True Value is created by internalising the external costs and benefits of human well-being, resource use and environmental impact into the value of economic activity (GDP).
Above Figure: Aligning and decoupling (from UNEP/EEA 2011).
The aligning goal illustrated in this figure is to have GDP highly correlated with well-being.
The decoupling goal is to reduce resource consumption associated with GDP and to have negative environmental impact (i.e. an increase in GDP results in a net increase in environmental quality).
September 2014, MMG/SNJ
In practice, working towards the True Value goal of ‘aligning and decoupling’ by ‘internalising externalities’ requires the linked data, information and evaluation of measureable aspects such as health, employment, income, skill sets, environmental and technological resources which help drive strong economies, but are not necessarily measured as economic activity – that is, an ‘externality’. Environmental and social impact factors – such as carbon emissions, water use, land disturbance, resource depletion, pollution, waste, temperature increase, climate variation, food and nutrition, insecurity and people migration relative to economic activity – are also externalities.
True Value Accounting is a methodology for incorporating these externalities into standard financial accountancy practice, whether this be an individual product or service (for True Value pricing), individual company or the consolidated accounts of nations (True Value economics).
Updated July 2018 SNJ/VHC