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The Biggest Accounting Scandal of them all?

Just as some companies boost their bottom line by counting costs as capital investment, national governments the world over ignore social and natural resource costs to create the appearance of economic wealth…

Leading development, economic and environmental groups have joined forces to launch a set of simple measures of global quality of life. BirdLife International, Oxfam and New Economics Foundation will urge world leaders to adopt a set of headline indicators at the Johannesburg Earth Summit today to guide global policy making for real sustainable development.The three groups believe that global economic growth, the standard benchmark of progress, paints a badly misleading picture of worldwide wealth and health. Current measures of global economic growth hide or ignore rapid and alarming declines in the quality of the natural environment, and huge disparities in social welfare between the North and South. Is this the greatest accounting scandal of them all? Just as some companies boost their bottom line by counting costs as capital investment, national governments the world over ignore social and natural resource costs to create the appearance of economic wealth. In reality, that wealth is acquired at the expense of the environment, poor countries in the South and future generations everywhere.In Johannesburg, the three groups will urge the international community to adopt a small set of headline indicators which paint a picture, not just of global economic prosperity, but of social and environmental conditions too. A few countries already do this to measure sustainable development at a national level. But, apart from the nearly fifty indicators proposed by the United Nations to track progress towards the Millennium Development Goals, no focused set of indicators has ever been agreed at a global level.Andrew Simms, Director of the New Economics Foundation, says:

The global economy is run using nonsense statistics. It is like a multinational corporation managed with creative accounting. The world needs a system to avoid an environmental Enron. We need a few key indicators that show real progress, and measure whether or not we are living within our environmental budget and increasing human well-being.

Although the indicators proposed by the three groups are not definitive, they provide a solid foundation on which governments can build.

4th July 2014