the quantification of the relative importance that people place on the changes they experience in their lives
A Complete Guide to Social Value
In this article, we’ll guide you through everything you need to know about social value and how you and your organisation can get started by implementing the right software tool to measure and evidence the social impact of your projects and operations.
Chapter 1
What is social value
There are a lot of social value definitions in circulation, with differences ranging from just terminology through to fundamental theory.
In their framework last year for defining social value in built environment projects, the Green Business Council (GBC) listed 24 well-established social value definitions alone. That does not include all the extra definitions from overlapping areas such as ESG (Environmental, Social and Governance), sustainability, CSR (Corporate Social Responsibility), the UN SDGs (United Nations Sustainable Development Goals), and social impact. This all reflects the fact that social value is an evolving concept and area.
Social Value UK, however, defines social value as “the quantification of the relative importance that people place on the changes they experience in their lives”, which is a good starting point. Those changes can be across social, environmental, and economic impacts. And it is important to look at both positive and negative impacts, to identify true social value. Another key factor is recognising that those impacts, and the way they should be captured, will vary based on the needs and context of different scenarios and individuals. Therefore, it is important to try and tailor the measurement as much as is possible based on available research and data. Ultimately social value can also be seen as all culminating in individual and community wellbeing, both current and long term.
Social value, therefore, offers a way to understand and generate real value for money, by ensuring that organisations make more effective decisions that are founded on accountability and a greater understanding of outcomes.
But to engage with their social value, organisations need to understand how to measure it. Better measurement, in turn, leads to better management, which leads to the maximising of social value generated with the resources available.
Chapter 2
How to measure social value
At its core, the traditional approach to measuring value can be used – a set of metrics. However, when measuring social value these metrics need to be relevant to the value that the interventions/organisations are generating. They can be qualitative, quantitative, or monetised.
Monetising the social value process refers to attaching a proxy financial value to an outcome. That value represents the relative importance of that change to those impacted. It does not show an actual financial return. The benefits of doing this are significant but it needs to be approached in a robust manner.
The benefits of monetisation:
True impact can be estimated:
By using counterfactuals, additionality analysis, and economic treatments a truer estimate of the actual impact can be created, compared to stopping at the output stage like Environment, Social and Governance (ESG) and other impact frameworks.
Provides a communication tool:
Monetisation creates a common language that local communities, staff, investors, customers, contracting authorities, and other stakeholders can understand to get an intuitive sense of scale.
It also enables greater discussion, bringing in stakeholders who aren’t experts into the conversation and decision-making process.
Improved decision-making:
By translating impact into a common unit, it is possible to compare like-for-like and therefore maximise social value.
For example, when assessing investment options, the holistic value and impact can be compared, with social value put alongside costs and financial returns.
Another example is the comparison and scoring of bids during the procurement process.
Provides greater accountability:
Supports more effective monitoring of initiatives and commitments and holding both suppliers/contractors and internal operations to account – traditionally a challenging area in social value.
Monetising social value can be a very powerful tool but must be developed in the right way to avoid overclaiming and stand up to scrutiny. One option is to let an existing measurement framework do the heavy lifting in terms of developing the relevant metrics, both monetised and non-monetised. One popular measurement framework is the National Social Value Standard (NSVS) which includes over 900 metrics. The NSVS covers all the Social, Economic and Envrionmental metrics your organisation needs to start reporting on social value.
Chapter 3
How to monetise social value
Key steps in the monetisation process:
1
Identifying outcomes
Qualitative research to identify the social, environmental, or economic outcomes of specific interventions and changes.
Most metrics have multiple outcomes grouped together and each of their individual valuations are aggregated.For example, the wellbeing impact on an individual moving from unemployed to employed, the changes to economic output, and the public spending impact.
2
Assessing methodologies
Assessing the most robust valuation methodology for each outcome.
For example, a WELLBY for wellbeing impacts, income levels analysis for changes to economic output, and public sector costs for their spending impacts
3
Finding the data
Collating the best quality data to support each valuation approach. For example, academic studies for WELLBY life satisfaction data, Office for National Statistics (ONS) data for income levels, and the Greater Manchester Cost Benefit Analysis (GMCA) Unit Cost Database for public sector costs.
