The momentum behind natural capital has been building, and social and human capital are set to follow suit. During 2018, the WBCSD will found the Social & Human Capital Coalition as part of its Redefining Value program, which aims to ensure that sustainable companies are better recognized in the market, better rewarded, and therefore more successful overall. The WBCSD will play a key role, but the Social & Human Capital Coalition will be open to all stakeholders and will be overseen by an independent board of experts, rather than remaining a WBCSD-led initiative. Access to resources, and input into decision-making, will therefore be available to all interested parties.
The new Coalition will build on the existing Social & Human Capital Protocol, which the WBCSD developed alongside the Natural Capital Protocol on behalf of the Natural Capital Coalition. Both protocols have a similar framework and apply similar logic. As with natural capital, the aim is to bring together existing methodologies and to raise awareness of companies’ social and human capital impacts and dependencies. The members of the Coalition will include academics, accounting bodies, business people, economists, health and safety experts, human resources professionals and investors.
“The Protocol is broad in its scope,” explains Matthew Watkins, an Associate on the WBCSD’s Redefining Value program. “We include human capital – for example, skills, knowledge and wellbeing – and also social capital – for example, relationships, shared values and institutions. Social capital is typified by the level of trust between a company and its customers, and how the value of that trust can help the business.”
Eva Zabey, Director of the program, points out that it is possible to value something “without it having a market price or having to pay for it.” She cites the example of social media platform LinkedIn: “It is a free resource, but if you lost all your connections, you would realize that you have lost something that has a value to you,” she says. “There are numerous valuation techniques that can be applied to understand how important, or useful, different social and human impacts are. Values from these exercises can then be used to make better decisions, even if they won’t feature in the financial bottom line.”
Zabey reveals that, while the WBCSD did consider creating an integrated coalition for natural, social and human capital, “the risk would be that the social and human capital communities would not have the time or the space to be able to convene and converge, because it would immediately be linked with other communities.” Nevertheless, the long-term plan is that there will be integrated performance management and reporting for both protocols.
“In the long run, we will need an integrated protocol,” she explains. “To begin with, it will be voluntary, but if we want to achieve scale, it will need to be mandatory. Currently, the whole field of valuation is experimental, especially in business, so it’s too early to establish mandatory methodology or guidelines. We need to make sure any guidance that is mandatory definitely leads to positive outcomes.”