Measuring Our Value to Society
Determining SGS’s Value to Society involves a three-stage process:
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This involves measuring and assigning an economic value to the full complement of capital stocks (natural, human, intellectual, built, social and financial) and the respective flows (outputs, investment, depreciation and appreciation) necessary for our business activities across the value chain.
Parts of the capital stock complement and many of the respective flows (as measured and valued in Stage 1) are not recognized nor priced by global markets, which results in a false view of the cost of production. More informed and empowered consumers and regulators are changing this reality and are increasingly holding companies to account for their wider impact on society. Stage 2 sets out future operating scenarios that consider the breadth and pace of this cost transition according to territory, sector and capital landscapes.
So far, the emphasis of our work has focused on Stage 1. Each capital flow has been distilled into a set of measurable indicators. For example, investment in human capital will comprise direct financial investments (e.g. in a healthcare program, such as employee flu vaccinations) as well as indirect investment (e.g. in time spent through employee volunteering). Each flow indicator, once measured and where relevant, is assigned an economic valuation, with negative flows (i.e. depreciation) translating into financial costs and positive flows (i.e. investment and appreciation) translating into benefits. These costs and the benefits comprise relevant company, individual and governmental components. For example, if we were to take a human capital (depreciation) indicator such as an employee workplace injury, which prevented the employee from working, the potential costs to SGS might include administration, compensation and employee replacement components; the potential costs to the injured individual might include reduced wellbeing and associated medical costs; and the potential costs to government might include medical costs and loss of tax revenues.
Armed with a comprehensive understanding of a business’s capital endowment and the state change over time (Stage 1), coupled with enhanced views on how operating landscapes are likely to change (Stage 2), Stage 3 involves the identification and appraisal of investment in the interventions necessary for securing long-term, resilient forms of wealth creation.