Why SCBA and SCEA are the preferred standard of social value decisions
The challenge
Social Return on Investment (SROI) has become a widely used way of monetising social impact. While useful for storytelling and engagement, SROI often produces inflated, non-comparable values that do not align with how government, regulators, and commissioners assess value for money.
What government expects
Under the Green Book, public value is assessed using welfare economics, with a focus on how interventions change overall social welfare and wellbeing.
The approved appraisal approaches are:
•Social Cost-Benefit Analysis (SCBA) – the default and preferred method.
•Social Cost-Effectiveness Analysis (SCEA) – used where full monetisation is not proportionate or where wellbeing is the primary outcome.
•Wellbeing valuation (e.g. WELLBYs) as a formal extension of SCBA, not an alternative to it.
These approaches are designed to support decision-making, not just impact reporting.
Why SCBA and SCEA outperform SROI
SCBA and SCEA:
• Are explicitly endorsed by HM Treasury and the Green Book.
• Measure net changes in social welfare, not gross or attributed impact.
• Apply conservative, transparent assumptions on:
• Counterfactuals and additionality
• Deadweight, displacement and duration
• Discounting and optimism bias
• Produce outputs that are:
• Comparable across projects and sectors
• Defensible in audits and business cases
• Suitable for procurement, funding and regulatory scrutiny
SROI, by contrast:
• Is not referenced in the Green Book or wellbeing guidance.
• Time effects are often weak or absent.
• Can double-count benefits or over-attribute change.
• Produces values that are difficult to compare or use in formal decisions – ‘communication grade’ not ‘decision grade’.
Wellbeing: a key distinction:
Recent Green Book guidance embeds wellbeing directly into SCBA and SCEA, using consistent national measures and values.
This ensures that:
• Wellbeing impacts are monetised only where evidence is robust.
• Time, adaptation and persistence of effects are explicitly modelled.
• Wellbeing, income, employment and health impacts are not counted twice.
SROI approaches often monetise wellbeing using heterogeneous proxies, increasing the risk of overstatement.
Loop’s position
Loop applies Green Book aligned SCBA and SCEA to monetise social value in a way that reflects how government actually makes decisions.
Social value measurement is increasingly being formalised and standardised by government, so we deliberately align to the formal appraisal framework government already uses.
This means:
• Credible, conservative valuations rather than inflated figures.
• Full transparency on assumptions and evidence.
• Outputs that support business cases, funding bids and procurement.
• Social value that stands up to scrutiny – not just storytelling.
A commitment to credibility and transparency
We recognise that SROI has played an important role in helping organisations articulate the benefits of their work to stakeholders. However, over time we have seen how the use of inflated or optimistic values can reduce transparency and, in some cases, undermine the credibility of genuinely impactful work, particularly when headline figures are not realised or cannot be clearly evidenced.
Loop takes a deliberately conservative approach. While this approach does not seek to monetise every possible benefit; it prioritises those that can be evidenced, compared and defended in public decision-making. We believe it is better to under-claim and remain transparent than to overstate impact. By aligning to Green Book-approved SCBA and SCEA, we aim to strengthen trust in social value reporting and ensure that good work is recognised in a way that is realistic and sustainable over time.
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