The Bruce Column — Social and human capital accounting starts to accelerate change

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Jun 29, 2017

It has been a slow burner. But, as our regular columnist Robert Bruce reports, the changed thinking that is being brought about by social and human capital accounting is now starting to take off. A new Guide issued by the CFO Leadership Network provides the details required to put it into action and practical examples.

There is a time when every­thing suddenly comes into focus. This is what appears to be happening in the field of social and human capital accounting. The business benefits are becoming clear and the practical ways to achieve them are moving into the main­stream. Social and human capitals are, in­evitably, seen as more sub­jec­tive than other capitals like financial, natural and man­u­fac­tured capitals. It was always going to take more time before they reached broad ac­cep­tance and ease of practical usage. But the launch and pub­li­ca­tion of the CFO Lead­er­ship Network’s Essential Guide to Social and Human Capital Accounting, under the aegis of the Prince of Wales’ Accounting for Sus­tain­abil­ity project, looks to be the long-awaited catalyst. It provides the tools and the guidance but, more im­por­tantly, it details case studies of what busi­nesses have already achieved. This is the body of practical ex­pe­ri­ence that or­gan­i­za­tions and business need.

It is a question of recog­niz­ing the role of social and human capital accounting, measuring its effects, and bringing it forward into de­ci­sion-mak­ing. Done properly this creates a rev­o­lu­tion. Pre­vi­ously unseen figures and factors change the thinking around a business. Examples abound in the Guide. British Land tackled skill shortages. National Grid invested in employee wellbeing and found that for every £1 invested it was getting back more than £2 return in reduced sickness absence costs. The Crown Estate set up a part­ner­ship to help job­seek­ers into sus­tain­able em­ploy­ment. It produced some £40m of societal value through savings on welfare and tax credits, increased tax and national insurance payments, and boosting local economies. All of these came from looking at the business from a different stand­point, through a new lens.

Read the entire column on our Global IAS Plus website.

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