Through a systematic process of prioritizing the most material social & human capital issues to stakeholders and to the business, companies can identify a starting point for measuring and valuing their impacts or dependencies on social & human capital and a clear sense of how the results could be used.
Some companies may have already conducted some or most of this stage through their existing sustainability strategy and reporting. In this case, companies should use the steps in this stage to validate existing social priorities (or ‘social & human capital issues’; see below) with a view to social & human capital measurement and valuation. Users should consider whether existing materiality analyses and stakeholder engagement could be adapted or extended to lay better foundations for social & human capital measurement and valuation.
This stage ensures that the measurement and valuation of social & human capital is aligned with both broader corporate strategy and stakeholder priorities from the very start of the process, laying a solid foundation for mainstreaming the measurement and valuation of social & human capital impacts and dependencies across the company. It is an important first step for deciding on the most material social & human capital impacts or dependencies that the initial assessment will focus on, and for setting a longer-term measurement plan.
Step 1. Understand social & human capital and its relevance to the business
This first step is intended to help companies identify social & human capital issues that are relevant to their business. This may include social & human capital issues that companies are already working on and issues they may want to work on in the future. The Protocol is flexible and therefore will be applicable regardless of the method or classification framework that is used to identify social & human capital issues.
Step 2. Identify the business case and potential business decisions
This step is intended to help companies identify how the social issues identified in Step 1 relate to business decisions and thereby create the business case for undertaking an assessment.
Step 3. Prioritize social & human capital issues
Step 3 brings the previous two steps together to determine the most material social & human capital issues that can be used as a starting point for identifying your company’s social & human capital impacts or dependencies so they can be measured and valued.
At the end of Stage 1, companies should have clearly identified:
- The most relevant social & human capital issues for the business;
- Business decisions that could be informed by the measurement and valuation of these social & human capital issues; and
- Which of these issues will be prioritized for further measurement and valuation using the Protocol.
These outputs are the foundation for building the company’s frame for social & human capital measurement and valuation. They define the starting point for measurement activities, and set out a longer-term plan for mainstreaming the consideration of social impacts within the organization.