Positive Business

Accounting for Sustainability

Comment 2

Inspiration

The Economy for the Common Good (ECG) states that “money is not the main objective, but serves only as a means of payment” (ECG, 2017, p.33) but what if ‘money’ itself is a currency created as a function of doing good? Imagine a Central Bank of Kindness that controls the printing presses, increasing its supply as more social good is done. A bank where the reserves are not held in virgin mined commodities like gold but in the digitally generated benefits of ecological and social sustainability.

To turn off the printing presses of our fiat currencies and replace them with this mechanism is not a likely, immediate outcome but who knows what the next 10 to 20 years may produce. Technologies have a habit of speeding up change, creating a moderate shift in the tectonic plates of today can produce a tsunami a few years down the road. Peter Drucker is often quoted as saying that “you can't manage what you can't measure”, wo what we need to measure must focus our attention on the goals of the business.

The metrics that have now engrained themselves into the global system are part of the problem and a reason why we have arrived at this moment of crisis. Everything that governs our judgement of what success looks like depends largely upon the prevailing economics, if what comes in is greater that what goes out – we have happiness with the reverse holding true.

The inspiration for our project is our collective desire to change this paradigm, not in a grand gesture but in significant small steps.

The problem

Increasingly, small and medium sized businesses understand the philanthropic and cultural value of sustainability. But those that focus on social and environmental outputs are disadvantaged by a traditional accounting system that incentivises economic gains whilst ignoring the true costs of their activities.

Businesses that are facing frugal times need to embrace any mechanism to create value in their business models.

How might we improve the situation where those businesses because they focus on social and environmental outputs, are disadvantaged by an accounting system solely focused on financial prudence, incentivising economic gains whilst ignoring the true costs of their activities?

Currently sustainability is a ‘nice to have’ mantra, a piece of marketing that chimes with an audience. Rarely do we have the power to validate sustainable behaviours but also quantify them. This matters because quantification leads to reward, which leads to a change in behaviour and a shift in outcomes.

What it does

Stemming from the belief that sustainability is not a fad but an essential facet of long-term success, the solution we envision is a social-accounting platform built using blockchain technology (imagine a Xero or QuickBooks for social accounting). A ledger that records business activities and uses machine learning to analyse and predict social and environmental impacts. In this way tangible value is revealed from sustainable practices which are then presented in a dashboard.

Our model includes a validated reward system. Businesses earn Earth Points** – that can be exchanged for collaboration and delivery within the community. Activity is validated and socially judged ensuring trust and transparency.

Through gamification we incentivise businesses to compete in greening our economy.

How we built it

We will use the ECG matrix combined with other tools and AI to identify which impacts are happening, the frequency of the impacts and associated value that these impacts are creating.

Our approach. Let’s take one step at a time...

There is a need to create an approach that takes people on the journey, that builds trust, demonstrates value and makes businesses feel secure in what they are doing. A practical solution that first focuses on energising the community, enables businesses to recognise the economic value directly attributable to their sustainable practises via an education and learning programme, and allows them to come together in community building activities, highlighting their achievements in the process.

A community of practice in sustainable innovation and delivery, a framework which seeks to educate in this domain, build a community and facilitate practice.

Challenges we ran into

The topic is BIG ONE!

Particularly, when exploring social accounting as an alternative method:

  1. How do you actually factor in environmental and social effect in a traditional accounting scheme?
  2. How do you make a particular method of social accounting widely accepted?
  3. How do you ensure that it won’t be ‘gamed’ so that companies can appear more socially responsible?

Accomplishments that we are proud of (and what we learned)

Over the last 48h...

  • We met and came together as a team.
  • We did extensive research, brainstormed and discussed innovative ideas
  • We designed a customer journey, and engaged and listened to mentors
  • We then developed and validated a concept and worked through its value proposition
  • And finally created a low fidelity prototype, and
  • Recorded this pitch!

But most importantly, we enjoyed the process and learned about sustainability together!

What's next for Positive Business

  • Continue to develop the prototype
  • User testing and validation
  • Content creation and dissemination
  • Marketing plan and refine business model
  • Seek partnerships and collaborations from organisations like the EU Commission

Of course, we will stay in touch via Slack!

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