daffodil_sproutsApologies to those of you buried in snow – here in Vancouver, I see the first signs of spring. As I watch tender green daffodil shoots push up through the cold earth, I am reminded of how difficult it can be to break ground and how important it is to nurture emerging ideas.

The other day I gave a talk to a group of social entrepreneurs from the Ashoka-sponsored Social Finance and Innovation Study Tour in Vancouver. The topic was measuring the impact of mission-driven projects, investments and businesses. This is a very important topic, because success in sustainability is all about impact. An organization’s ability to measure its social or environmental impact (in addition to financial) is directly linked to its ability to innovate, grow and profit. And the field of social and environmental impact measurement is still emerging, much like the daffodils.

In my talk, I looked back to the emergence of our accounting system. It is the foundation on which our economic systems operate. These include the money economy, the carbon economy, the ecosystem economy and ultimately, the social economy (economic activity that generates social benefits).

Our current accounting system evolved from a math book written over 500 years ago by the father of accounting, Italian Luca Pacioli. Over centuries, certain procedures and principles became widely used and ultimately were accepted by businesses and accountants as the “norm”. By the 1930s many accountants argued their accounting methods were “generally accepted accounting principles”, thus was born the GAAP, a universal accounting framework in Western economies. (FYI: in Canada for public companies the GAAP is being replaced by International Financial Reporting Standards this year.)

Today we need to develop new accounting systems to support new sustainable business principles and behaviours. For instance, the carbon economy wasn’t even a thought bubble back when Pacioli was crunching numbers. Today it’s a serious consideration in business risk management.

Carbon accounting has its roots in the 1997 Kyoto Protocol, which established the framework for emissions trading. In 2001 the World Resources Institute and the World Business Council for Sustainable Development published the Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard, which detailed a standard for measuring carbon impacts. And now many companies measure their carbon footprint and offset what they can’t reduce. In doing so, they internalize pollution costs.

So it took 500 years to develop the economic / financial accounting system, and about ten years to develop the carbon accounting system. At this rate, it’s likely to take even less time to develop accounting systems for other intangibles.

The social economy is developing systems and standards for measuring social value such as increased jobs and training, reduced poverty and decreased welfare costs. However, the accompanying accounting systems that measure and quantity social impact are still in their infancy.

It is challenging to gain agreement on the core measurement units of social impact. One example of this is found in the foundation sector in Canada.

Last year, I worked on a project for the Community Foundations of Canada and Philanthropic Foundations Canada to study the state of community investing (CI) in nine Canadian foundations. Community or mission investing is an emerging field of interest for foundations. It uses endowment assets to finance social and environmental enterprises and initiatives for at-market or below-market returns. The report concludes that CI is still an embryonic practice in Canada, with limited measurement of impact outcomes.

As foundations and others become more active in community investing, they will look for evidence that their investments are performing both financially and socially. This interest will spur advancements in social-impact accounting.

With patience and perseverance we will win mainstream acceptance for new accounting methods that enable organizations to innovate, grow and profit in a sustainable business model. I see the progress every day as I watch my daffodil shoots push a little further out of the hard winter earth.


Coro’s Blog Topics

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Published September 14, 2017

It’s all about the chain, gang: Procurement the link to sustainable supply chains

We are transitioning to a low carbon, circular and inclusive economy. The latest arrival to the party is the procurement department. And none too soon, given the mammoth challenge ahead to make global supply chains sustainable and ethical. If you’re looking to fill your procurement cart with insights on tackling the challenges, read on for information about two tools and a city with a supply chain vision.

Published June 26, 2017

Universities: Show us what you’ve got!

We live in a volatile, uncertain and complex world. With threats of climate change, rising income inequality, social unrest, resource scarcity…

Published June 19, 2017

Vancity – a Force For Good

Vancity, Canada’s largest community credit union, has achieved the title of Canada’s Best Corporate Citizen for the second year in a row.

Published June 6, 2017

Accelerating Sustainability Visions for the Future

If you haven’t updated your sustainability or corporate social responsibility approach in the last few years, you are putting your company at risk.

Published April 28, 2017

Progressing Past the CSR Plateau

Corporate social responsibility is stuck. When it emerged on the scene 20 years ago, businesses and other stakeholders had high expectations for what a focus on CSR could deliver. But the reality is that neither business nor society are on track to enable nine billion people to live well within the boundaries of the planet by 2050 – let alone 2030.

2011-02-10

Why sustainability accounting systems are like daffodils

Apologies to those of you buried in snow – here in Vancouver, I see the first signs of spring. As I watch tender green daffodil shoots push up through the cold earth, I am reminded of how difficult it can be to break ground and how important it is to nurture emerging ideas.
2011-01-06

Make a Resolution, Reach Your Goal

Considering a New Year’s resolution? Well here’s a good reason to commit. Research shows that “People who explicitly make resolutions are 10 times more likely to attain their goals than people who don't explicitly make resolutions.”
2010-12-14

How Purchasing Drives Sustainability

If we purchase consciously, we can make our dollars work harder. We can target our purchasing to effect change beyond what we get back. Locally raised organic free-range turkey. Preloved mittens. A LEED Gold home. Camino Fair Trade chocolate.
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