The six-capital framework would help the finance function to become a business partner that makes a contribution to the evaluation of an organisation’s performance against its purpose, said PwC recently when releasing findings of joint survey done with ACCA in a report.
According to the report, the six capitals are: financial capital, manufactured capital, intellectual capital, human capital, social and responsible capital, and natural capital.
“Historically, we've been very focused on the financial value added. I think what we're going to see, what we are seeing, and we will see more of is a balance around the six capitals,” said Brian Furness, Global Consulting Finance Leader, Partner, PwC UK.
- More than 70% of the respondents indicate that the mainstream use of finance insights to evaluate an organisation’s performance against its purpose would be achieved in the next three to five years
- More than 60% believe that the finance function will be fundamental in evaluating intellectual capital, while over 40% view it as fundamental to evaluating human capital and social & responsible capital
- 62% said that finance will be either fully or partially involved in evaluating natural capital performance
To lead with these added insights, finance will need to evolve beyond its current skill set to incorporate a range of technical and soft skills, as well as business acumen driven by a new world view to assess operating model performance, PwC pointed out.
Currently, 55% of the respondents claimed that finance business partnering was a proactive role in their organisations, but only 37% reported that it was truly embedded in the organisation as a fundamental part of decision-making and strategy, the company said.
Business strategy development and the analysis of current performance — the two most valued aspects in the role according to the respondents — suggest that finance professionals might not yet be achieving the forward-looking view on which the future of the finance function may depend, PwC added.
Yet, more than 78% of the respondents see the role of finance business partners increasing and most of them believe it will increase significantly in the next three to five years, according to the report.
Oversight and guardianship of data integrity and standards, for instance, will be an important responsibility that respondents see as part of the development of the role, PwC noted.
“With the broader measurement and evaluation of organisational purpose becoming increasingly fundamental to business transparency and performance, the finance function has the opportunity to use its capabilities to drive long-term value for the organisation,” Furness said.