Can you put a price on Social Value?
Our recent Economic Breakfast Briefing on social value, held on 23 May, highlighted the growing importance of delivering social value with real estate developments. It also sparked debate as to how social value can be quantified. For example, if a new development creates jobs, reduces homelessness or offers amenities which make a community a safer or more enjoyable place to live, how can such a positive (and potentially intangible) impact be quantified? Furthermore, why do we even need to measure social value?
The environmental impact of developments and buildings is increasingly coming under scrutiny. With focus turning towards sustainability and the preservation of our environment, a universally accepted metric could facilitate comparability between buildings and projects.
At present, there is no universally accepted metric for measuring social value, but different measurements have been developed:
- The National TOMs Framework was devised by the Social Value Portal and launched in 2017. It is designed around 5 principles, 18 outcomes and 35 measures which focus on the promotion of employment, business growth, healthier/safer communities, the environment and social innovation.
- BREEAM is an international scheme that provides independent third party certification of the assessment of the sustainability performance of individual buildings, communities and infrastructure projects (as further explored in our companion article, for which, see here).
- NABERS (the National Australian Built Environment Rating System) is an operational energy performance rating used in Australia. Unlike Energy Performance Certificates (which are not based on actual energy consumption), NABERS can be used to measure a building’s energy efficiency, carbon emissions, water consumption and waste production. It uses a 6 star scale, which enables comparability between buildings.
- LEED (Leadership in Energy and Environmental Design) is a green building rating system used worldwide. Projects are assessed across different categories (including Location & Transportation, Sustainable Sites, Water Efficiency, Energy & Atmosphere, Materials & Resources, Indoor Environmental Quality, Innovation, etc) and earn points under each category. Based on the number of points achieved, a project earns one of four LEED rating levels: Certified, Silver, Gold or Platinum.
The above examples show that ways of measuring social value have been devised. But if social value in the real estate sector is about what the industry can do for society, do we lose this premise if we make social value all about data? Indeed, you can quickly get lost in the numbers and not necessarily change the outcome.
Clearly, a balance needs to be struck as other interested parties will generally look to social value statistics to support their decisions. For example, many local authorities through the Social Value Act 2012, will reward procurement contracts to those bidders who can prove their projects will have a positive social impact. Investors will also presumably want to see financial records/predictions that social value has an impact on return on their investment.
Notwithstanding the danger of relying too heavily on the numbers, the position appears to be shifting with developers and investors increasingly looking to measure social outcomes. This is in the expectation that this will assist with their developments, investment agenda and decision-making processes. One uniform industry wide set of metrics to cover the impact of social value throughout the life cycle of a development should help address these demands and encourage positive and continuous community benefit whilst producing long term stable income streams.