A new role for the firm incorporating sustainability and human dignity. Conceptualization and measurement

Abstract

Abstract At the macro level, different institutions (the OECD, the WEF, the UN) have developed sound methodologies to measure the economic, social and environmental impacts of economic activity. At the micro level (i.e., the firm level), it is crucial to develop a methodology to measure how firms contribute to human dignity and social welfare by generating value for stakeholders. Common accounting principles are primarily focused on determining annual profit/loss figures, contributing to shareholders’ interests and paying taxes. This accounting model must be complemented with a new approach that can interact with stakeholders while informing them about the value that firms are generating. The accounting process should be able to quantify not only profits but also the impact of firms on suppliers, customers, the environment, local communities, workers’ quality of life, employment and society overall. This paper’s primary contribution is to present a model that has the ability to monetize all of those interactions and impacts in a manner that is comparable, auditable, understandable and possible to be used by firms of all sizes.