Corporate social responsibility (CSR), community relations, accountability, corporate citizenship, transparency, stakeholder engagement, (I could go on for a while here) are too often seen as nice-to-haves or nice-to-pursue by executives. Bottom line is, all of these are directly affecting your organization’s finances. How so? They’re all closely linked to your intangible assets. And even if they’re still not quite obvious to everyone yet, intangible assets are as impactful as tangible assets (sometimes even more) to business continuity. That being said, I’m sure that whether you’re the owner, top executive, Community Relations or Public Relations professional in your organization, your brand’s reputation, its place in the market and its perception by communities where you operate are fairly high on the agenda. Especially if recently your name has been all over the news.
Traditionally – and from the accountant’s point of view, an organization’s financial (tangible) assets have been material things like factories, machinery, and physical human capital. In a somewhat more off the beaten path approach, financial assets should also include intangible, non-physical (invisible) elements that are rooted in human knowledge (know-how) and a business’ relationships and profile.
How are intangibles linked to capital?
I recently came across a very interesting paper, that was published by Business for Social Responsibility back in 2006, called Business Brief: Intangibles and CSR. According to the paper, intangible assets can be divided into 4 capital groups that can directly have an impact on your overall CSR strategy:
4 main capitals that relate to intangibles
- Human – knowledge assets and leadership
- Organizational – communications and strategy
- Market – reputation, brand development, partnerships and networks, and adaptability
- Innovation – R&D capability and technologies
You’ll notice that when it comes to intangible assets and the different types of capital they impact, human competency is fundamental to each one of them. Most importantly, they have nothing to do with the basic value of physical assets.
The link between CSR and intangible assets
I found that even if Business for Social Responsibility’s paper was well into its teens, it still to this day accurately pinpointed the link between intangible assets and Corporate Social Responsibility:
“The link between intangibles and CSR is intimate and mutlifaceted. Understanding how value is created through intangible assets is integral to understanding how long-term wealth is created through CSR.”
In an ever changing business world where the customer is getting involved, asking more questions and caring a whole lot more about his or her footprint, organizations from all industries have had to adapt and change the way they do business, hence the increase in Corporate Social Responsibility programs worldwide.
Should you need a little assistance with stakeholder engagement and building a trusting, long-term relationship with the various actors that can impact your organization, make sure to contact us! We’d be happy to help you meet your responsible business targets!