An event held at the Institute of Chartered Accountants in England and Wales (ICAEW) has highlighted the need to quantify natural and social capital. ICAEW say measuring the two factors will ensure that nature and society are included in corporate decision making. The discussion was held at a roundtable event on 16 May where an Outside Insights publication written by Adrian Henriques was also launched.
The purpose of the event was to debate how to account for social and natural capital. The participants were asked to discuss the importance of monetisation, how to share information, the difference between natural and social capital as well as whether there are any circumstances that only require narrative descriptions.
Francesca Sharp, Sustainability Manager at ICAEW, said: “How you choose to quantify something is a critical part of how you measure it, and this goes hand in hand with the overall story.
“For example, applying a monetary value works when audience awareness of the issue is strong and when there is robust data and empirical evidence. Full transparency is vital and all other factors, including the non-monetised ones, must also be taken into account.
“The best way to be transparent about quantification methodologies is through publishing all the detail, including any changes made to the methodology. There will always be a lot of assumptions involved; these must be laid out in a very clear way and checked independently. This could be by peer review or by independent supervision and auditing of the approach.”
Delegates agreed that opportunities for sharing information on quantifying natural and social capital must be created. This could be attempted through formation of sector-based groups of businesses with common interests or through facilitated discussions.
They also decided that natural and social capital must be treated significantly differently in the quantification process and should not be conflated or substituted for one another.
Delegates also agreed that context is critical and accompanying narrative must be provided.
Francesca added: “Adrian’s piece is a thought provoking addition to a growing base of conversation about natural and social capital – particularly in the build-up to the launch of the landmark Natural Capital Protocol in July.”
Full text of Quantifying natural and social capital: guidelines on valuing the invaluable is available here.