Social and Human Capital Coalition
Despite growing awareness of the importance of social and human capital for business, there has been little consensus on how businesses can measure and assess its value.
Even when executives recognize the broad positive impacts of diverse leadership, or resilient approaches to stress management and mental health, they are unable to quantify their value.
“One of the biggest challenges facing companies that aim to understand the business case for investing in human capital is establishing credible and reliable approaches for measuring and valuing programs that improve human capital and employee wellbeing. The second challenge is integrating the assessment of human capital into a framework that considers the other key capitals, such as natural, social and financial. Developing reliable, integrated approaches is critical.”
The Social and Human Capital Coalition (SHCC), which is now part of the united Capitals Coalition, has developed a framework which aims to help address this challenge. The SHCC Protocol, published in 2019, aims to deliver a credible, comparable and broadly accepted approach to social and human capital impact measurement and valuation. If the Protocol framework is adopted by a critical mass of companies, it will help create a standardized and comparable set of metrics and data collection practices that can be used by business globally.
Nestlé, an early leader in committing to living wages for all employees, was one of a group of companies who helped develop the Protocol framework. In partnership with the SHCC, Nestlé conducted a study to determine a methodology for measuring the relationship between employee wellbeing and wage compensation, comparative to regional living expenses. Nestlé found a strong correlation between improved quality of life and health outcomes amongst employees who were paid a living wage, as opposed to standard minimum wage determined by local laws. The findings of the study reinforced Nestlé’s 2014 commitment to pay all of its employees a living wage.
The Protocol provides the global business community with an opportunity to not only comprehensively assess internal human capital management, and impacts to the business and employees — it also provides practical tools for companies to examine effects on other stakeholders in the company’s value chain, in local communities and wider society. However, without adequate up-take from companies, or the business community coalescing around a similarly comprehensive framework, human capital valuation will remain fragmented.