In business you only manage what you measure and you only achieve good performance with management. So, with our aim of transforming business performance to deliver value across people, planet and profit, we had to begin by expanding what was being measured. This led to a decade of extensive research and testing of the measurement of non-financial capitals — human, social, and natural.
The research breakthrough came in identifying simple and stable ways to measure non-financial capitals that would be actionable by business. It would be unrealistic, for instance, to exhaustively measure social capital through each of its numerous expressions and dimensions. We have sought to capture the essence of non-financial capitals in a few key indicators.
Human capital is defined and measured as the experience, skills, confidence, aspiration, health and well-being of an individual. Social capital is defined and measured as the trust, social cohesion, and capacity for collective action in communities. Both these capitals use expert-designed survey tools deployed to the relevant people and communities in the specific business context.
Natural capital was slightly different given the extensive and robust measurement tools already available. Research here was about identifying an approach that suited its management (inputs) rather than its reporting (outputs). Therefore, with the goal of actionability in mind, an inputs approach focused on 5 key resource areas was taken: abiotic, biotic, water, air, and topsoil erosion.
Each of the measurement tools and metrics were developed with a wide range of academic experts, tested extensively and peer-reviewed twice by an external expert panel. Their conclusion was that the development of these new actionable business metrics measuring non-financial capitals was 'groundbreaking'.