Future Now
The IFTF Blog
Finance: Intangible Reforms
Many influential investors, seeking improved ways of detecting undervalued companies, have identified intangible assets as the ultimate creators of future value. New tools have emerged for quantifying these alternative capitals. Think about the increase in companies incorporating corporate social responsibility (CSR) metrics into their public communications. Natural and social catastrophes will be in the forefront of driving stronger alternative capitals. As we become more aware of the increasing uncertainty and vulnerability of the following years, we will look at intellectual and/or social capital as drivers for protecting our surroundings.
Managing risk and mitigating uncertainty will become more necessary as we transition to new capital-based institutions. Just as the Internet followed a path from obscurity to hype to bubble and crash and then towards integration and true institutional innovation, so will new-risk management and services. The path for mitigating uncertainty will be an increasing transparency of capital flows—whether traditional capitals, alternative capitals, or a mix of both.
New measurement tools and new ways of signaling value will emerge.
At an individual level, these shifts will ultimately lead to the concept of a “personal capital ecology” as a replacement for narrow concepts of financial planning. A personal capital ecology will incorporate concepts such as personal carbon credits and social-reputation accounts. New institutions will grow as a need to support these new measurement tools.
Want to learn more? Check out our 2007 TYF perspective, “Finance: Intangible Reforms” for more information and an interview with Jed Emerson—a Senior Fellow with the Generation Foundation in London and a fellow with the Said Business School at Oxford University—on blended value, innovation of financial instruments, changes in standards and financial indexes, and much more.
This perspective also contains definitions of financial capital, intellectual capital, natural capital, and social capital. As well as more in depth looks at how these new capitals will change our financial systems.
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You can find the complete set of our 2007 TYF perspectives here. Or search for each separately.