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Heroic Accounting

New proposals for monetizing corporate planetary impacts are perilous

As concerns mount about social and environmental sustainability, an unlikely planetary hero has emerged: the accountant. A growing collection of investors, academics and business leaders have proposed that better accounting practices can overthrow what Financier Ronald Cohen calls “the tyranny of profit” and set capitalism on a more sustainable track.

This new “Impact Accounting” promises to tabulate every way that individual companies influence planetary welfare—including economic profit, employment, social equity, biodiversity and climate—and translate all these into a single measure of impact, represented in dollars and cents. According to Cohen and Harvard Professor George Serafeim, the resulting “impact transparency will reshape capitalism… it will redefine success, so that its measure is not just money, but the positive impact we make during our lives.” Another Harvard Professor, Rebecca Henderson, expresses the plan concisely: “Accountants hold the key to the salvation of civilization.”

Powerful interests seem to agree with impact accounting’s potential. The European Union, the World Business Council for Sustainable Development and a consortium of multinational corporations are all developing impact accounting methods, as is the Capitals Coalition, a group of 380 entities, including The World Bank, Walmart, and the UN Environment Program. Several consulting firms—led by KPMG, BCG and PWC—have developed their own methods for valuing a company’s total impact. And a Harvard University research initiative focused on “Impact Weighted Accounting” has an advisory board that includes leading figures from asset management, banking, advocacy, philanthropy and academia.

Please select this link to read the complete article from SSIR.

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