What are the six capitals of IFRS?

The Six Capitals of IFRS: A Broader View of Value

When discussing financial reporting under IFRS (International Financial Reporting Standards), the concept of the six capitals plays a central role in how organizations measure and communicate value. These capitals go beyond traditional financial statements, offering a more holistic view of a company’s resources and obligations.

While the response mentions cash, liabilities, OPEX, CAPEX, and net book value, the official IFRS Framework aligns the six capitals more precisely: financial, manufactured, intellectual, human, social, and natural capital. The financial capital—often what people first think of—includes cash, invested capital, and income. It reflects the monetary resources a company uses to operate and grow.

Then there’s capital expenditure (CAPEX) and operational expenditure (OPEX), which, while not capitals themselves, relate directly to how financial and manufactured capital are deployed. CAPEX represents investments in long-term assets—like machinery or buildings—while OPEX covers day-to-day operating costs, both shaping the company’s financial footprint.

The true value of assets, including their net book value (NBV), matters greatly under IFRS. NBV—calculated as original cost minus depreciation—helps determine the carrying value of assets on the balance sheet, influencing both investor perception and regulatory compliance.

However, modern reporting standards encourage looking beyond just numbers in a ledger. Intellectual property, employee skills, brand reputation, and environmental impact—all fall under the broader capital framework. Social and relationship capital, for instance, can drive long-term sustainability just as much as cash in the bank.

In practice, IFRS doesn’t prescribe a rigid list of line items but promotes a principles-based approach. This allows companies to report on what’s material to their business model, ensuring transparency and accountability across all forms of capital that sustain value over time.