HUMAN CAPITAL AS AN ASSET: Seven guiding principles to shift how PAGE 14 AN ACCOUNTING FRAMEWORK FOR THE NEW WORLD OF WORK human capital is valued GUIDING PRINCIPLES TO SHIFT HOW HUMAN CAPITAL IS VALUED From profits to purpose From corporate policy to social responsibility For too long, many companies had embraced the notion that a company’s sole Codes of conduct and corporate values often serve as a “north star” for enterprises, responsibility is to maximize profits for its shareholders. In one sign of the changing defining and guiding acceptable behaviour at work. We see progressive companies times, in August 2019, the Business Roundtable of leading US chief executive with strict protocols for respecting differences and diversity in all its forms – gender, officers released a new Statement on the Purpose of a Corporation signed by 181 race, age, sexual orientation, ability and other characteristics. Any infringement can chief executive officers committed to leading their companies for the benefit of all lead to disciplinary action. stakeholders – customers, employees, suppliers, communities and shareholders. In doing so, the Business Roundtable publicly acknowledged a shift from shareholder With mounting pressures and expectations for organizations to be strong actors in primacy to stakeholder primacy. their ecosystems and become more human-centric – for the benefit of the business and all stakeholders – there is a call for codes of conduct and corporate values The World Economic Forum has been advocating for stakeholder capitalism for 50 to apply both within and beyond the organization. In light of this, there will be a years. The original Davos Manifesto of 1973 set out for the first time the stakeholder rethinking of how the employment contract intersects with the social contract and concept that businesses should serve the inter with enterprises as actors in the community. It will be important for companies to be ests of all society rather than simply their shareholders. The Davos Manifesto 2020 provides the Forum’s vision for able to rely on their workers to represent the business in this broader context and to stakeholder capitalism and declares that “the purpose of a company is to engage all its value them accordingly. stakeholders in shared and sustained value creation”. The manifesto goes on to state: “A company is more than an economic unit generating wealth. It fulfils human and societal aspirations as part of the broader social system.” Consequently, performance measures should focus not only on the return to shareholders but also on how an organization achieves its ESG objectives. And executive remuneration should be tied to stakeholder responsibility. An important element of stakeholder capitalism and corporate purpose is a company’s responsibility to its people, including contingent workers as well as salaried employees.