• Frankfurt, 11 June 2021

Rethinking Capital and Value Balancing Alliance - Joint Statement

The business environment has fundamentally changed. The paradigm of pure economic
growth, financial success and shareholder value is outdated, and intangible assets have
replaced tangible assets as today's engine of value creation. To create long-term value,
companies need to account for: 

·        their impacts on society, environment, and wider economy (inside-out perspective,
value-to-society – the social license to operate)

·        the current value of their intangible assets and the effect of sustainability aspects on
decision-making and enterprise value (outside-in perspective, value to business – the
financial license to operate and shareholder equity).

We support the latest developments towards standardization of sustainability reporting and
decision-making frameworks. We also support initiatives to develop standards to represent
true shareholder equity and profitability by recognizing the current value of intangibles on the
balance sheet.

We recognize that decision-making and reporting needs to build on robust, comparable, and
verifiable information. Therefore, accounting concepts and frameworks need to be further
developed and harmonized.

Our ambitions to develop a standardized sustainability accounting framework and a
standardized intangibles accounting framework are complementary. We aim for a close
collaboration in developing methodologies for companies to integrate sustainability aspects
and proper recognition of intangibles into decision-making and reporting applying traditional

Natural, social, and human capital aspects as well as the link between the inside-out and
outside-in perspective of the double materiality can then be embedded into decision-making
and reporting and compared.

Changing the economic system is a huge undertaking which needs joint efforts by all. As part
of a growing international movement, we will reach out and increase our collaboration with our
partners and stakeholders in this endeavour.

Christian Heller
Chief Executive Officer
Value Balancing Alliance

Andrew Watson
Rethinking Capital