The main evidence of scientific discoveries consists in isolating an object and observing its effects. This is the principle of experimentation, and this is how Becquerel discovered radioactivity in 1896, by isolating Uranium salts with photographic plates.
Thus all experiments or evidence of a phenomenon must be done by clearly delimiting the element and the perimeter of the study. Evidence is obtained by isolating the elements in one step and then in a second step where the aim is to improve the measurements. This is known as the experimental method.
For the balance of externalities, and given the complexity of the phenomena involved (noise, parasitic effects, etc.), it is therefore important to define a perimeter accessible to the study and its analysis. We will therefore define a perimeter of application, and then address the necessary measurement points.
In front of each step in the value chain, it must be possible to assign the quantities valued. These elements directly from the accounting systems require a point of attention. Indeed, if the charge is used on several processes. Strictly speaking, it should be possible to allocate this load to the different processes, at least to know the efforts made and the levers activated on each production unit. Nevertheless, as all of them are on the same line in the balance of externalities, this breakdown has no impact on the final state. We will recommend a breakdown of the charges over the different stages of the value chain, even if this does not affect the final reading.
It should be noted that the materiality matrix provided by SASB gives a first reading of what needs to be provided to produce the detail of the actions in the value chain. This detail is not visible in the communication, but allows for traceability, in the same way that transactions, in the accounting system, feed the financial statements.
In summary, the methodology rests on two pillars:
The accounting method (work done by the company) must be close to the accounting methods and principles of IFRS: materiality, prudence (effect of time), intelligible, …
The method of determining social costs must be integrated in a learning process, as proposed by the quality standards. Thus we talk about quality management concerning these standard social costs, i.e. social costs reduced to quantities that can be measured by the company. We will discuss in detail this measurement of the social costs in future articles, using the Deming structure: evaluation, measurement, control and correction.