Author: stephenhinton
Coming soon! Training in using the Commons Finance Canvas
The Commons finance Canvas is a tool to help intentional communities like eco-villages or CSA food projects to plan their finances. The canvas helps groups produce a prospectus and business plan. This free online training is coming soon so do sign up if you’d like to know the moment it is released!
Putting sustainability into financial reporting
We can envisage a balance sheet from which it is possible to glean the current state of the firm’s investment in circularity. A worked example is given below. Note that by circular infrastructure we mean infrastructure that:
- runs (or can run) on renewable energy
- uses recycled materials and recycles materials
| THE TRANSITIONAL COMPANY | ||||
| PERIOD ENDED 31/12/2016 | ||||
| CURRENT ASSETS | CURRENT LIABILITIES | |||
| Cash | 200 000 € | Accounts payable | 0 € | |
| Accounts receivable | 0 € | Accrued Expenses | 0 € | |
| Inventory | 0 € | Taxes owed | 0 € | |
| TOTAL CURRENT ASSETS | 200 000 € | Long term debt | 0 € | |
| TOTAL CURRENT ASSETS | 0 € | |||
| PROPERTY AND EQUIPMENT | ||||
| *Circular Infrastructure | 100 000 € | LONG TERM DEBT | ||
| *Non-circular Infrastructure | 50 000 € | *Loans for Circular investment | 100 000 € | |
| Less depreciation | -4 000 € | *Loans for other infrastructure investment | 30 000 € | |
| NET FIXED ASSETS | 146 000 € | Other loans | ||
| TOTAL LIABILITIES | 130 000 € | |||
| OTHER ASSETS | STOCKHOLDERS EQUITY | |||
| Licence | 0 € | Paid in Capital | 0 € | |
| Goodwill | 0 € | Retained Earnings | 0 € | |
| TOTAL OTHER ASSETS | 0 € | TOTAL NET WORTH | 0 € | |
| TOTAL ASSETS | 346 000 € | TOTAL LIABILITIES AND NET WORTH | ||
| *Percentage circular infrastructure value | 67% | *Percentage investment loans for circular infrastructure | 77% | |
As the example above shows, the infrastructure is 67% circular. In terms of loans the 77% invested in circularity gives a degree of transparency for investors. For example, if investors think that regulations will become stricter in future, then the investment is sound.
Extended Profit and Loss Statement
An extended profit and loss statement can also be created as shown below.
From this you can derive measures like % of sales of circular products, cost of circular technology, circular vs non-circular expenses and trends over time. This again creates transparency for the capability of the firm to operate in an environmental way.
| INCOME STATEMENT | |
| PERIOD ENDED 31/12/2016 | |
| CURRENT | |
| OPERATING INCOME | |
| *Circular product sales | 50 000 € |
| *Non-circular sales | 100 000 € |
| Net sales | 150 000 € |
| *Renewable energy | 2 000 € |
| *Non-renewable energy | 2 000 € |
| *Non-circular materials purchase | 2 500 € |
| *Circular materials purchase | 2 500 € |
| Other costs of good sold | 100 € |
| GROSS INCOME | 140 900 € |
| OPERATING EXPENSES | |
| *Renewable energy | 2 000 € |
| *Non-renewable energy | 4 000 € |
| *Non-circular materials purchase | 3 000 € |
| *Circular materials purchase | 10 000 € |
| *Repairs and maintenance on linear infrastructure | 20 000 € |
| *Repairs and maintenance on circular infrastructure | 30 000 € |
| *Costs for waste elimination, non-recycled | 2 000 € |
| Other expenses | |
| TOTAL OPERATING EXPENSES | 71 000 € |
| Other income | 0 € |
| Other expenses | 0 € |
| NET INCOME BEFORE TAXES | 69 900 € |
| TAXES | 25 000 € |
| NET INCOME | 44 900 € |
| Circular products 50/150 75%
Renewable energy 2/6 50% Circular materials 10/13 77% Circularity lost to waste 15% Circular infrastructure costs 30/50 60% |
The Baltic: a dying sea on the doorstep of industrial giants
At a Stockholm seminar on the 18th January held by the Baltic Works Commission, scientists, government officials and NGOs came together to discuss the dying briny depths on their doorstep: the Baltic Sea. The general consensus is one of emergency where technology provides an as yet unproven ray of hope. Without bold investments, policy changes and some bold pilot studies – worst case – the whole sea could turn in to a dead and decaying algal soup. I presented a solution with economic incentives based on Environmental Fiscal Reform.
