People are at the core of business. They are your employees, customers, suppliers, distributors, retailers and neighbors. They determine whether you have a productive workforce, loyal customers, healthy value chains, vibrant local communities and supportive governments. Their growth, prosperity and well-being matter and they are crucial to the success of your business.
In the current global context, ensuring this well-being presents multiple challenges. Persistent poverty, inequality, economic instability and a widening skill gap all impact business value despite significant advances in economic development. No longer can businesses rely solely on financial assets or returns on financial capital to evaluate their risks and opportunities. They must also understand how trends and shifts in society will affect them and how their actions influence society.
In September 2015, all 193 United Nations (UN) member states ratified a set of 17 Sustainable Development Goals to provide a framework for achieving global prosperity within the limits of the planet. Momentum from this revitalized global agenda alongside government policy, investor requests and consumer sentiment are all driving businesses to better manage and integrate social and human capital impacts and dependencies into their core business strategies.
To do well in today’s world, businesses must establish effective social dialogue at the enterprise level and/or between employer and business organizations, and workers’ representatives, and implement robust systems that build an understanding of the positive and negative value they create beyond financial returns and how such value is distributed.
Despite growing awareness, there is little consensus on how businesses can measure and assess the value of social and human capital resources. The development of measurement and valuation approaches – particularly in relation to social capital – is still in its infancy. Even when CEOs and other decision-makers recognize the value of assets such as community relationships or employee talent, they are unable to translate this value consistently into terms that people inside and outside their businesses can understand, trust and, most importantly, use. As a result, businesses struggle to embed these factors into processes such as strategic decision-making and communications. In many cases, this leads to undervaluing and consequently, underinvesting in the people and relationships on which businesses and society depend.
The Social & Human Capital Coalition believes the assessment and management of corporate performance needs to incorporate social and human capital alongside financial and environmental performance. The Coalition is therefore committed to delivering a credible, comparable and broadly accepted approach to social and human capital impact measurement and valuation - as outlined in this Protocol - that enables businesses to truly value people and relationships as a driver of sustainable growth.