[P2P-F] new integrated multi-capital accounting schemes

[Michel Bauwens]

Reporting 3.0 Platform
reporting3.org/

Selected References:

Baue, B. (2017): Blueprint 3. Data Integration, Contextualization &
Activation for Multicapital Accounting. Reporting 3.0.
reporting3.org/wp-content/uploads/2017/07/R3_Data_Blueprint_Report-1.pdf

Meadows, D. (1998): Indicators and Information Systems for Sustainable
Development. Sustainability Institute. donellameadows.org/wp-content/
userfiles/IndicatorsInformation.pdf

* Meadows actually repeats human capital here, but lists “wealth” in this
section, so we took the liberty of re-labeling in order to conform with the
field of multicapitalism that has emerged in recent years — for example
through the International Integrated Reporting Council’s Integrated
Reporting Framework and Mark McElroy’s MultiCapital Scorecard — trusting
that this remains true to Meadows’ — and Daly’s — original intention.
---------- Forwarded message ----------
From: Great Transition Network <gtnetwork at greattransition.org>
Date: Sat, Aug 5, 2017 at 7:45 AM
Subject: Money for the People (GTN Discussion)
To: michelsub2004 at gmail.com



>From Bill Baue <bbaue at verizon.net>

-------------------------------------------------------
[Moderator's Note: Today's the last day for commenting, and then Mary will
have her opportunity to respond. Thanks, all! --- JC]

Monetization and Blockchain

This has been a rich and wide-ranging conversation, so I’m chiming in now
to add to one issue that’s been mentioned already, and address one issue
that hasn’t been mentioned yet (as far as I can tell, though there has been
so much posted I apologize if this is duplicative.)

My opening caveat is that I’m specifically refraining from weighing in on
the more ambitious proposal of the wholesale transformation of money. My
contributions are far more humble and circumscribed. I want to discuss the
question of “monetization” and make a related point about blockchain, which
has already been discussed, though not from this angle, I believe.

And a few preliminary words of the context from which these comments
spring: a work that I wrote that was recently published by the Reporting
3.0 Platform (where I’m a Senior Director), in the Data Blueprint: Data
integration, contextualization & activation for multicapital accounting.
This report draws significantly from the 1998 report to the Balaton Group,
authored by Donella Meadows, called Indicators and Information Systems for
Sustainable Development. In particular, we draw on the "Daly Triangle,”
named after Herman Daly (who is of course a member of the Great Transition
Initiative network and has contributed to this dialogue). As part of our
12-month Data Blueprint collaborative development process, we took in
feedback in a virtual dialogue (similar to this forum) that the Daly
Triangle — which links the Ultimate Means of Natural Capital through the
Intermediate Means of Human and Built Capital to the Intermediate Ends of
Social and Financial* Capital to the Ultimate
Ends of Well-Being — doesn’t reflect the notion of thresholds or the
carrying capacities of the capitals** that Meadows stresses at one
important point in her report.

So, we took the liberty of “updating” the Daly Triangle in an effort to
integrate such thresholds, borrowing the conceptual framework of Kate
Raworth’s “Doughnut Economics” that posit ecological ceilings (inspired by
Johan Rockstrom’s Planetary Boundaries) and social foundations. What we
ended up with was the “Daly Hourglass,” with the capital stocks represented
as cycles, and capital flows connecting the Ultimate Means to the
Intermediate Means and Intermediate Ends to the Ultimate Ends — with the
sustainability thresholds intersecting at the capital flows, thus
discerning the carrying capacities of the capitals.

I describe this primarily to note that the paramount importance of linking
Ultimate Means (Natural Capital — which we know we as a people are now
over-tapping on an annualized basis, as the Ecological Footprint that
William Rees and Mathis Wackernagel co-conceived tells us Earth Overshoot
Day was Aug 2) with Ultimate Ends (Well-being — or what Mary Mellor
wonderfully calls “wellth”)

Now, on to my main points:

Monetization: Money is, as Mary Mellor points out, more a symbol than a
tangible thing. Accordingly, money is used not only to “represent”
financial transactions, but it’s also increasingly used as a “normalizing”
mechanism to generate a kind of equivalence or comparability between
otherwise disparate things. A carbon price, for example, is a kind of
monetization. So as you see, I’m addressing an issue that’s related to
Mellor’s essay, but not the main focus. But I believe it warrants inclusion
in this discussion, because of 1) its increasing prevalence and importance
and 2) the potential to “reform” its use, since it isn’t quite the
Pandora’s box of money itself.

In the Data Blueprint, we look at the case example of how The Crown Estate
uses “monetization” in its multicapital “Total Contribution” accounting
approach to “normalize” (or “commonalize” as they say) between the various
positive and negative economic, social, and environmental impacts the
company has on the world. We take a brief trip down a side alley to look at
some of the critiques of such monetization (these focused on KPMG’s True
Value Methodology, which is sufficiently similar to Total Contribution to
make our point), primarily leveled at the ethics of such a move (KPMG
itself acknowledges the ethical dilemmas involved in the academic journal
that you can find referenced in the Blueprint).

