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CCEG SOCIAL VALUE & INTANGIBLES REVIEW financial and non-financial returns as many foundations use program-related investments to pursue their charitable goals while seeking financial return. Governments are also innovating with partnerships that direct private investment to social purposes with Pay for Success models (like social impact bonds) for youth employment and foster care programs.2 Globalization and technology have been drivers for this change. Global challenges -- like climate change, income inequality, and refugees/immigration -- call for a collective responsibility that includes businesses to seek solutions. At the same time, social media and the internet bring greater transparency to all phases of production and consumption cycle. “Bad” actors and actions are more public, so firms are more visibly held to account. Finally, scrutiny by regulators and markets adds pressure to ‘de-risk’ investments by including carbon disclosures (Task Force for Climate Change and Financial Disclosure) and adopting new accounting standards that measure environmental and social risks (Sustainability Accounting Standards Board).

Moving away from a profit-centric world view Markets cannot afford to take a short term, profit-centric view of business; instead they increasingly value social/ environmental factors in order to gauge longer-term sustainability and profitability. There is a new vision of corporate societal value creation that takes into account the external effects of business activity and tries to value them.3 This has led to attempts to standardize the measures of social value and to adopt generally accepted measurement principles. The efforts to measure social value rest on three basic elements.

The SDG mapping for Social Values

First, establish the objective or “value” to be achieved. This can be tied to a social, environmental, or economic outcome like those of the SDGs: reducing poverty, improving children’s and maternal health, or cleaning up the environment. By focusing on the outcomes, rather than inputs we are better able to take advantageof the business sector’s ability to experiment and discover new solutions.

Second, identify the metrics for measuring the desired social outcome. There is a wide range of measures and standards covering everything from supply chains (Fairtrade, organic certifications), to green construction and building codes (LEED), to defining social enterprises (B-lab), and standards for reporting on corporate sustainability (Global Sustainability Reporting Standards). These are the building blocks for assessing and communicating social value. In some cases, these offer detailed standards, like the Impact Reporting Investment Standards (IRIS), which provide metrics to quantify the results of investments or portfolios dedicated to impact investing.

Finally, monitor and evaluate the results. Methods with varying degree of rigor and statistical certainty can be used to assess what works and what does not. Equally important, evaluations can capture the cost effectiveness of alternative approaches. In the market, techniques like KPMG’s True Value and other tools help monetize the social impact of a given business unit or activity. Using these techniques firms can align their corporate strategy with the creation of greater social value. By trial and error, the results of these efforts signal which practices are successful and which are not.

©www.globalgoals.org 2.Many governments have experimented with Social Impact Bonds or Pay for Performance programs that include upfront financing by the private sector for the delivery of social goods (increased youth employment, lower recidivism rates, or shorter stays in foster care and better placement) 3.See, for example, A New Vision of Value: Connecting Corporate and Societal Value Creation, KPMG 2014. (https://assets.kpmg.com/content/dam/kpmg/pdf/2014/10/a-new-vision-ofvalue-v1.pdf)

February 2017

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Social Value and Intangibles Review February 2017  

CCEG Social Value & Intangibles Review (SVIR) – February 2017 Centre for Citizenship, Enterprise and Governance journal on Social Impact and...

Social Value and Intangibles Review February 2017  

CCEG Social Value & Intangibles Review (SVIR) – February 2017 Centre for Citizenship, Enterprise and Governance journal on Social Impact and...

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