Realising the ‘S’ in ESG
How and why social value is something that you can’t ignore
What is social value?
Social value is the positive contribution businesses make to society as an outcome of its business activities. This can be categorised and measured in both quantitative and qualitative measures as seen from a variety of publicly available models. And presented in a monetary value using publicly available fiscal data.
Measuring social value
Social Value is commonly, calculated using financial metrics available from publicly available secondary fiscal data. For example, the government green book, Office for national statistics (ONS), local authorities and other national databases. Businesses can calculate the financial economic value and uplift they create through its business activities. The results are presented to demonstrate the financial contribution to society and the local economy, reported as social value.
Beyond ROI
Social Value is more than a Return on Investment (ROI). Investors should think wider than calculating a £ value and focus on the holistic impact their investments and assets have on society.
The Social Return on Investment (SROI) methodology is often used to measure the impact infrastructure and development projects have on the local economy. SROI takes into consideration the economic uplift and expected deadweight from existing projects. This methodology has been criticised for its limitations which has led to the development of a variety of methodologies that take into consideration wider metrics outside of employment and the investment cost; to ones that have a holistic view to social impact.
Examples of publicly available Social Value guides and methodologies that cover more than economic contribution to society:
- UK Green Building Council - UKGBC – Delivering Social Value: Measurement
- Better Buildings Partnership – Responsible Property Management Toolkit
- Housing Association Charitable Trust (HACT) Social Value Calculator
We are continuing to enhance our Real Estate Social Value Model to help our clients report both quantitative and qualitative data relating to social value.
What are the drivers for social value?
Over the past decade, we’ve seen several drivers for the increased focus on the “S” in ESG in the built sector:
- Section 106 of the Town and Country Planning Act 1990 otherwise known as S106 – As part of the planning approval and contractual requirements, developers are given descriptive social and environmental expectations from local governments.[i]
Public services (Social Value) Act 2012
“An Act to require public authorities to have regard to economic, social and environmental well-being in connection with public services contracts; and for connected purposes.”[ii]
Public procurement notice (PPN) - Taking Account of Social Value in the Award of Central Government Contracts Notice
In September 2020, the central government issued a public procurement notice effective from 1st January 2021 for all local government procurement. As part of this PPN, the government also issued a social value model focusing on themes to help rebuild society post Covid-19:
Covid-19 recovery
Tackling economic inequality
Fighting climate change
Equal opportunity
Well-being
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Why is a managing agent with purpose critical to the future of your investments?
Globally, the Real Estate sector plays a vital role in developing, creating, and sustaining communities. More recently, there has been a growing interest from society, our clients and their stakeholders to understand the impact the industry is having on people and communities. Investors, landowners, and businesses need to consider existing societal issues as part of the wider decision-making process.
Covid-19 has played a role in accelerating the drive for understanding social value and driving positive impact in communities surrounding developments, investments and assets.
Supporting society to recover and stabilise will help investors sustain the value of their investments, for example communities with high employment rates are more likely to spend money in their local shopping centres and retail parks.
Helping Investors meet The Stewardship Code 2020 principles (*side box)
“Stewardship is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.”[i]
One of the principles for service providers is the “supporting of client’s stewardship”. Investors that have signed the Stewardship Code should seek to appoint managing agents that are aligned to the principles to ensure they are meeting the code expectations.
Embedding social value into property management
We see our clients playing a vital role in rebuilding and sustaining communities. To achieve this, our clients need to understand key societal issues and how their investments and assets can be used to tackle social issues and create a positive change. We believe the Real Estate sector can contribute to 1, 3, 4, 8, 9, 11, and 12 of the United Nations Sustainable Development Goals (UNSDGs).
Supporting our clients to realise the “S” in ESG
We know our clients want to capture and report Social Value and impact for their funds and assets. To meet this demand, in 2020 we appointed a new Head of Social Value and launched our Real Estate Social Value Model 2.0. Our Social Value service supports our clients throughout their journey to ensure together, we have a positive impact in the communities surrounding their assets.
In May 2020, we launched our social value service offer as part of our sustainability capabilities which is delivered based on our Real Estate Social Value model and methodology to implement social value through our managing agent business, Managed Services.
The aim of our model and methodology is to support our clients to identify key societal priorities in the communities surrounding their assets and to develop a social value action plan with targeted initiatives. Our socio-economic consultants work alongside our managing agent business to help them identify key societal issues. We conduct a local needs analysis and use available information via our own mapping tool which enables us to use data such as unemployment rates, education levels and income levels to tailor the social value action plan.
The importance of purposeful managing agent
At JLL, sustainability is at the forefront of how we manage our client’s assets and investments. We work in collaboration with our suppliers and clients to identify ways to positively contribute to the communities surrounding the assets we manage and report the outcomes. By aligning with our clients, we help them to realise their targets as well as having a positive impact in communities.
Examples of where we’ve made a positive impact:
Employment and Skills
We are currently running a pilot in London to introduce our national service partners to a scheme that enables them to transfer unspent apprenticeship levy funds to small-to-medium enterprises. To date, our suppliers have transferred £50,000 worth of apprenticeship levy funds to SMEs via the London Progression Collaboration.
Local Economy
We have experience in supporting our clients to lease units at reduced rates for charities and small businesses. In the Beacon, we set-up and facilitated a campaign called “Grow at The Beacon” aimed at small and start-up businesses whereby one such business would be given a vacant unit for a period of twelve months free of rent, business rates and Service Charge.
We are a member of Reading Business Improvement District (BID), working with local businesses and police. We are a sponsor of Merton's Business Network for Climate Action Partnership, supporting local businesses to reduce their environmental impact. We’ve actively promoted local businesses during the government “eat out to help out scheme” to support local businesses.
Community Engagement and Support
In the Thistle shopping centre, we created a relaxation area within a vacant unit. We hosted a book exchange, giant chess set, computer workstations, children’s games and a tv screen, showing children information about sustainability and how they can make a positive impact on the environment. As well as a food donation station within the hoarding of a vacant unit for the public to donate tinned and packet foods and personal hygiene products. We then donated these contributions to local charities.
Mental and Physical Well-being
An example of an initiative we set-up was with permission with our client was at Castle shopping centre. We set-up a partnership with the local MIND Charity Dorset to deliver eight free webinars on how to tackle difficult issues related to various types of loss (e.g.loss of money/family member/job/social security/health. Held by a pool of experts in various sectors offered practical and psychological support. We have also organised 40+ health checks and prostate cancer information sessions
The future of social value for the real estate sector
Inevitably, the definition and measurement of social value will evolve and the expectations of society on businesses may expand. We are already seeing it expand into two key areas; the first is understanding the holistic social impact on communities. This means capturing both the positive and negative impact on communities. Secondly, understanding and reporting how our suppliers, occupiers and networks impact society.
(2 x Side boxes)
- Social impact is the positive or negative impact businesses have in society. This is the next level into understanding the truth meaning of the “S” in ESG. For example, a new development may have unaccounted adverse impacts on communities. For example, the displacement of existing community groups or the pricing-out of low-middle income earners from the property market.
- In 2020, our Managed Service supply chain created £149m worth of social value including contributing to the local economy whilst delivering services and goods on our client’s assets.
Get in touch with Syreeta Bayne today, to see how we can help your business realise the “S” in ESG and make a positive impact in society.
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