What does 'intellectual capital' encompass according to the IIRC?

Intellectual capital, as defined by the International Integrated Reporting Council (IIRC), refers to the knowledge-based intangible assets that contribute to the value creation process of an organization. This encompasses aspects such as the intellectual property, brand reputation, employee skills, and relationships that an organization possesses.

The emphasis of intellectual capital is on non-physical resources that can drive innovation, improve efficiencies and ensure competitive advantage. This is critical in today’s information-driven economy, where knowledge and intellectual assets often hold more value than tangible assets such as machinery or property.

In contrast, the other options refer to different categories of business assets or attributes. For instance, fundamental assets can include both tangible and intangible assets, but do not specifically focus on the knowledge-related aspects of intellectual capital. Physical properties are strictly concrete attributes, such as buildings and equipment, which do not capture the essence of what intellectual capital represents. Lastly, market share is a measure of a company’s competitiveness in its industry but does not directly relate to intellectual capital, which focuses more on the intangible aspects that help to create or maintain that market position.