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Getting a handle on social value

Social value, like the circular economy, is a great example of how reframing an old challenge can bring new energy and new solutions. In the past two or three years, the idea that social impacts could be defined, measured, even monetized, has been taken off the list of impossible things and is now yielding interesting, relevant new practice that promises a new era of social value creation.

Sustainable development goals set the context

Business’ growing acceptance that there is money to be made from fixing the world – and growing risk from failing to – is part of the reason. Dodd Frank in the US, the UK’s Modern Slavery Act and Social Value Act, and EU legislation on conflict minerals are part of a trend towards greater scrutiny and expectations of the social performance of business. In 2015, the UN’s Sustainable Development Goals developed with business set a new framework for sustainable prosperity: a 2050 world in which 9 billion people live well, within planetary limits. Of the 17 goals, 11 are clearly social – focused on hunger, poverty, inequality and other human woes.

These changes seem to reflect something deeper – a profound unease with the current formulation of capitalism, and much closer attention to the role of business as a result. As the World Business Council on Sustainable Development (WBCSD) put it, ‘momentum from the global agenda, government policy, investor requests and consumer sentiment is driving companies to better understand, manage and communicate their true impact on society and the economy.’

The art of the possible?

But realizing you need to get a handle on social value is one thing; doing so is another. Social value can be positive and negative, can be within a business, in its value chain or the wider world, and might be physical, mental, emotional or even spiritual. One person’s positive impact can be another person’s negative. Working out metrics for one business is hard enough: developing a method that would enable investors to compare businesses with each other – harder still. In 2014, Anthesis brought together a group of brands around the idea of a shared framework on social impact valuation. They could all see how it matters, and many were already in the thick of developing their own approach, but the thought of a coordinated effort and shared metrics still seemed a step too far.

Two years on, what has changed? Social impact, value and purpose are still in the spotlight. A recent Ethical Corporation webinar on the subject attracted 950 participants. And the multiplicity of frameworks has multiplied further still. WBCSD’s Social Capital Protocol and BITC’s Social Value Template aim to simplify and harmonize the process of social impact valuation across businesses. Our work has focused on helping individual businesses sharpen their approach, and we have learnt a lot in the process. Our recent acquisition of Enveco Environmental Economics in Sweden is broadening our view of social value creation with a new focus also on governance, institutional and social aspects of ecosystem management and planning, with stakeholder participation, learning processes, attitudes and incentives to the fore. We’re still working out how these non-corporate aspects of social value creation can be brought into the measurement of corporate impact on society.

But the idea of a shared set of indicators for social value still seems a long way off. Through our work on social valuation with companies in communications, FMCG, infrastructure and construction materials, via a range of methodologies, we are starting to wonder if it is in fact a useful ambition.

The truth is it may not be very helpful to try to coral the very different kinds of impact currently lumped under ‘social value’ into a single frame. The value a construction project creates in a local community, the benefits of women’s education in an apparel supply chain, the socio-economic effect of banking services in an African country and the impact of a hazardous material on the health of a retailer’s customers may have some features in common, but crunching them into a single frame and burying all the complexity in a set of indicators – or dollar value – may obscure more than it reveals.

Don’t be deterred: it may be easier than you think

Where we have seen more productive progress is in the methods being used to drill into these different kinds of value. We are helping construction and development companies understand the value and vulnerability strategy from the ground up, with a base in stakeholder value and materiality, giving them a clear narrative and an increasingly solid business case for action. We are developing a data-gathering tool that simplifies and aggregates the impacts of hundreds of projects funded by a corporate foundation. We are helping a company bring the social attributes of products and materials into a green design tool. In all these cases, the credibility of the approach is based on finding relevance for the organization concerned. And the organizations concerned are finding ways to understand their social impact and bring it into strategy.

In time, it may be possible to look across these real projects and see the connections, similarities and shared metrics. If that is possible, it will be more powerful because it brings together metrics that are proven in use, rather than developed to meet a theoretical need. Whether any such metrics will prove universally useful and comparable remains to be seen.

Email Director if you’d like to discuss how Anthesis can help you get a handle on social value.

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