Circular Economy Accounting
In recent years, the world has seen a new breed of investors who care about the impact their investment has on the environment and social wellbeing. As this trend is increasingly hitting mainstream, a new sub-trend has emerged by an even more focused type of investors whose investments are focused on “systems” and “circular economic” outcomes.
These investment strategies require new innovative metrics that measure the system-impact of investments across environmental, social and economic performance areas.
The Yorth model recognizes Restorative Development as the cornerstone and a key foundation in a circular economy. We also recognize that understanding the synergistic relationships between all parts in the system are important for circular economic planning and investment principles. This is a cornerstone in our metrics and sustainability financing tools.
Equity vs Profit
When measuring return on investment (ROI) in current economic systems, we define success by short-term financial return on investment (ROI). Consequently, many investments made today produce a net-negative return on investment at the system level. This deficit continues to add to the environmental, social, and financial burden within the local economies. Because of the way we define success, we generate ‘profit’ but we lose equity. We can show you how and why this happens and how to assess and improve the outcomes for your sustainability investment strategies.
We can further explain how certain investments and strategies can make a seemingly prosperous business landscape become volatile and less resilient. Sadly, many sustainability investments produce a negative system ROI still today.
The finance team at Yorth set out to create innovative models that qualify investments for restorative and circular economic ROI. The outcome is a comprehensive model that can measure and report exactly how sustainable or circular investments are, both in terms of their isolated financial impact and as a part of the larger system of which the investment is a part of.
The Circular Economy Accounting model is a part of the Yorth Circular Insights™ framework.