And here’s where the strands weave together: in the Data Blueprint, we
applaud Total Contribution for taking a multicapital approach, but we
critique its use of monetization in the absence of contextualization within
the carrying capacities of capitals. Here, we lean on the work of Mark
McElroy of the Center for Sustainable Organizations (who conceived
Context-Based Sustainability, and with whom I co-founded the Sustainability
Context Group in 2012), who has proposed that monetization makes sense only
when contextualizing the carrying capacities of capitals, and he
illustrates his point using “Context-Based Monetization Cost Curves”
whereby the “cost” of a resource (say, the carbon cycle) is directly linked
to the overall carrying capacity of that capital resource, such that costs
are very low when the capital stock is cycling within the carrying
capacity, and becomes increasingly expensive as the carrying capacity is
neared, and prohibitively expensive when the
sustainability threshold of the carrying capacity is crossed.

Of course, Context-Based Sustainability (based as it is in the work of Dana
Meadows, with whom Mark collaborated as Chair of Dana's Sustainability
Institute) is predicated on managing capitals within their carrying
capacities not just for the health of those resources, but ultimately for
the sake of the stakeholders who rely on those resources for their
well-being (wealth).

So, as you can see, the idea of linking monetization to capital sufficiency
in service of well-being is consistent with the premise of Mary Mellor’s
essay, but is achievable without quite as much ambition and “disruption” as
overturning our monetary system.

Blockchain: In the Data Blueprint, we also present two pilot projects that
use blockchain to track “transactions” — one pilot, a collaboration between
Reporting 3.0, Radboud University, and Noorden Duurzam, is a
“habitat-based” implementation to track financial, social, and ecological
value flows in the north of the Netherlands. The other, a collaboration
between Reporting 3.0 and Guard Global, applies to the investment realm,
using XBRL tagging taxonomies to track such flows as well. Significantly,
both pilots are seeking to integrate a contextual “filter” into the
blockchain that assesses if the flow is “sustainable” — i.e. within
carrying capacity. One of the benefits of blockchain technology is that it
can maintain confidentiality (for example, of the actual data involved in
the transaction) while simultaneously allowing for the authentication of
that data within the blockchain — thereby enabling the scrutiny (assurance
or auditing, if you will) of
proprietary data without compromising the secure nature of the data.

Here again, we believe that this approach to blockchain holds significant
promise, as it enables the insertion of contextual assessment — namely,
respect for sustainability thresholds that are tied to well-being (wellth)
— in ways that are implementable within the existing financial and social
regime, while also transforming those regimes in ways that align with the
goals of the Great Transition.

Thanks all of you for such a great dialogue!

Best,
Bill Baue
Senior Director
Reporting 3.0 Platform
reporting3.org/

Selected References:

Baue, B. (2017): Blueprint 3. Data Integration, Contextualization &
Activation for Multicapital Accounting. Reporting 3.0.
reporting3.org/wp-content/uploads/2017/07/R3_Data_Blueprint_Report-1.pdf

Meadows, D. (1998): Indicators and Information Systems for Sustainable
Development. Sustainability Institute. donellameadows.org/wp-content/
userfiles/IndicatorsInformation.pdf

* Meadows actually repeats human capital here, but lists “wealth” in this
section, so we took the liberty of re-labeling in order to conform with the
field of multicapitalism that has emerged in recent years — for example
through the International Integrated Reporting Council’s Integrated
Reporting Framework and Mark McElroy’s MultiCapital Scorecard — trusting
that this remains true to Meadows’ — and Daly’s — original intention.
** Here again, for absolutely strict accuracy, Meadows didn’t use the term
“capitals” in association with “carrying capacity,” but she does discuss
the capitals in depth throughout the report.

**********************************

On Jul 1, 2017, at 9:31 AM, Great Transition Network <
gtnetwork at greattransition.org> wrote:

>From Paul Raskin <praskin at tellus.org>

-----
Dear GTN,

The old proverb—money is the root of all evil—may overstate the case, but
money is, indeed, implicated in the iniquitous debt/growth spiral now
degrading Earthland.

Mary Mellor explains in her new GTI essay, “Money for the People,” that it
needn’t be so. The modern money system is a social construct that evolved
to spur capital accumulation, but lingers on in an era needing, instead, to
throttle consumerism, debt, and the economic growth machine. Rather than
creating money privately through bank lending, as the current system does,
an alternative approach—public money—can undergird an economy oriented
toward people and use value, not profit and exchange value.

I think you’ll find Mary’s vision of a critical institutional pillar of a
Great Transition economy illuminating, intriguing, and inspiring. Please
read it at www.greattransition.org/publication/money-for-the-people, and
let the comments and questions begin! How would public money work in
practice? How would it interface with the market? How might its pursuit
contribute to strategies for system change?

Comments are welcome through JULY 31.

Looking forward,
Paul Raskin
GTI Director

HOW WE WORK
Odd-numbered months are for internal GT Network discussions; even-numbered
months are for public dissemination. You will receive all comments via
email, and can review the entire thread online at
www.greattransition.org/forum/gti-forum. The essay will be published
alongside a “Roundtable,” comprised of selected comments from the GTN
discussion and a response from the author.

PS: Apologies for any difficulties getting to the website over the past
couple days. It’s back up and running!

-------------------------------------------------------
Hit reply to post a message
Or see thread and reply online at
http://greattransition.org/forum/gti-discussions/191-
money-for-the-people/2420

Need help? Email jcohn at tellus.org





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