I'm working with a group of F500 CPG (consumer packaged goods) companies on developing new metrics for the assessment, reporting and targeting of environment and social impact. In the mission/impact statement, we referenced the concept of Human Capital. One member asked for clarification. Here's my response:
Along with the
environmental component of the three-pronged model of sustainability
(whether "triple bottom line" or ESG), we are experiencing a very
strong up-tick in focus on social responsibility, both internally and
externally. Internally, human capital of course refers to the
relationship between labor and economic value (I believe that Adam
Smith considered human capital one of the four elements of fixed
capital, the other three being machines, buildings and other
improvements on land -- though I digress). The attention to labor has
taken new directions, with sites set on significantly higher levels of
healthy, productivity and engagement. Just look at the new craze in
published lists relative to "best places to work."
Concurrently,
focus is also on the impact that companies have on the public outside
of the company (read: society as a whole and not just a direct
customer, i.e. society's human capital). By way of example, CSR
departments are trending away from the "big checks for top billings"
type philanthropy and towards direct contact with social organizations,
NGOs and communities (e.g. thousands of people from many large
corporations are out building homes with Habitat for Humanity or
planting gardens in public schools, etc.).
So what's this
got to do with the supply chain? Well if you want to assess/measure
sustainability along the supply chain, then a measurement of the impact
upon human capital is a necessary component. Doing so will not only
allow for the setting of targets towards increased health and
productivity (for employee and community), but will attract new talent
and add value to the products being manufactured.
At a
recent conference, a single mother employee (non-management) from a
highly sustainable company stood up and was practically in tears
talking about how much she loves working for her employer. I'm not
sure that I'd need any form of metric to show the value in having such
a happy and committed workforce, though they do exist. Employees have
responded most favorably to an employer's commitment to both the environment and the employee's personal well being.
The
bar has been raised relative to the impact companies have on people as
it has been raised relative to the environment. I believe that
embracing both in a supply chain analysis is critical.
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