Birthplace & Historical Archive of Multicapitalism & Context-Based Accounting

Time to declare a Planetary Accounting Emergency!

As if the Planetary Climate and Coronavirus emergencies were not enough, now comes a Planetary Accounting Emergency, a chronic and widespread failure of general accounting methods to address the 21st-century needs of business and society in the following ways:

• They fail to express the environmental sustainability performance of individual companies and/or whole sectors
• They similarly fail to express the social sustainability performance of individual companies or sectors
• They fail to measure or report the true state of human well-being in the aggregate, either at the local, national or global levels, and instead simply prop up GDP, which only reinforces unsustainable behaviors in commerce

Mainstream accounting systems, that is, neither assess nor report the sustainability performance of human activities in authentic triple bottom line terms, and yet that is exactly what they must do in order for us to have any chance of achieving sustainability in the conduct of human affairs. Our security depends on it.

Worse yet is that our conventional accounting systems actually encourage the adoption of policies and practices that perpetuate – and even facilitate – our social and environmental crises because of what they do measure and report on the one hand, and what they do not measure and report on the other.  This bias comes at the expense of human and environmental well-being, neither of which is measured, much less reported, by current methods.  We need dashboards that tell us the whole truth, not just a part of it!

Mainstream performance accounting systems, that is, are no longer fit for purpose and deprive us of precisely the kind of information we need to effectively manage for sustainability.  In short, we are quite literally gaslighting ourselves to death with our own accounting systems!

Indeed, the human economy and its finance-centric performance accounting systems are dangerously monocapitalistic in form, in the sense that they promote an ethic that narrowly values the growth and health of only one type of capital, economic, at the expense of all others, even though our health and well-being depend on them.  Our problem, therefore, is not capitalism, it is monocapitalism, and the longer we cling to it the less secure we become.

The solution, we believe, is a new economic doctrine that we call multicapitalism – a system in which businesses and other actors in the world strive to live within their means and ensure the means to live and whose performance is assessed in those terms accordingly.  In multicapitalistic economies, performance is thereby measured, managed and judged in terms of what our impacts on all vital capitals are, not just one of them.

None of the other emergencies we face (climate, biodiversity, water, plastics, population, income inequality, debt, political conflict, etc.) can ever be fully resolved, much less taken up in earnest, unless such accounting systems are first put into place.  Why not?  Because the information we need to effectively navigate our way out of them is simply not provided by today’s accounting systems.  Instead, they incentivize negligent behaviors of precisely the sort that got us into the trouble we’re in!

What we desperately need now, therefore, is a new breed of accounting tools that can help us better assess our own performance in today’s terms.  And for that, there can be no better solution than context-based triple bottom line methods, such as the MultiCapital Scorecard, all of which are free and open-source. But will we use them?

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For more information about our work in the application of context-based multicapitalistic performance accounting tools at the levels of both individual organizations and whole economies, contact CSO’s Executive Director, Mark W. McElroy, PhD. And for an article co-authored by McElroy and Martin Thomas that demonstrates the dramatic differences in performance profiles for companies when viewed through the lenses of single versus triple bottom lines, see here: Time to Declare a Planetary Accounting Emergency (Solutions journal, December 2020).