Demystifying social value for purpose-driven businesses
Businesses are increasingly moving towards being driven by social values rather than just being driven by profit alone. And whilst the United Nations’ Sustainable Development Goals (SDGs) are being widely discussed, the movement of Social Value is gaining momentum.
Activewear brand Patagonia recently pledged to give 100% of its profits over to fighting climate change. It will do this via the Patagonia Purpose Trust and Holdfast Collective- a nonprofit dedicated to combating the environmental crisis and preserving nature, in a move that cements its commitment to social value over financial growth.
Social value versus social impact
Social impact can be defined as the measure of success or failure - in literal terms, the impact - of charitable giving and other purpose-driven activities. Increasingly, businesses are adopting robust and data-driven frameworks to measure impact.
Of course, how you measure impact varies, and there are a number of frameworks or approaches involving data, such as counting volunteering hours, to adopt. This is why measuring “impact” is not always an objectively comparable activity. Forward-thinking businesses will want to measure not only the impact of their activities externally, but they will also want to measure and consider the “value” of those actions, both to wider society and to their business. This is where social value comes in.
The best examples of social value go hand in hand with social impact, working together in harmony to show the good that is being achieved, while putting a value on why this form of work is important, both to individuals, businesses and the wider world.
What are the principles of social value?
“Social value is about understanding the relative importance of changes that people experience and using the insights we gain from this understanding to make better decisions,” according to the organisation Social Value International.
“By embedding a mindset where impact and social value are part of an organisation’s culture, we can all work to optimise the value of our work.”
There are eight principles of social value:
Involving stakeholders
Understanding what changes
Valuing things that matter
Only including what is material
Don’t over-claim
Transparency
Verifying results
Responsiveness
Source: Social Value International
How does social value work in practice?
Social Value is international in scope and described as a movement, though countries vary in how rigorously they approach it.
For example, in the UK, social value is enshrined in law, although the application of this law is not easily enforced. The Public Services (Social Value) Act came into force on 31 January 2013, requiring “people who commission public services to think about how they can also secure wider social, economic and environmental benefits.”
The UK act followed similar legislation already in place in the European Union. It relates to government-funded organisations and contracts awarded to private businesses in the delivery of public services. The National TOMs (Themes, Outcomes and Measures) Framework evolved out of the Social Value Act and, although the legislation refers to the distribution of public money, the private sector can choose to follow the social value movement and so may choose to adopt the TOMs Framework.
Social Value International and both the UK and US organisations offer membership programmes, and support members through training, social value assessment tools, offering frameworks to measure value and support in meeting regulatory or statutory obligations in this area. There is plenty of advice and resources available about how to get the most social value, but ultimately it is up to those organisations how they approach it and then measure the return on their investments in social value.
What is a good return on a social value investment?
There are many ways to demonstrate social value as a business, from choosing sustainable and ethical working practices to not trading with organisations that don’t support your values. But showing quarterly or end-of-year financial results, telling the story of how your decision to invest in social value is paying off, can prove tricky.
Many organisations choose to use the SDGs as a framework for some or all of their work in this space. The list of goals set out by the United Nations in 2015, ends in a rallying call to all nations, leaders, businesses and individuals to pull together to solve the biggest problems in the world. As a result, it can be helpful to measure and frame this sort of activity by one or more of the 17 SDGs. What’s more, there is regular research being done by the UN on the wider impact of its work, which makes it possible to place these activities in context.
The answer to the question “What is a good return on a social value investment?” is not clear cut. To some, it is as simple as, if you are doing a good thing, then it’s a good investment. But it’s not that simple. As ever, the crux of the matter is social purpose as much as value, and how charitable or ethical activity feeds into a stance taken by your business to leave the world a richer rather than a poorer place (and not in the financial sense). If an activity is beneficial to the wider world, if your company is meeting its responsibility to other human beings and the environment, if you are a leader who is choosing the harder but more ethical route over the cheap and dirty one, then it has an impact that will be felt far and beyond annual profits. That seems like a good return on a social value investment.
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