This is a fresh, new, back to basics accounting approach to any commitment to achieve ‘net zero by 2040’ or ‘a 50% reduction in Scopes 1 and 2 by 2030’ for example. At its heart is the simple application of double-entry bookkeeping to recognise each £1 of capital allocated into building sustainable relationships with the environment, nature, people and society as stakeholders as investments into intangible assets on the balance sheet. This paper explains how by using normative accounting and governance to inform decision-making on the intangibles impacted by a net zero transition commitment we can tackle the root cause of the climate crisis—being upside down accounting incentives and, by cause and effect, an upside down transition mindset.

Today's accounting practice defies GAAP and accounting standards and has thereby created a system in which the incentives to transition are seemingly illogical and upside down. Rethinking Capital has stated that net-zero is guaranteed to fail without introducing changes aligned with public interests. This paper explains how Rethinking Capital's normative accounting theory of intangibles could be the missing link. It supports Bill Gates' observation that the rules have failed to keep pace with the transition to an intangible economy and explains why this is the root cause behind today's climate and social inequity. It explains the blueprint for today's economic system design, pinpoints how and where to apply a permanent fix and how to test that fix on the net zero transition. Finally, it explains how to secure the fix into new rules that will begin to transform the economic operating system.