17013293_sIntegrated reporting encourages companies to track the value they are adding to, or subtracting from, six capitals:

  • financial,
  • manufactured,
  • intellectual,
  • natural,
  • human, and
  • social.

That’s an excellent idea, but we are challenged with how to assess natural, social, and human capital. As we get serious about ensuring conditions for a flourishing human society on this planet, those capitals are the ones that matter most.

My plenary talk at Sustainable Brands ’13 in San Diego earlier this month was entitled, “Enabling the Renaissance: The Perfect Storm in True Cost Accounting.” Using the metaphor of the Iceberg of Company Value, I explained why we need to get better at measuring and tracking the intangible reputational value of companies, since it represents about 80% company market capitalization. It’s too big to ignore, especially as we migrate to Capitalism 2.0. Measuring how the company is protecting and enhancing human, social, and natural capitals will help us better assess its “non-financials.”

Here is a 14 minute video of my presentation.

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob

4 Responses to “It’s Time We Measured What Matters”

  1. Bob Willard says:

    Thanks for your support, Andrew. Better metrics will help us focus on the most urgent gaps we need to close. We need all POVs and attitudes in this fight. :-) Keep pushing the edges of our too-comfortable envelope. Bob

  2. Andrew Cowan says:

    Hi Bob, I will let you know how things progress and am always looking for people to help move this project along as it is still in early development stages at the moment. I have at least 20 years ahead of me to crack this one. I get a sense that organizations are looking at this closer all the time and I am excited about what is happening with business and government including municipalities. Hopefully it will happen sooner rather than later. To your point on the art of sustainability (black or green art) I would definitely agree that we need to build and rely more on the science of sustainability and less on the art of sustainability of which we have practiced in the past with frustrating and somewhat limited success. That is why I expect your work has been so well received by many sustainability champions and progressive organizations. We need standards and peer accepted defaults and protocols with respect to measurement, especially in the area of measuring and even monetizing outcome based externalities. Once we have this type of data we can have a much greater influence over the change we all are striving to support. Thanks Bob, as an aside my former nick name was the “Green Bastard” but I like the idea of sustainability hero much better.

  3. Bob Willard says:

    Andrew, you have identified the huge gap in today’s accounting for what matters. Measuring the human and social value / benefit that a company or municipality creates is still a bit of a black art. We need to measure outcomes (e.g. number of lives improved), versus outputs (e.g. the number of paid volunteer hours in the community, or total monetary and in-kind donations). For many of key social performance indicators, we to revert to an interim proxy approach until we agree on better metrics for outcomes. If you can crack this nut, you’d be a sustainability hero. :-)
    Bob

  4. Andrew Cowan says:

    Hi Bob, we have met on occasion when I was Senior Manager at the Green Municipal Fund for the Federation of Canadian Municipalities and you were a speaker at our conference. I am now out on my own and am working with municipal clients. I would be interested in your thoughts or efforts in applying sustainability return on investment and how it relates to the TBL model and corporate reporting. I think it is very positive that corporations and organizations are adopting true cost accounting, corporate measurement and reporting systems. However a fundamental barrier or gap is a consistent approach to evaluating and being able to compare projects and programs to determine which potential option will yield the greatest potential benefit from a sustainability standpoint. I see this type of decision support being a piece of the puzzle to truly moving organizational culture toward a path of sustainable decision making.

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