Orientation

The protocol seeks to address the challenge of how businesses can measure and value the impact of social and human capital resources. The global research recognises that CEOs and decision-makers must consistently translate the value of non-financial assets such as community relationships or employee talent into terms that people inside and outside their businesses can use. It highlights specific megatrends – globalisation, technology, demographic changes, and climate change – and the need for future-proofing operations, making understanding social and human capital even more important.

Stage 1: Frame

The report emphasises the importance of commencing the process with a defined objective, outlining the management of resources within organisations. The recommended approach is to engage a small core team to encourage different perspectives and ownership that represent several departments of the organisation, thus avoiding any project label risks and improving operational services and communication (OSC). By allowing a dedicated change management person on board, organisations can embed social and human capital issues into its natural capital assessment while securing local input within the organisations that have multinational operations. The report recommends involving external experts to build a credible approach and present various outcomes of valuation projects.

Stage 2: Scope

Each organisation is likely to start from varying stages of maturity while integrating sustainability into core business functions. The report suggests that companies refer to, build on and evaluate social and human capital issues in:

• Corporate Materiality analysis
• Industry-specific priorities

The report additionally suggests the use of roundtable mapping and virtual data rooms to map and rank relevance.

Stage 3: Measure and value

Most organisations do not possess an exact definition of social and human capital, however, the risk lies in underestimating it. The report encourages the adoption of a unified methodology that is repeatable, and that provides consistent and comparable data. The report advocates the evaluation of the organisation over the years and repeatedly define the challenges and objectives. It suggests that businesses communicate the indirect effects of pursuing sustainable development goals through demonstrating their contributions to these very goals.

Stage 4: Apply

Once interpretation & testing phases were completed, the report highlights that the organisation can act and implement the proposals it receives. The report recommends embedding the assessment into the organisation’s current system and processes. For instance, the report suggests that organisations adopt a Total Societal Contribution (TSC) approach that identifies the relative positive and negative performance issues for each capital mentioned further in the report. Other approaches mentioned in the report include a cost-benefit analysis, total profit and loss account, and scorecards to communicate results assessed against objectives.

Next steps

The Social and Human Capital Protocol advocates that businesses prioritise and tackle any negative impact areas requiring urgent attention before developing recommended actions based on stakeholder, employee, and legal inputs. The report highlights that continual communication and sharing of knowledge benefits the understanding of social and human capital value. While this is a nascent field with various challenges, the report encourages businesses to develop a long-term understanding and benefit from the adoption of the Social and Human Capital Protocol.