Finding the right methodology for you to identify the value you create, preserve, or erode
This new paper, published by the Value Accounting Network, navigates users through the various value accounting methodologies to help find the right combination for them. It recognizes the need for consistent but different approaches depending upon needs and aims to clarify the process of selecting methodologies and increase the uptake of value accounting.
Value accounting has been defined by the Network as: ‘The collection, calibration, and use of information about the relative value that an organization depends on, creates, or erodes using common units. This information is used when making decisions for a variety of purposes.’
Value Accounting therefore encapsulates the many different valuation methodologies you may be familiar with, including capitals assessments and accounting, impact measurement and management, context driven information, impact valuation, true price, true cost, and true value.
This paper sets out what the leading value accounting methodologies aim to do and the applications they are most suitable for, as well as their relationship to an overarching framework expressed in the Natural Capital and the Social & Human Capital Protocols.
It also sets out the key differences and similarities across a range of aspects relating to value accounting and capitals assessment methodologies. It must be noted that the focus and breadth of the methodologies are quickly evolving to suit market needs. This paper does not intend to provide a ranking of methodologies but instead a navigation tool to identify the right approach for different users.
The Value Accounting Network, co-hosted by the Capitals Coalition and the Impact Management Platform, consists of the British Standards Institute, Economics of Mutuality Foundation, eftec, GIST, IDEEA Group, Impact Institute, Impact Weighted Accounts Initiative, OECD, Rethinking Capital, Social Value International, S&P Global, UNDP SDG Impact Standard and the Value Balancing Alliance.