A NEW WAY TO MEASURE THE VALUE A COMPANY CREATES

摘要

Critical to every company is knowing the value itrncreates. Profit and loss statements have historicallyrnbeen used to measure whether a company has beenrnsuccessful. While this has served us well to date, itrnonly provides one perspective of value, and that is thernmonetary return to the shareholder. Today we want tornknow more. We also want to know if society gains valuernfrom the company’s existence, or is adversely affected.rnWe want to know what our contribution is towardsrnliveability. And we are all seeking to place ‘customers atrnthe centre’. But how can we measure all of these?rnOne methodology that does include a broaderrnperspective to measuring value is Integrated Profit andrnLoss (IP&L). This includes reporting impacts on naturalrncapital, social capital, and human capital, together withrnfinancial capital results. Yarra Valley Water preparedrnan IP&L account for its 2014/15 financial year. In a yearrnwhere traditional financial accounting methods recordedrna profit of $50m, the IP&L account was $446m, madernup of $374m in financial value addition, $53m of naturalrncapital impacts, $13m in human capital, and $6m in socialrncapital. Interestingly, the profit to the shareholder usingrntraditional accounting is only 11% of the total value tornsociety recorded using the IP&L methodology.rnThat leaves 89% of value to society that is not recordedrnin traditional accounting methods. Having access tornsuch information improves strategic decision making tornimprove the social value a company creates.