Multicapitalism and the Two Faces of Integrated Reporting

In an article written for Sustainable Brands, Mark W. McElroy, Ph.D. discusses different approaches of integrated reported for corporations. Multicapitalism is a new economic doctrine for sustainability in commerce. The world’s prevailing economic doctrine largely boils down to prioritizing impacts on only one type of capital with shareholder well-being in mind. The time has come for a new form of commerce in which performance is assessed in terms of impacts on multiple forms of capital. Capital theory in the sustainability and economics literatures expresses the view that there are five broad categories of capital. These include natural, human, social & relationship, constructed and economic.

Organizational performance can then be thought of in terms of impacts on all vital capitals relative to norms, standards, or thresholds for what they would have to be considered sustainable.  Value is by no means restricted to economic assets. Multicapitalism is the evolutionary result of Context-Based Sustainability, a methodology initially devised for non-financial management only.  What is new and exciting about multicapitalism is its extension of CBS into the financial domain.

Integrated reporting is enhancing the way organizations think, plan, and report the story of their business. Organizations are using integrated reporting to communicate a clear, concise, integrated story that explains how all of their resources are creating value. It is also helping businesses to think holistically about their strategy and plans, make informed decisions and manage key risks to build investor and stakeholder confidence. In the process, they are able to improve future performance. This practice is being embraced by a diverse coalition of business leaders and investors to drive a global evolution in corporate reporting.

In addition, integrate reporting applies principles and concepts that are focused on bringing greater cohesion and efficiency to the reporting process. It improves the quality of information available to providers of financial capital to enable a more efficient and productive allocation of capital. Its focus on value creation, and the “capitals” used by the business to create value over time, contributing towards a more financially stable global economy.

For the full article, CLICK HERE.