Rethinking capitals - going beyond the financial

By Heather Donald CA

27 January 2015

Heather Donald CA, highlights the international drive for a fresh approach to capital.

I attended Rethinking Capitals, an event series exploring different forms of non-financial capital, hosted by ICAEW in partnership with Newcastle University Business School and the Natural Capital Coalition.

The event brought together academics, people from business, the public sector and civil society to share ideas, case studies and engage in debate. Rethinking capitals is about pushing boundaries and ultimately the way in which organisations will report on how they create value to wider society and their stakeholders.

What are non-traditional forms of capital?

Many of the speakers started by explaining what they meant by non financial capitals. The IIRC International <IR> Framework categorises capital in six forms - financial, manufactured, intellectual, human, social & relationship and natural. It defines capital as stocks of value that are increased, decreased or transformed through the activities and outputs of the organisation.

Dr Andrea Couslon, Senior Lecturer at University of Strathclyde Business School, discussed the need for companies to think about valuation beyond the economic rationale and Jeremy Nicholls, CEO of the SROI Network, said that the true value in a social and environmental profit and loss account is that it helps organisations to make better decisions about resource allocation.  

Gillain Vesty, RMIT University Melbourne, focused on integrated thinking within the firm and how tools that make decisions more visible and facilitate information flows will create sustainable outcomes for society. John Fullerton, founder of the Capital Institute, introduced the concept of Regenerative Capitalism - the evolution to a more complex understanding of what we need to understand as "capital" if the economy is to be ecologically sustainable and promote shared well-being. 

As a CA, I am accustomed to thinking about financial capital, but it is this multiple-capitals approach, where an organisation considers its social, environmental and human impact that is really gaining momentum.

Taking the Value Proposition Beyond the Bottom Line

ICAS presented a poster which illustrated that by measuring social, natural, human and intellectual capital, an organisation can better value its business. For example, organisations could measure and report on the use of local suppliers across the supply chain (Social Capital) or the cost and carbon savings as a result of reusing existing materials (Natural Capital).

Human Capital at SSE

George Cobb CA, Chair of the ICAS Sustainability Committee and Sustainability Accountant at SSE, presented on SSE's soon-to-be-published report that will quantify the 'value' of SSE's human capital. They consider human capital as an 'asset' and as a 'flow' and by understanding its value in this way, SSE can make better informed decisions.

Want to know more?

This is an exciting and fast-evolving area and one that is set to develop as more organisations start reporting on non-financial capitals, leading to better informed and more sustainable businesses. The ICAS contribution and other posters, presentations, photographs and audio-recordings of the talks will soon be available on the ICAEW Website.


  • Sustainability

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