CSR » Accounting for social value

Accounting for social value

Chris Farrell, MD, Impact Reporting, discusses the importance of reporting on social value in the financial sector and why it's a job that should start from the top

Social value is often generated by firms through funding charitable projects, launching a foundation, organising volunteering opportunities and investing in sustainability initiatives. Led from the top, directors are now expected to back CSR initiatives and inspire staff.

Reporting on the social ‘return’ of your Corporate Social Responsibility (CSR) should be an integral and expected element of financial accountability.

Social investment

Organisations are looking at practical ways to tackle issues such as reducing emissions through energy initiatives and people-focused outreach programmes like staff training. However, there is still an underlying perception that considers CSR as secondary in the business space, resulting in small budgets, unambitious actions, and a general lack of strategic decision making.

To effectively and meaningfully deliver on key social objectives, there needs to be real investment and that business case can be difficult to justify without robust and reliable social value data.

Understanding ‘value’

The frameworks and methodologies associated with social impact measurement may differ between organisations and sectors, yet some key themes are pertinent across all industries. For example, analysing common inputs – money invested in charities, time spent volunteering, or trees planted is often balanced with common outputs – jobs created, lives saved, and a reduction in carbon emissions.

One attractive approach, particularly in corporate circles, is calculating social value as a ‘Social Return-on-Investment’ (sROI). This relates to the perceived monetised value of an organisation’s social impact and is a very specific, granular methodological way of understanding the monetised impact of a CSR project.

Yet, there are limitations to focusing solely on the sROI of your impact. Namely, that it is easy to invest strictly in the CSR activities that produce a high sROI and that by doing so, you are in danger of ignoring other projects that may be more valuable in the long run or provide a broader range of benefits to society.

Instead, firms must be motivated by their organisational purpose to drive their CSR strategy. Leading with purpose-first means that decisions reflect the preference of the end-user or community you want to help, rather than whims or quotas. To truly understand whether you are making a difference in communities, you need more than high-level figures; you need stories driven by real people.

It is important to be aware of the qualitative data – the narratives and experiences – that also exist. These are often overlooked but are an effective way of contextualising your impact and humanising your corporate social responsibility (CSR) reporting.

Capturing accurate data

How social impact is recorded, analysed and reported is just as important as how it is created – the information you get out is only as good as the data you put in.

Updating and quantifying data live is the route companies should work towards in CSR reporting. It’s already standard practice for HR, sales and financial data to be captured consistently and accurately in real-time – and now the norms for social value data capture are catching up. Google Analytics, Xero, Salesforce, and intranet systems are all updated live, and reports can be gathered at the click of a button, without the hassle of manually compiling data from multiple sources. In short, having all social value data feeding into one central database is advantageous as it allows for immediate access to insights which can be used in strategic decision making.

Your key stakeholders expect transparency. It’s important to reflect on your current business behaviours to understand if all stakeholders are working towards a common goal and if your CSR budget is being allocated efficiently. To get to a point where you are truly trusted by prospective customers and seen as a desirable employer, the clear measuring and reporting of your impact is imperative.

It’s important to make the analysis of your social responsibility is an ongoing requirement, and refrain from solely relying on an annual report – you wouldn’t wait a full year for updates on your sales. Modern software is making this not just possible, but practical, taking in feeds from CRMs and intranets and calculating social value in real time.

Reaching the right goals

Aligning to and supporting the Sustainable Development Goals (SDGs) – 17 global goals set by the UN in 2015 – is a straightforward and ethical way of benchmarking the impact of many value-based businesses. These are a blueprint to achieve a more sustainable future and address global challenges related to poverty, inequality, climate, environmental degradation, prosperity, and peace and justice.

Aligning to the UN’s SDGs is important because of their worldwide and future-proofed applicability. Organisations track and report on their pro-social and pro-environmental activities according to which SDGs they contribute towards, provide structure and help employees understand the greater goals they are helping to achieve.

The power of social investment

Demonstrating social impact is not a legal obligation for all sectors but that doesn’t mean financial organisations shouldn’t celebrate it. We’re at the beginning of monitoring and truly understanding the importance of social value but with the ease of access and cost-effectiveness of digital technology all firms can now quantify and analyse the impact they make to local communities, society and the environment.

Pull-out box –

Ten top tips for directors to create social value buy-in:

  1. Letting employees choose charities – While having a ‘charity of the year’ is the norm in corporate circles, asking staff to nominate a chosen charity can help make this process more democratic.
  2. Developing employee initiatives – Organise lunchtime cycling, weekend volunteering and recycling projects for all to get involved. Open the floor to suggestions, allowing employees to make recommendations that are important to them.
  3. Building social value into client contracts – Insist that partner organisations prioritise social value too. This is the norm in public sector contracts and is becoming more familiar across a wider range of sectors.
  4. Leading from the top – The most successful CSR-focused businesses have directors who are active and committed to a social value mission statement.
  5. Adopting a framework – The time is now to be serious about CSR. Paying lip-service won’t give businesses the desired results. Set real objectives with fixed timeframes, and work towards those.
  6. Aligning with the Sustainable Development Goals (SDGs) – Benchmark achievements against 17 global goals set by the UN in 2015 to achieve a more sustainable future and address global challenges. These will help drive growth, attract capital and focus on purpose and offers accountability and assessment.
  7. Gamifying the creation of social value – Inspire employees to do more and get competitive about it. For example, set up a leader board and offer prizes as incentives.
  8. Starting with the basics – Transforming a business’s attitude to social value won’t be an over-night process. It’s OK to start small and scale up. Get rid of plastics, put recycling bins in place, ditch cars, use public transport or walk into work.
  9. Listening to stakeholders – To truly embed social value into a business, it needs to harmonise. It’s about working towards a culture whereby social impact is created naturally and fluidly.
  10. Working with pro-social companies – Be open to partnering with social enterprises, charities, or other ‘good’ companies at all stages of negotiating contracts.

Chris Farrell is the managing director of Impact Reporting, a bespoke social impact reporting tool

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