In just under 3 minutes Keith Ambatchscheer of the International Integrated Reporting Council explains the main principles and concepts.
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The limitations of today’s current economic systems have been recognized, discussed and researched for many years by economists. Economists call this issue externalities. Externalities are the consequences of economic activity which affects customers, and other parties without the effect (both positive and negative) being incorporated in the price of goods and services.
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Economic and accounting story telling is only two thirds complete, and it is the missing one third which is so valuable.
The price of a good or service is easily defined as the dollar amount a purchaser and a buyer agree on. The value of a good or service is the value (or lack of value) of the outcomes of being supplied with the good or service.
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The paradox of profit is that a larger profit appears to be good for the owners of the organization as the result of a profit is that the Net Assets of the organization (Net Assets minus Net Liabilities) has increased by a greater amount. However, where the current year profit is the result of management pushing risk into the future and pushing extra risks and costs on to customers, suppliers and employees and society then the current year profit is illusory.
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