Multi-Capital Accounting Standards

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1. Bill Baue:

"You're seeing the multi-capital model as inherently reductionist, an attempt to monetize and financialize the commons, when in fact it seeks to accurately depict the commons in ways that enhance accountability. I appreciate your concern that a multi-capital approach in the capital markets isn’t sufficient to address the need for community governance, but I think we're a long way off from such a world, and we're going to get there faster if we get the corporate community thinking in terms of using capitals borrowed from the commons. Because you are having impacts on capitals that are shared with stakeholders, the companies have an ethical obligation to measure those impacts and make sure they are sustainable. It's a self-accountability mechanism. The next step would be to then engage with stakeholders and see if they agree.

It's true that power is rarely shared voluntarily, but companies are recognizing that these resources are limited and that their social license to operate is also limited. I see you working on the notion of revoking the corporate license to operate — that can be effective, because it brings the issue into the view of companies risk management mechanisms.

But ultimately change happens more effectively when organizations recognize that they have to take accountability themselves, rather than having it imposed from without. Actually, the external imposition of accountability works hand-in-hand with the internal embracing of accountability. In short, I think CBS (Context-Based Sustainability) and the commons can each achieve our goals best by recognizing the overlap in our perspectives, instead of "enclosing" our perspectives off from one another." (

2. Mark McElroy:

"Perhaps the single most important feature of the International Integrated Reporting Council’s (IIRC) proposed standard for integrated reporting is that it is capital-based. It is predicated, that is, on the view that organizational performance — both financial and non-financial — is a function of what a company’s impacts on vital capitals are, given the importance of such capitals for human/stakeholder well-being.

Indeed, the fact that performance is a function of impacts on vital capitals is arguably the least controversial claim in the sustainability literature, and is all but taken for granted in financial management. Financial performance, that is, is a function of an organization’s impacts on financial capital, and non-financial performance is a function of its impacts on natural, human, social, constructed (or built) and intellectual capitals. The latter, intellectual capital, is sometimes embedded in the preceding three.

Importantly, another emerging standard, the Global Initiative for Sustainability Ratings (GISR), is also capital-based. It, too, is predicated on the view that sustainability performance is a function of impacts on vital capitals." (

Carrying Capacity

Mark McElroy:

"To be clear, neither the IIRC nor the GISR speak in terms of the carrying capacities of vital capitals — not yet, anyway. In principle, though, the inclusion of the idea that capital stocks and flows have carrying capacities is essential to the capital-based view of performance, because the fact that impacts on capitals can increase or decrease the quality or sufficiency of such capitals is precisely what makes them relevant. Indeed, human well-being depends on them.

It is not enough, then, to simply say that an organization’s operations have had impact on water resources (a type of natural capital); rather, the question must be: Have its impacts diminished the quality or sufficiency of such resources at levels required to ensure human (and non-human) well-being? Assuming we can allocate shares of natural resources to specific organizations – which we can – actual use then can be compared to such allocations as a basis for assessing performance. The concept of carrying capacity provides us with just the kind of measurement model we need to perform such calculations." (

Advantages of multi-capital approaches to circularity

Stephen Hinton:

"A multi-capital impact approach to the circularity of supply chains has several advantages:

Measures against “should be” show progress in context and improves transparency towards stakeholders. These measures give clear indications to policy makers as to how on track the changes are.

For each identified capital type, identifying capital preservation or regeneration status sheds light on investment needs as well as behaviour changes needed.

The overview provided by multi-capital approach has the ability to be a powerful informer of strategy. Strategy formation needs to know where to focus, and to either look to start to do or do more or do less or stop altogether. The normative approach can result in powerful indicators for policy makers to monitor and adjust as needed.

Offering an overview of all capital types ensures that policy makers take a broad approach and do not miss vital aspects of the service provision. The overview may offer insights into positive spiral opportunities.

Alignment with accepted metrics. Multi-capital approaches combine triple bottom line with planetary boundary as well as doughnut social floor thinking.

The normative approach generates metrics that better speak to citizens and are easier for journalists to communicate. This ensures a deeper social engagement in the transitions.

Multi-capital approaches are a robust way to deal with adaptive systems like the production system. For the enormous changes that are facing us, and for the hopes we place on corporations that have shown sluggishness up to now, normative metrics will quickly show if the incentives in place for companies are working. If they are not working, the insights of the multi-capital analyses will form a sound basis for introducing market-based instruments that will augment the information work of spreading the ideas of circular economy with incentives that will make it rather expensive NOT to comply." (


Bill Baue:

"There are currently three major new standards being established in the corporate community, and all of them are adhering to (multi-)capital theory, which arguably compels them to take account of impacts on the commons — or on capital resources that are shared amongst stakeholders.

These three are:

  1. International Integrated Reporting Council (IIRC)
  2. Sustainability Accounting Standards Board (SASB)
  3. Global Initiative for Sustainability Ratings (GISR) ."



Integrated Reporting

" <IR> is a process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation.

An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term."

  • "The International Integrated Reporting Council ('the IIRC')

is a global not-for-profit organization, incorporated in England and Wales. Company no. 07746254 with its registered office at The Helicon, Third Floor, 1 South Place, London, EC2M 2RB."

More information


  • The MultiCapital Scorecard. y Martin Thomas and Mark McElroy. Chelsea Green Publishing, 2017.

"The Consultants Martin Thomas and Mark McElroy have developed a format that provides a practical way to oversee such expansive sustainability. You choose what you wish to measure – what you feel is important – and even the weights you want to give to the various items. But they provide, thorough their MultiCapital Scorecard, a means for managing and evaluating that broader view of the organization.

It’s an important book because when you fall short of sustainability – an unpalatable workplace, polluting the environment, or being unproductive and winding up in the financial red – you are eroding capital, be it societal or corporate, and that’s destructive. And even if you find a multicapital approach wrongheaded or the authors’ system too elaborate, the method may include useful ideas you can borrow for your own situation." (