For communicators searching to prove value on their companies’ investment in employees, branding and other intangible assets, the investment and shareholder communities can be difficult to get through to. Yet, the move toward different regulations and trends in corporate reporting has eased this burden and opened the door for a strategic discussion of the value of human capital.

At Communicate magazine’s Corporate Reporting, Human Capital and the Intangible Asset, investors, communicators and HR professionals united to discuss some of these issues.

Ian McDonald Wood, research and consulting director at FutureValue, opened the debate saying, “The one thing that investors like least is uncertainty.” He also notes that the accounting industry is built upon a long history lacking innovation and lacking methods for dealing with intangibles. Independent bodies like the Financial Reporting Council (FRC) and the International Integrated Reporting Council (IIRC) have sought to change the way accountants and corporate reporting teams approach intangible assets by encouraging a narrative approach to reporting. The FRC, for one, stands by its mantra of ‘clear and concise’ as the route to good communications as opposed to annual reporting becoming an overly-regulated checkbox activity.

Jonathan Labrey, chief strategy officer at the IIRC, said, “A business must be able to invest and show the value of that investment over the short, medium and long term and prove the value of that investment over the short, medium and long term.” This can be achieved, he says, through strategic thinking about value creating.

However, the investors, for the most part, maintained that their interest still lay squarely in the bottom line. “Strategic reports are something we do not need,” says Henry Dixon, portfolio manager for investment fund GLG. Bob Yerbury, non-executive director of wealth management company Above Wealth, agrees, adding about the strategic report, “At the end of the day it doesn’t really tell you very much.”

Despite this, the bottom line is increasingly comprised of intangible assets. Various valuations place the worth of intangible assets somewhere between $35 trillion and £840bn, depending on the index and country. Thus, human capital and other intangibles do play a role in the ultimate cost of a stock and value of a company. In approaching this the HR folk within companies are beginning to work with investor relations teams and leadership to promote a strategic approach to employer brand, human capital valuation and recruitment.

Research undertaken by Communicate, Emperor and Rethink Group found that 83% of UK-based companies rate employer brand management as either a strategic commitment or priority to the leadership team.

Leena Nair, senior VP for leadership and development at Unilever, says the shift comes from the changing role of human resources within companies now that traditional functions like payroll are being outsourced. She points to the need for HR to prove its value as a reason for employer brand to become a more strategic consideration. “Transparency has pushed up credibility of the HR function,” she adds. Tina St. Leger, VP and global head of HR at Viiv Healthcare says employees should feel valued but that businesses benefit from their employees, “All of our employees are valuable and should be treated as such.”

Finally, the debate finished with an examination of new standards for the measurement and evaluation of intangible assets. The British Standards Institute (BSI) is launching a Human Capital Standards Committee that will examine these issues. “The HR community hasn’t really engaged with standards before,” BSI’s lead programme manager Sally Swingewood says. “Ever.” Wilson Wong, head of futures and insight at the CIPD is working with the BSI in this regard. He says 40% of the valuation of a business will be touched by HR in the future. Thus, corporate reporting is a way to convey that the company understands this value.

These shifts are still in the early stages for both HR and IR, yet they will continue to impact long-term investment strategy, stakeholder communications and human capital management.