Six Capitals v The Triple Bottom Line

8 April, 2015

The relative merits of the Six Capitals v The Triple Bottom Line may be questioned as reflecting a distinction between Integrated Reporting and Sustainability Reporting. I would argue that we can’t have one without the other. Let me explain.

Six capitals v the triple bottom line

The GRI has pioneered a form on triple bottom line reporting which focuses on disclosures on social, environmental and economic performance and, more recently, on governance and process disclosures. The GRI’s work has provided both the tools (a robust set of indicators developed through an extensive international stakeholder engagement process) and impetus for increased corporate accountability for negative impacts, previously invisible.

In a shift drawing attention to value created, Forum for the Future (2009) identified five types of “sustainable capital from where we derive the goods and services we need to improve the quality of our lives”[i].   As early as 2003 The Sigma Guidelines (The Sigma Project, 2003) saw these five capitals (i.e. natural, social, human, manufactured and financial capital) as a means of enhancing accountability in a way which builds on the triple bottom line approach.

“By utilising the five capitals model it is possible to overcome some of the weaknesses of the triple bottom line concept, for example, the temptation to trade off social, economic and environmental factors as if they were equal (when environmental integrity is actually a prerequisite for society and the economy) and can be treated in isolation from one another (when, in fact, they are often interrelated).” (The Sigma Project, 2003, page 21)

The IIRC drew on and acknowledged this prior work identifying the following six capitals: financial, manufactured, intellectual, human, social and relationship, and natural. The process of doing so is explained in the IIRC’s Capitals Background Paper (IIRC, 2013) and additional supporting papers including a literature review. In addition to a consultation process it involved extensive searches of the academic and professional literature and detailed examination of key contributions.

The IIRC’s Capitals Background Paper (IIRC, 2013, p 21-22) notes:

“…quantitative indicators, such as KPIs and in some cases monetised metrics, can be very important in explaining an organization’s usage of and effects of various capitals. This is particularly true where KPIs are themselves “integrated” in that they display the relationships between two or more capitals… Notwithstanding the importance of such metrics it is not considered necessary for the Framework to prescribe specific metrics or measurement methods to be used in an integrated report. Rather, it is believed that the IIRC should complement, rather than duplicate, such material developed by established reporting standard setters and industry bodies.”

The Capital’s Background Paper provided examples of metrics used in IIRC pilot company reports and suggested that a database of metrics be developed, particularly including those which demonstrate the relationship between two or more capitals. Of course telling a value creation story around multiple capitals involves more than metrics, but the GRI indicators could be, and very often are, used by organisations to inform their approach to i) the stewardship of human capital, social and relationship capital and natural capital and ii) reporting on these capitals in accordance with the IIRC’s International <IR> Framework.

In their joint publication Climate Change your Journey to Integrated Reporting Promethium Carbon and the CDSB highlight the synergies between climate change-related and integrated reporting and demonstrate how climate change-related disclosures can be included in an integrated report.

Integrated Reporting v sustainability reporting

Key differences between integrated and sustainability reporting include:

  • the primary audience
  • a focus on value creation (and depletion) versus measuring (often negative) impacts
  • the extent to which they are forward v backward looking
  • the issues on which accountability is discharged
  • and connectivity of information.

A robust sustainability reporting process is often an irreplaceable foundation for organisations on the Integrated Reporting journey and, I would argue, essential for the preparation of a good integrated report. Integrated Reporting makes visible the value in managing sustainability. Thus, it can highlight the business case for managing sustainability impacts.

The IIRC and the GRI

The IIRC and the GRI have made statements regarding their collaboration. But we are perhaps yet to see the benefit of this collaboration. To succeed in creating a paradigm shift the IIRC must continue to appeal to mainstream business and accountants. Doing so risks watering down the extent to which corporate Integrated Reporting practices promote sustainable development. The GRI has an important role to play in keeping Integrated Reporting focused on making “a lasting contribution to … sustainable development” as per the IIRC’s declared vision. For many organisations the GRI indicators would likely be the first port of call for thinking about reporting on value creation (and depletion) across multiple capitals. It would seem to me that this would be a particularly fruitful area of collaboration.


Carol Adams is a member of the GRI Stakeholder Council, was a member of the Project Team on the IIRC’s Capitals Background Paper and is a member of the CDSB’s Technical Working Group. The views expressed here are her own.


Adams, C A (2015), “The International Integrated Reporting Council: a call to action”, Critical Perspectives on Accounting, Vol 27, 23-28

Adams, C. A. (2013, updated 2015). Understanding Integrated Reporting: The Concise Guide to Integrated Thinking and the Future of Corporate Reporting. Oxford: Dō Sustainability.

Adams, C. A., Frost, G. and Webber, W. (2004) Triple Bottom Line: A Review of the Literature in Triple Bottom Line: Does it all add up? Henriques A and Richardson J (eds), Earthscan.

Forum for the Future (2009) Five Capitals.

IIRC (2013) Capitals Background Paper for and supporting literature search, alternative visual representations of the capitals and summary of public comments.

Promethium Carbon and the CDSBClimate Change your Journey to Integrated Reporting

The Sigma Project (2003) The SIGMA Guidelines.