2

The big change would be an inclusive accounting practice. True price ie is trying to cope with the economic externalities. But even then; the way we approach ‘accountability’ is based on the history of our human economic activities. That’s a little bit short sighted…

The earth’s prominent resource energy is available in different modalities. Since we cannot ‘make’ anything in the energy-matter domain, the only way to produce ‘things’ is by adding mechanical energy or adding/extracting chemical energy to raw material.

The more exact way to account the amount of energy used would give a better accountability then the ‘usual’ way. Moreover we also solve the problem of converting calculated (relative) value in different currencies. The last observation is probably the best: the energy yearly sent by the sun has a value of over $ 5.000.000 per capita, outnumbering the value of fossil energy by at least a factor 1.000.000…and as bonus, from the financial perspective, it has no additional chemical influence on the earth’s natural processes…

Changing Business Accounting Practices to an absolute earth/solar based norm would certainly change our opinion on our business and value system…but change has a price for the existing powers…do you want to make the change to the Doughnut Economics?