Adopt comprehensive cost accounting
A new approach to calculating the costs that corporations and private actors impose on individual Canadians and the natural world.
The old model of accounting and economics has created a flawed and dystopian world in which ordinary Canadians and their natural world are the victims. We are all the unwitting recipients of costs which have been shifted on to us in a myriad of ways. These hidden costs and pathologies are affecting you and your families in more ways than you can imagine. The current crisis in world trade as a result of the imposition of tariffs, the climate crisis and the affordability crisis are all an occasion to rethink how we capture costs both at the level of companies and in our national accounts.
The problem
A deeply flawed accounting system in Canada and most western countries has permitted the offloading of a variety of ‘uncaptured’ costs onto individual Canadians and the natural world surrounding them. These costs which are deliberately shifted onto you and your family are substantial and have highly detrimental impacts on your well-being and health. They arise because corporations and other private actors have maintained a siloed model of financial reporting in which all social (human) and environmental costs generated by the profit-seeking activities of companies are placed beyond the reporting boundaries of the firm. Companies in Canada routinely seek to maximize their retained earnings, wealth and profits through adherence to a set of accounting conventions inherited from 15th century Italy, and which only require them to report on the disbursement and conservation of financial capital. It is a simple and uncontested fact that the more a company can “externalize” the often hidden, long-term, and cumulative costs of its production, distribution and marketing processes, the more wealth it can retain for its shareholders and executives. An apt descriptor is “privatize the profits, socialize the costs.”
Our national system of accounts further aggravates the license given to private corporations through this flawed accounting system, by classifying the damages, remediation expenses, compensation, and defensive expenditures of governments in response to these costs, as a net benefit to our economy i.e. as part of GDP! The failure to acknowledge that a system of corporate cost-shifting and fictitious profits is taking place on a vast scale means that we are willfully ignoring the growing and cumulative costs of pollution, habitat destruction, indebtedness, toxic work environments, public health dysfunction, damage to other species, etc. In summary, these freebies and the way in which we, as taxpayers, are forced to assume responsibility, personally or collectively, in the effort to mitigate them, are the reason for the pathologies, erosion in quality of life, and environmental degradation, including species loss, that we experience and see around us.
Let’s take just a few examples to illustrate how the lack of “full cost accounting” is undermining your well-being.
The range of direct fossil fuel subsidies to the oil and gas sector, the costs in terms of both air pollution and contribution to climate change, the cost of cleaning up orphaned oil and gas wells and tailings ponds, particulate matter emissions which damage public health after chronic exposure, the damage to health resulting from localized emissions of benzene and other volatile organic compounds resulting from tanker truck refuelling of gas stations– all of these things cost an estimated several hundred billion annually.
Poor diet, obesity and chronic stress all have direct healthcare cost implications, with a growing incidence of diabetes and heart disease. Toxic workplaces cause sickness, absenteeism, short and long-term disability claims, staff turnover and significant reductions in productivity. There is a tidal wave of mental health costs resulting from psycho-social dysfunction in homes and workplaces.
No political party has been willing to call for the meaningful structural changes that would get at the root causes of these and other hidden cost problems. CV21 will.
“This implies that cost shifting, socialization of costs, leaving costs unpaid and creating unnecessary social costs and social waste are expressions of an instinct of predation.”
Sebastian Berger Preface - ‘The Social Costs of the Megamachine,’ in Capitalism as Megamachine, 2025
Our solution
CV21 will embark on a national conversation about how large Canadian companies’ accounting practices, along with the reporting practices informing the government’s national accounts, must be reformed so that they reflect the actual costs of production and not the truncated costs preferred by corporations. This means, specifically, that they must no longer avoid, ignore, hide or shift costs. Businesses and corporations are not somehow separate from society; their accounting practices must be grounded in more than financial metrics alone. We must develop a humanitarian and ecological accounting system at both the firm and national level. The formal accounting standards must be altered to reflect real, full cost-based pricing in a finite world, and attach an equal priority to the satisfaction of actual human needs and the concern for ecological well-being. A key approach here will be to adopt a model along the lines of the CARE/TDL approach (Comprehensive Accounting in Respect of Ecology/Triple Depreciation Line) which several progressive accountants have carefully developed. This new approach to governance & accounting would oblige companies and the government to conserve the optimal well being of the human condition and the natural world, and not simply the financial assets of the company at the expense of the former, in the course of carrying out and reporting on their commercial activities.
How would that benefit you?
Products that are harmful to human health or the natural environment would become relatively more expensive while safer alternatives would become more competitive;
Full cost accounting would force polluting industries to internalize costs that they used to push off to the public via air and water pollution. This would reduce things such as asthma, cancers, toxic runoff or excessive pesticide use;
As government would be less prone to picking up the tab for corporate cost-shifting, more funds would be available for health, education or sustainable transit;
Overall, sustainable businesses would be more competitive because their rivals would no longer be able to cut corners. The result would be better, cleaner products, technologies and services which would become more widely available to the benefit of all Canadians.