If 50% of the world’s investments are going to ethically invested within five years there’s going to be a massive demand for accounting reform — Richard Murphy

The shoe is dropping.

Tax Research UK
If 50% of the world’s investments are going to ethically invested within five years there’s going to be a massive demand for accounting reform
Richard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum

Richard Murphy on the need for sustainable cost accounting

Sustainable cost accounting and the political necessity of addressing reality.

Tax Research UK
Business has to change its accounting for the climate crisis and Mark Carney needs to go further than he’s suggesting is necessary

Labour needs to drop the Green Industrial Revolution: we need a Green New Deal, and they’re nothing like the same thing
Richard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum

Profit maximisation and the Green New Deal cannot mix — Richard Murphy

The simple fact is that the Green New Deal and profit maximisation are incompatible with each other, and this is of massive importance and is an issue that cannot be ducked if the Green New Deal is to work. This is the idea behind my work on what I call sustainable cost accounting (SCA).

The core idea within SCA is that existing accounts treat the supply of finance as the constraint on corporate activity and as such the return to financial capital is considered to be the focus of financial reporting, without any consideration being given to the use of that financial capital and who might benefit from it. Quite explicitly, externalities such as environmental cost are ignored in this framework, which accepts the standard neoclassical line that natural capital is a ‘free gift of nature’. This is inappropriate in a world where we face the reality of climate crisis. The capital constraint that businesses now face does not come from finance - which is readily available to most of them at almost no real cost in the case of larger companies - but from natural capital, whose use we have to limit.

Sustainable cost accounting does, then reject the reporting structure of current accounting, which is no longer fit for purpose, and in the process effectively imposes a new reporting requirement, and so corporate objective, on all companies in place of profit maximisation. This new requirement is the obligation to maintain their business on behalf of all stakeholder groups in society within the constraints that the climate crisis will impose upon them. Unless this is done the Green New Deal cannot deliver the transformation in the way in which we manage the economy that the Common Wealth think tank describe in their report. But when this is understood the ramifications are also much bigger than they appear willing to embrace.…

Tax Research UK
Profit maximisation and the Green New Deal cannot mix
Richard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum

Sustainable Cost Accounting — Richard Murphy

Until markets correctly evaluate true price based on true costs, negative externalities will continue to be socialized and the public, which now included everyone in the world, will pay the difference. This won't happen without institutional changes, including legal.

Tax Research UK
Sustainable cost accounting – an introduction

Sustainable cost accounting – the change needed to make business take the Green New Deal seriously

Sustainable Cost Accounting: the paper supporting my arguments

Richard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum