The Catalysts is a social enterprise founded for the common good to benefit everyone and everything.
It is a spin-out of Rethinking Capital and holds the intellectual property relating to the net zero, nature and other sustainability applications of normative accounting for intangibles and normative governance.
The Catalysts has been founded to test and rapidly drive this IP to adoption. The ambition is to impact net zero and nature decision governance at scale by late 2023 and at a system level in 2024.
It will first explore the financial, mindset and other benefits of its net zero decision governance and reporting framework. This is designed to tackle the root cause of the system’s inability to solve the climate crisis—being upside-down accounting incentives and, by cause and effect, an upside-down transition mindset.
To flip these incentives, the framework applies normative accounting and governance to enable informed decision-making on the intangibles impacted by a net zero transition commitment.
The Catalysts has been founded to rapidly drive this work to adoption at scale—and to benefit everyone and everything.
Our name was chosen because we’re certain that this application of normative accounting for intangibles is net zero’s catalyst—the simple innovation that applied in just the right place and at the right time will enable and speed up building equitable relationships with the environment and nature.
The net zero application properly recognises the impact on intangibles of a transition commitment, for example, bp’s ‘50% reduction in Scopes 1 and 2 by 2030’—including the impact on intangibles derived from innovation and on reputation, stakeholder relationships and the social license.
This uses a rethinking of the simple debits and credits of double-entry bookkeeping, an innovation from the Golden Age of Islam, to create transition incentives. It is also informed by and is an interpretation of existing International Accounting Standards—like an instruction manual for how to use those standards in this context.
This game-changing rethinking of double-entry bookkeeping has been designed to tackle the root cause of the climate crisis, being upside-down incentives and, as an effect, an upside-down transition mindset. Its benefits include improving all key financial metrics and accelerating the net zero transition by giving the best incentives. It also provides the legal logic that should remove the current risk of personal liability of decision-makers.
And the same decision logic has been adapted to give the best incentives to invest in creating equitable relationships with nature, the oceans, society and people as stakeholders.
Our first innovation taken to market adoption in 2023 is the decision governance and reporting framework that applies normative accounting for intangibles to a net zero transition commitment.
The long road to creating this started in February 2001. Its Eureka! moment came in November 2017 in Copenhagen, and since that point, we have worked hard to root it in double-entry bookkeeping and existing accounting standards. This included going deep into accounting theory on the subjectivity of value and the purpose of accounting—to give value to what’s valuable and use numbers to achieve desired outcomes.
Our community supporting normative accounting is growing steadily, and our thanks go to all of them. A few are named above, describing our work in their own words. Some are now joining our innovation communities that will take this to testing until September 2023.
At that point, we aim to show rigorous case studies and tell stories of what decisions become possible if normative accounting for intangibles becomes the accepted rule.
And, if all goes to plan, we will make a case for the normative accounting of intangibles to provide a playbook to guide the strategy at COP28 and carry over to COPs29 and 30.
At COP28, our aim is this headline on 30th November 2023, day one of the Conference:
‘All stakeholders in the 2023 Conference of the Parties in Dubai are excited, and relieved, to announce two vital breakthroughs in tackling the climate crisis.
The first is agreement on the root cause of the climate crisis—being upside-down accounting incentives and, as an effect, an upside-down transition mindset.
The second is agreement that normative accounting for intangibles, a rethink of double-entry bookkeeping, an innovation from the Golden Age of Islam, will flip the incentives. And if adopted widely, should be net zero’s catalyst.'
Today our creative community comprises experts in intangibles, law, strategy, governance, risk management and history. At its centre is a group of technical accounting rockstars, including a former IASB board member, a professor in public accounting, and accounting experts in the TCFD, ISSB, UNDP and EFRAG sustainability programs.
We aim to create an open innovation community pooling shared experiences, insights and creativity. Please register your interest here to join our community and receive our important updates directly.
You can download our first publication with the Centre for Climate Engagement at Hughes Hall Cambridge with support from the Council for Inclusive Capitalism, here. Our thanks go to Emily Farnworth, the Hughes Hall team, Meredith Sumpter and the Council’s team for their belief in our ideas.
We look forward to releasing new content over the coming weeks and aim to announce a series of monthly webinars.
The Catalysts, a Rethinking Capital company