How can companies record the ‘value’ of respect for human rights?
The public statements of ever more companies and investors are rejecting an exclusive focus on shareholder primacy and short-term returns, recognizing this has led to business and capital markets failing society, the planet and their own long-term interests. Leaders are returning to ideas of the ‘purpose of the corporation’ and wider stakeholder interests. They are recognizing that financial capital is but one form of capital to be valued along with natural, social and human capitals: that is, the planet and people.
But what does that mean for accounting models? Financial accounting is stuck measuring tangible assets while companies’ market value sits mostly in intangibles.
“Management accounting has seen emerging innovations around environmental and social metrics but struggled to capture the value of respecting people’s dignity. Until we can address this gap, we will be missing a crucial part of the picture.”CAROLINE REES, PRESIDENT OF SHIFT
Modeling human rights issues in accounting terms
We are exploring the fundamental change that is needed in the field of accounting in order to reflect the value for society and companies of business conduct that respects human rights. We aim to contribute to progress in accounting for the value of business respect for human rights in measurable and generally applicable ways.
We are linking up with organizations that have been tackling this conversation in broader environmental and social terms to examine ways to embed the human rights dimension. Early consultations suggest an opportunity to identify one or two human rights issues that could be modeled in accounting terms, on which further initiatives could then build. Two leading candidates for this approach are living wages and land tenure.
We are conducting research and expert consultations to identify what kind of process might best enable an informed, inclusive and productive conversation that could start to develop an accounting model for one or both of these issues.
Please browse our outputs and discussion papers below to learn more about this area of work.
Research and Outputs on Accounting for Respect
Expert Roundtable on Business, Human Rights and Accounting: A Summary Report
This document is a summary of the expert roundtable discussion on business, human rights and accounting that took place on April 24, 2019, in collaboration with Manchester Business School, St Andrew’s University, and hosted by the Institute for Chartered Accountants of England and Wales.