Accounting isn’t really my thing. Sure, I have a business and I like money but accounting just isn’t my thing. I get someone else to do it then just look at the figures in the boxes with my fingers crossed in the hope that I’ve got the balance right.
So, when the prospect of listening to Jane Gleeson-White talk about her book, Six Capitals, The Revolution Capitalism Has To Have – or Can Accountants Save The Planet? – I was curious but not excited.
I should have been excited, this book is excellent.
In a nutshell our corporate accounting systems have been stuck in a time warp while the world moved on. Unable to account for things like intellectual property, customer satisfaction (service industry key performance indicator), sustainability, staff retention and engagement, brand identity and so on and so forth we currently have an accounting system that can’t adequately capture much of what we value. This is especially true now that so many businesses that don’t make or sell any ‘thing’ exist, and not only exist but are worth billions > Facebook is a good example of this.
Classic accounting is as old as the merchants of Venice (think back to the Crusades and that’s what we are accounting for in our GDP figures) and while triple-bottom-line accounting came into being in 1997 it was very much a ‘tick in the box’ and a bit of a story rather than integrated accounting.
This book charts how far we have come with fully integrated accounting of the six capitals.
I actually can see immense value in this type of accounting as it is actually relatively easy to adopt and, given my experience with the customers of the cosmetic industry, is exactly the type of information and metric my customers and consumer action groups are looking for. But it isn’t all good and it isn’t all happy, happy, joy, joy. Accounting is about money and there is no getting away from the fact that this type of accounting is still about giving everything a monetary value – no $ value, no value at all.
That is just sad and highlights to me what I already know about my culture, that we really are totally detached from nature and need to put dollar signs on it to even realise it is there.
Putting a dollar value on nature.
While there is a danger in valuing nature – if it has a value, it can, theoretically, be traded – it can also have its merits as the book shows with numerous examples.
By way of demonstrating that putting a dollar value onto nature won’t necessarily render it tradable the book highlights that humans are given a value in terms of healthcare costs, insurance risk and we are not traded. We still fight hard to end slavery, trafficking and the trading of human body parts as we have laws and moral codes prohibiting such things. We all know this hasn’t always been the case and not all countries value human life this way but there is a provision for its protection and as such we could take some degree of comfort that the same could also be true of nature.
We should be able to place a dollar value on nature without feeling we can trade it or offset it.
Offsetting does get a mention in the book. I’ve never been a fan of offsetting, carbon offsets or moving nature-scapes from one place to another. My reason is that I feel it legitimise sloppy behaviour. That you can leave a mess as long as you can pay to off-set it. And how on earth are we supposed to up-root a place of natural beauty and pop it somewhere more convenient so a road or housing estate can go there instead. That’s just stupid and over-simplifies the complexity of nature and the importance of space and place. This is all discussed.
Letting the people who wrecked it fix it.
How do you feel about letting the people who wrecked the planet – the mega-corporation – fix the planet?
Possibly not that great?
But I do have some degree of faith in the following:
Corporations aren’t actually bigger than their customers, staff, Directors. Corporations can’t make things or do things without people, that people today are more aware of the environmental impacts of their actions, are asking more questions and demanding more transparency. That the world has changed massively in the last 40 years and will continue to do so and that corporations will just have to change and innovate if they want to exist.
Secondly the book talks about how the purpose of a corporation can be re-worded in law to enable and support this different way of doing business. That financial gain doesn’t have to be the only metric that a CEO is measured on and that increasing shareholder dividends are not the sole reason for companies to exist. These legal changes are necessary as the company Directors do have their hands tied if profit is the only thing that legally matters and Directors can be sued for prioritising other things over making more money. I think that might be what is happening in the Australian Superannuation market at the moment but that’s for another post.
Finally I am convinced that there is actually more money, happiness, social and environmental justice in doing thing better and that we are naturally moving to this anyway, we just need a little push to get there a bit quicker.
So yes, this book has inspired me and renewed my faith in our collective ability (as humans) to actually solve this problem of a finite planet and if accountants have to be at the helm for now then so be it. Just keep a close eye on what they are valuing and make sure that capital for capitals sake is not it.