Corporate Social Responsibility
How well do you manage your capital assets?
Financial capital – organisations that want to remain solvent need to pay attention to the monetary funds they have available and how that underpins the operations and the services they supply. Lack of working capital and cash flow is often the killer blow to a business despite often having brilliant ideas and bags of innovation.
Physical capital – organisations use their financial capital to create physical capital such as premises, machinery, equipment. The method of payment e.g. purchasing outright, renting, leasing will affect how effectively financial capital is used. Physical capital especially machinery will depreciate i.e. reduce in value so efficient businesses find the right balance.
Human capital – a key organisational asset is the people that work for or support the organisation. Human capital is an in-tangible business asset. A business needs to formulate plans to accumulate human capital in terms of on-the-job experience, life experience, training programmes and programmes to empower individuals, promote self development and skill development to strengthen individual and team abilities and capabilities.
Natural, or environmental capital, is the sourcing and efficient use of natural resources and environmental assets. These assets include raw materials, soil, air and water. The effective development of natural capital includes the development of strategies that ensure efficient use and the reduction of waste with reuse and recycling wherever possible.
Social capital is the development of social and/or collaborative networks with individuals, groups or community organisations. Social capital is based on interrelation, reciprocity and cooperation and the development of mutual trust in order to reach common goals with stakeholders including voluntary groups or other members of a supply network.
In your organisation do you have the right asset mix and do you effectively manage all types of asset? Does your corporate social responsibility strategy actually deliver benefits in terms of natural, social and human capital and in turn drive business equity? Food for thought!