At a Stockholm seminar on the 18th January held by the Baltic Works Commission, scientists, government officials and NGOs came together to discuss the dying briny depths on their doorstep: the Baltic Sea. The general consensus is one of emergency where technology provides an as yet unproven ray of hope. This is only if the countries surrounding the Baltic are ready for bold investments, policy changes and some bold pilot studies. If nothing is done, the nutrients contained in the dead sea floor could flow into the water body and – worst case – cause the whole sea to turn in to a dead algal soup. Continue reading “The Baltic: a dying sea on the doorstep of industrial giants”
Engaging the Climate Tragedy
Reblogged from strategist Jem Bendell. Sobering.
When discussing the sorry state of efforts to address climate change with professionals working on this topic, across sectors, I often hear a reluctance to question whether it is too late to avert catastrophic climate change, or what such a view might mean for the focus of our work. Various objections to this view are raised and prevent open discussion or an evolution of work. Therefore, I decided to deliver a speech at a leading climate business and finance event in Australia, at Griffith University, to seek feedback on my argument that we must now shift focus.
In my keynote, Nov 29th, I’m outlining the following:
- There has been some progress on environmental issues in past decades, from reducing pollution, to habitat preservation, to waste management.
- Much valiant effort has been made to reduce carbon emissions over the last twenty years.
- There have been many steps forward on…
View original post 1,408 more words
The “Wind and Solar Will Save Us” Delusion
The “Wind and Solar Will Save Us” story is based on a long list of misunderstandings and apples to oranges comparisons. Somehow, people seem to believe that our economy of 7.5 billion p…
Case Study: Dealing with transition to fossil-free food provision and refugees at the same time
PLACE: Sweden. Municipal level
SITUATION: Swedish municipalities are facing several resilience challenges at once. They have to provide shelter and care to the highest influx of refugees and migrants per capita in Europe whilst preparing for the ambitious government-led transition to fossil fuel independence and carbon neutrality by 2050. Food security is at risk too, as Swedish food provision field to plate is fossil-fuel dependent and food waste is high. Sweden is also dependent on food and fodder imports; farmers are struggling to compete with imports from countries that have lower food safety and animal welfare standards, better soil and growing seasons, and lower costs.
FRAMING QUESTION: How can municipalities work towards a de-fossilised food provision system that reduces waste, manages the influx of migrants and refugees whilst ensuring the farming community can live on what it produces? Continue reading “Case Study: Dealing with transition to fossil-free food provision and refugees at the same time”
Beyond Physics: Advanced Biology and Climate Change
Reblogging this excellent piece on the difficulties of modelling climate because life influences it.Thanks to Judith Curry.
Reflections on the stabilization of Earth’s climate by life.
View original post 2,345 more words
The economics of pollution and non-renewable material surcharges
Market based instruments
If renewable solutions were cheaper for firms to use, they would. This is how price signals function to steer the behaviour of firms. For the circular economy to function, price signals should favour circular products and production methods. In other words, it needs to make better business sense to install circular and renewable energy infrastructure, and to install and use infrastructure that uses recycled materials. Without that, the linear economy – one that inputs extracted materials and outputs materials as waste will continue to be the modus operandi of the profitable firm.
This article explores how to use price signals to steer firms’ buying behaviour in a way that keeps the economy stable. Market-based instruments are financial mechanisms that steer price signals to guide the behaviour of firms and markets in general. Continue reading “The economics of pollution and non-renewable material surcharges”
The Community Finance Canvas: commoning in practice
How can we create alternatives to the current system that:
1. Protect collective resources, both material and immaterial, that require a lot of knowledge and know-how?
2. Develop social processes that foster and deepen thriving relationships?
3. Produces in, as Commoning expert Silke Helfrich calls it, a Commons-Creating Peer Economy, or Commons-Oriented Economy?
Commoning is less a noun than a verb because it is primarily about the social practices of commoning—acts of mutual support, conflict, negotiation, communication and experimentation that are needed to create systems to manage shared resources. This process blends production (self provisioning), governance, culture, and personal interests into one integrated system. Continue reading “The Community Finance Canvas: commoning in practice”
Stephen Hinton Consulting 