To enable a world of sustainable economies, chartered accountants must support organisations in understanding how all capitals – natural, human, social and produced – underpin their performance, financial stability, economic prosperity and individuals’ wellbeing. 

In June, I joined the board of the Capitals Coalition, a global network of organisations to which ICAEW has a long-standing association – indeed we hosted the project at Chartered Accountants’ Hall when it launched in 2012.

The Capitals Coalition now boasts more than 450 member organisations worldwide, united in the goal of revolutionising decision-making in businesses, financial institutions and governments. To deliver a fairer, just and more sustainable world, the value of all four capitals must be considered when decisions are being made.

This change will not be an easy one, which is why the Coalition has dedicated significant resource to creating a practical, step-by-step tool to help organisations make the switch to ‘capital thinking’.

Practical guidance 

The Coalition has created a Framework for Integrated Decision-making outlining seven steps to ensure the adequate consideration of all four capitals, as well as their interdependencies, in decision-making.

The aim is to provide organisations with a practical way to ensure they are incorporating capitals thinking in a consistent and transparent way. The framework breaks down each step into subtasks that need to be completed and defines the expected outputs for each.

The framework is then supported by two technical documents aimed at preparers and stakeholders. The first, the Capitals Protocol provides detailed guidance on how to conduct an integrated capitals assessment, with sections dedicated for each of the seven steps. 

The second document, Governance for Valuation outlines a “common structure to build confidence in valuation”. This document outlines transparency requirements, confidence criteria and guidance on how to communicate results.

Shaping the framework

After a year of development, the Coalition has published its beta version of the framework and its supporting documents to the public, calling for organisations to try, test, discuss and feedback on the tool.

It openly acknowledges the scale of the challenge it’s attempting to overcome in the opening pages of the beta framework: “We know this is not easy, and we know the Beta Framework is not perfect,” it states. “We need your help. Only a collaborative effort from all of us will transform the way that we account for and value what matters.”

This is a great opportunity for ICAEW members to be at the forefront of efforts to fundamentally shift thinking within organisations, putting them and global economies on a more sustainable footing.

The expertise of chartered accountants in collating, scrutinising and communicating data will be vital in ensuring the value of nature, social and human capital is being given the same level of consideration as produced capital.

The consultation on the beta framework is open until 10 January 2025. I would urge all of our members to look at these documents, talk them through with their peers and pilot the approach described. 

Applying these tools to real-world decisions could not only support more integrated decision-making at your organisation, but also help to refine these tools to help secure sustainable development the world over.

Get involved

Find out more about the framework and the consultation by visiting capitals coalition.org.

Download:

• The beta framework for integrated decision-making
• Capitals protocol
• Governance for valuation

The Coalition has created user templates to help those testing the framework, as well as a series of forms through which to share your insights and feedback.

You can also register to hear more on the framework and the consultation through webinars being held on 7 and 26 November.