Lack of quality data can result in a change in valuation methodology, or it being judged that an outcome cannot currently be robustly monetised.
4
Conducting additionality analysis and applying economic treatments
Applying a number of additionality factors, multipliers, and economic treatments to every valuation, tailoring their levels.
For example, deadweight, attribution, displacement, duration, drop off, discounting, inflation, and marginal utility of income.
As can be seen, monetising social value is a challenging process that has many pitfalls. One option is to let an existing measurement framework do the heavy lifting in terms of developing the relevant metrics, both monetised and non-monetised.
Chapter 4
How can social value be used in the public and private sectors?
We are seeing an increasing amount of social value related legislation and requirements for both public sector and private sector businesses (e.g. the Public Services Act, the Social Value Model, Procurement Policy Note 06/21). Plus, a growing focus on social value performance by workforces and the public in general.
Whether businesses are bidding for contracts, trying to attract investors, motivating their workforces, or appealing to customers and local communities, the demands on both demonstrating and improving the social value they generate continues to grow. This means public and private sector organisations are having to look closely at how to allocate their resources most efficiently to maximise social value. The starting point of this is to actually measure the social value being generated.
Some examples of where social value measurement can support the public and private sectors, across all forecasting, monitoring, and evaluating stages:
Internal strategies or CSR
This can include social value, sustainability, CSR, ESG or general impact strategies. Using measurement frameworks to help identify goals, initiatives, and set targets.
Then embedding the relevant metrics and aims in the governance and measurement process to evaluate progress against those targets, improving accountability, and feeding the outputs into reporting.
Business cases and investment decision making
Using financial proxy values attached to metrics to compare investment option impacts like-for-like as a common unit, including seeing return on investment ratios.
Therefore, improving investment decision making, building stronger business cases (the Five Case Model or others), and ultimately maximising social value.
Procurement
Contracting bodies
Using metrics to decide what questions to ask bidders, how those will be measured, and what targets to set. Evaluating and scoring bids using like-for-like proxy values. Monitoring and managing supplier social value commitments during the contract – improving accountability.
Bidding organisations
Using metrics to fully demonstrate social value, including setting commitments and targets, and looking at the best ways to increase the amount of social value generated. Particularly with a growing number of public sector requirements such as the Social Value Model and PPN 06/21. Clear monitoring and social value reporting delivered during the contract using metrics.
General stakeholder communication
The common language of financial values and the ability to wrap up all impacts into one figure can support the communication of social value being generated to all stakeholder groups.
Those can include investors, local communities, employees, suppliers, governing bodies, contracting authorities or customers.
Chapter 5
A word from our clients
“In our line of work, we can really struggle to attach actual value to what we do, with the focus being on big outcomes that can be hard to quantify. Loop’s report has provided us with valuable information that we are incredibly pleased with and will be able to use to inform our future activities as well.”
Catherine Bishop, Chief Executive, Tigers Sport and Education Trust Read More
“The fact that Loop and its tool are partners with Social Value UK and Social Value International was a real selling point and helps us show our clients – particularly local authority clients – that we are following the same government-led guidelines. “
Anna Kennedy, Regional Sustainability Manager, Sir Robert McAlpine Read More
“The Loop results form a key element in our communication with existing and potential investors, allowing us to give our clients confidence in the multiplier effects that investments into social real estate assets can deliver.”
Adrian D’Enrico, Head of Social Real Estate, Alpha Real Capital Read More
“Loop’s expertise and the bespoke platform it developed have helped us translate social value from a concept to tangible outcomes that are easier to understand and communicate, both internally and externally. It has allowed us to develop our business strategy and… a deeper understanding of how we generate social value…”
John Scanlon, Chief Executive Officer, SUEZ Recycling and Recovery UK Read More
“The report that Loop has produced has really helped us showcase the benefit of our solution beyond the end-user independence that is at the heart of the offering. People’s wellbeing and the environment are intrinsically linked, so putting a monetised wrapper around these wider benefits helps us convey the real value that our Smile Homes® system delivers.”
David Adams, Chief Executive, ADS Independent Living Solutions Read More
