The SIGMA Guiding Principles consist of two core elements:

1	The holistic management of five diff e rent types of capital that reflect an organisation’s overall impact and wealth (in the broadest sense).
2	The exercise of accountability, by being transparent and responsive to stakeholders1 and complying with relevant rules and standards.

The five capitals are:
Natural capital – the environment
Social capital – social relationships and structures
Human capital – people
Manufactured capital – fixed assets
Financial capital – profit and loss, sales, shares, cash etc

Natural capital encompasses the other capitals as natural resources and ecological systems form the basis of life, on which all organisations (and wider society) depend. Social, human and manufactured capitals are critical components of an organisation and its activities. High levels of these capitals deliver value to both organisations and society, not to mention improving the quality of life of stakeholders. Financial capital is crucial to the ongoing survival of an organisation, and is simply derived from the value that the other four capitals provide. All of the capitals are heavily interlinked and there is some overlap between them.

This whole system is then encircled by the principle of accountability, representing the relationship that an organisation has with the outside world – with its stakeholders and for its stewardship of the five capitals.

The capitals need to be managed for the long term, not just for immediate re t u rn, building up stocks of capital and living off the interest that this creates. They also need to be recognised as interdependent, where changes in one are likely to cause an impact on another. Likewise, one form of capital cannot simply be traded against another.

The SIGMA Guiding Principles are compatible with other approaches that organisations may wish to pursue, most notably the concept of the triple bottom line², which has widespread popularity.

	footnotes 1 Stakeholders are those individuals and groups that affect and/or are affected by an organisation and its activities. 2 The idea of the triple bottom line was developed by John Elkington (1997) Cannibals with Forks - The triple bottom line of 21st Century business, Capstone Publishing Limited. See section 4.3 for further explanation of the triple bottom line and how the SIGMA Guiding Principles build on this concept.

© 2001-2006 SIGMA Project

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