Social Value – A Force for Good?
Force for good – or the Emperor’s new clothes?
“Doing well by doing good” has long been a familiar dictum in both the ethical business and the responsible built environment milieux. Sometimes attributed to Benjamin Franklin, the phrase seems forever fashionable, yet remains remarkably vague. Its latest manifestation, over the past couple of decades, has been in the field of “Social Value”, which has grown out of the thinking surrounding corporate responsibility, ethical economics, and social enterprise and valuation. Reframing a recurring ideal frequently reorders and refreshes purposeful ambition; but it can also confuse and complicate public perception and professional practice. Arguably, this seems to be precisely the case with Social Value as an instrument of policy formulation and plan implementation. As with the notion of “sustainability” some 30 or so years ago, the theory is unquestionably a force for good and assuredly will have a positive influence over time. It would be rather surprising if it wasn’t and didn’t. But the present bandwagon on which many social value devotees travel has created a vehicle promising all kinds of exciting destinations and fancy fare structures. A force for good it might be – but it is one full of flattering rhetoric, false prophets and flawed measurement.
The modern emergence of social value as a planning protocol resulted, as the World Business Council on Sustainable Development succinctly stated, from momentum gained by the global agenda, government policy, investor requests and consumer sentiment driving companies to better understand, manage and communicate their true impact on society and the economy. In disparate ways, at different scales, and for dissimilar objectives, various agencies and organisations have sought to advance their brand of social value – the UN, the OECD, the EU, the UK government, Business In The Community, any number of city authorities, and several leading management consultancy firms.
Put very simply, social value is the value that people place on the qualitative, quantitative and comparative changes they experience in their environment and their lives; some, but not all, in market prices. There are a set of Principles of Social Value, to which many organisations subscribe, assisting those who desire a wider definition of value so as to increase equality, improve wellbeing and increase environmental sustainability. Unremarkable in themselves, but drawn from customary precepts fundamental to social accounting and audit, cost-benefit analysis, sustainability reporting, financial accounting and evaluation practice. The ‘Seven Principles’, as they are colloquially known, can usefully be listed as follows.
- Involve stakeholders.
- Understand what changes.
- Value the things that matter.
- Only include what is material.
- Do not over-claim.
- Be transparent.
- Verify the results.
Social value, therefore, is a way of thinking about how scarce resources are allocated and used. Recognising this, the UK government introduced the Public Services (Social Value Act) in 2012, to transform the way public bodies choose to buy their services. Given the relatively low adoption, the inconsistency in practice, the apparent disregard by central government and the general lack of information since, the Minister for Civil Society has recently announced a review of the Social Value Act. The past five years, moreover, has witnessed a burgeoning growth in think-tanks, models, methods, networks, conferences, summits, consultancies, guidance, awards and the like. A veritable growth industry! On the other side of the coin, for anyone looking for an elegant model of best practice, we, at Hillbreak, would highly recommend Bristol’s “Social Value Policy” document 2016.
Few deny the merits of exploring the full consequences – social and environmental, as well as economic – of major investment and development decisions. The challenge, of course, comes in measuring them. Quantifying the qualitative intangibles and determining the direct externalities is a serious challenge. So much subjectivity is involved in the selection of monetary values and rates of return, as well as the parameters of scrutiny and the priorities attached, that any evaluation process soon attracts scrutiny and opprobrium. Even in the private sector, where the measure of ‘profit’ has been refined over several hundred years, there still remain significant problems in interpretation and manipulation.
The accepted methodology coming to the fore over recent years is Social Return on Investment (SROI). This is not a new approach or construct. It is built on well-established evaluation approaches drawn from cost-benefit analysis, social cost accounting and environmental economics. In essence, SROI is a framework for measuring and accounting for a broad concept of value; seeking to reduce inequality and environmental degradation and improve wellbeing by incorporating social, environmental and economic costs and benefits. Ideally, SROI aims to measure change in ways that are relevant to the communities or organisations that experience or contribute to it. Some SROI analyses are ‘evaluative’, conducted retrospectively on projects already completed; others are ‘forecast’, predicting how much social value will be created by a particular proposal. The process and practice is well documented elsewhere (see, for example, the regular guidance provided by Social Value UK).
A Property Industry Perspective
Whilst recognising the growing need for better ways to account for social, economic and environmental value in framing property investment and development decisions, at Hillbreak we would identify a range of issues worthy of consideration regarding present practice. Some of these can best be summarised as follows.
- The present process is complex, time-consuming, expensive, cryptic, concealed, and extremely volatile in both adoption and application.
- Context should be everything. Social value can mean different things, to different people, in different places at different times. Especially true when it comes to urban development.
- The ‘march of the measurers’ is relentless, and though more information, better benchmarked, is always welcome, there is a certain need for caution, as measurement in the built environment is inherently idiosyncratic given the diversity of the sector and the vast range of outcomes it is trying to achieve.
- An intrinsic ambivalence exists between consistency and discretion. On the one hand, investors and developers seek confidence and certainty in their dealings. On the other, they contend that ‘no-one-size-fits-all’ in terms of specific location, design, operation and disposal.
- Likewise, while the precepts of ‘proportionality’, ‘comparability’ and ‘standardisation’ proclaimed by government are seemingly worthy ones, they preclude the situational exercise of good sense and professional judgement. This is compounded by the mushrooming use of automated evaluation tools.
- Social Value is becoming ‘big business’; and, in the usual way of things, the big players will best be able to ‘game the system’. Witness the springing-up of specialist SV consultancy services and the proselytization of modish valuation methodologies.
- Investors, developers and professional teams are having to learn how to understand and demonstrate the way their buildings can add significant value to society and the local community through the manner in which they are located, designed, built, managed and occupied. Some of this is genuine, some artifice, but the game is on! (See, for example, “Measuring the Social Value of Offices”, BCO, 2016.)
- There is sensitivity about the use of ‘financial proxies’ and other estimates and assumptions made in SROI. Sometimes described as “dressing up one’s own prejudices”, sometimes seen as ‘professional judgements’ (“You pays your money, and you takes your choice!”).
- The problem of ‘additionality’ appears largely to be ignored. Additionality is all about the marginal difference a project makes, and what value it adds. For, in a social value context, it is relevant to ask the question: what difference is the development making compared to another proposal? Or what would happen if the project did not proceed?
- Professional valuers will be all too well aware that relatively small changes in the constituent factors of time, cost, income, interest and yield can collectively have massive impacts upon value – especially if all are moving in the same direction. And this just concerns the ‘tangible’ elements of a valuation. Once you start adding intangible proxies to the equation the result becomes a delusional fantasy.
Having highlighted these issues, however, it is worth restating that all responsible parties to the process of urban development are becoming more keenly focused on ensuring ‘genuine’ value for money in the delivery of improvements to the built environment for everyone concerned. But it takes time, and it will be a lengthy and formidable journey. One of the most rewarding labours will be the collection, collation and communication of “best practice” in the field of Social Value in the Built Environment together with the establishment of some agreed benchmarks to lighten the burden of evaluation and reduce the cynicism presently prevailing. Remembering the while a questioning Oscar Wilde: “What is a cynic? Someone who knows the price of everything and the value of nothing”.