What is Social Value?

Social value considers the broader impact that a business's operations have beyond financial gains. An account of Social Value is a story about the changes experienced by people.

Externally, it reflects the positive effects and contributions a business makes to society and the environment. This includes initiatives that support and enhance local communities, contribute to environmental sustainability, and foster positive outcomes in the areas where the business operates.

Internally, social value involves the considerations and actions a business takes within its own operations, emphasizing the well-being and experiences of its employees. This encompasses fair employment practices, creating an inclusive work environment, prioritising employee health and safety, and fostering diversity and equal opportunities.

Essentially, the idea of social value emphasizes the holistic impact of a business, acknowledging not only its responsibilities to the wider community and environment but also its duties towards its own workforce.

Want to learn more about social value? You can read our blog on that here

In this blog, we'll take a look at social value and its importance in construction, exploring:

• Commercial importance in the public and private sector
• The use of data to measure, monitor and report on social value.
• How this data can help contractors win more work.

Why does Social Value matter for construction companies?

In the construction industry, social value is a crucial factor driving project development, procurement, and investment. Recognising the broader impacts of construction projects, there's a growing emphasis on practices that contribute to societal well-being and align with ethical approaches. This shift has made social impact a key aspect in project planning and valuation, offering a competitive edge to companies and appealing to conscious markets.

Companies and investors are realising that integrating social value into construction projects is not just an ethical choice but a strategic one. Social value enables organisations to become more responsible and prioritise people, but also access significant commercial value to stand out in procurement tenders and win more business. Without an effective social value reporting methodology, organisations cannot access data that's crucial for calculations, and so having robust and verifiable data capture processes is paramount for construction companies to visualise their social impact.

Commercial importance in Public Sector

Social value is crucial for construction companies operating in the public sector for several reasons:

1. Tendering and Contract Awards

In public procurement, there is a strong emphasis on social value. Government procurement guidance such as PPN 06/20 mandates the consideration of social value in public contracts, and a minimum weighting of 10% of the score in a tender must be allocated to social value. Therefore, construction firms that can demonstrate a commitment to this will gain a competitive advantage in securing contracts and winning tenders.

1. Community Impact and Relations

Demonstrating a commitment to social value not only highlights a company’s interest in positive community outcomes but also emphasises external social impacts resulting from construction activities. For example, volunteering or charitable donations to engage and involve local communities. This approach not only builds a positive reputation but also establishes stronger community relations, providing a competitive advantage in future contract acquisition by fostering trust and support among local stakeholders.

1. Stakeholder Expectations

Public sector stakeholders increasingly expect projects to have positive social impacts internally as well as externally.

By considering your internal social value prioritising employees' well-being, safety, and diversity, companies establish stronger relationships with stakeholders, attract and retain talent, enhance productivity, and uphold a positive reputation this engaged workforce contributes to reduced operational costs, drives innovation, ensures compliance, and ultimately secures stronger customer relations, leading to increased opportunities for future projects and commercial success.

Data is crucial for understanding the interplay between a company's internal social value efforts and its external impacts. This understanding is essential for driving commercial success within the public sector.

1. Regulatory Compliance

In the EU the CSRD is placing social value requirements on many large companies and listed SMEs. Moving forward, EU companies will have to report and disclose on issues such as human rights, equality, diversity and inclusion and community impacts. Whilst social value until this point has been very UK-centric, its impact is growing, and in years to come will be widely adopted by many EU organisations due to regulatory requirement.

To learn more about Social Value Reporting in the Public Sector, you can read our blog here

Commercial importance in Private Sector

Emphasising Environmental, Social, and Governance (ESG) factors has become a crucial criterion for private investors when evaluating potential investment opportunities. The inclusion of social value within the ESG framework reflects a company's commitment to positively impacting society, engaging with local communities, and ensuring a supportive and responsible approach to its workforce.

By integrating social value, companies in the construction industry not only diminish the risks linked to regulatory issues and reputational damage but also meet the expectations of investors seeking stability and enduring growth. Consequently, these companies gain access to a broader investor base, setting the stage for long-term success. When competing for a contract with a company whose investors prioritise ESG values, construction firms must emphasise their commitment to ESG and social values. This demonstration serves as a persuasive factor for the investors associated with that company, increasing the chances of securing the contract.

How social value can ultimately help you win more work

Social value within the construction industry is not only the right thing to do morally, but a strategic business approach. By incorporating social value considerations, construction companies position themselves favourably in both the public and private sectors. For public sector contracts, the focus on social value is pivotal due to regulatory requirements, community engagement, and meeting stakeholder expectations, paving the way for increased opportunities and success in tendering and contract awards. Meanwhile, in the private sector, the alignment with ESG factors becomes a defining feature or a business’s commitment to sustainability, reducing risks and attracting investors seeking stability and responsible business practices, opening doors to a wider pool of investors and private sector clientele.

As stated, central to social value is data capture at all stakeholder touchpoints. SustainIQ offer a real time reporting feature, using two of our pillars – People, Health & Diversity and Community Engagement & Partnering – we makes it simple for companies to measure, monitor & report on their social value activities. This centralised data within SustainIQ plays a central role in contributing to a business’ success by providing a comprehensive view of their social impact efforts.

Have a look at our case study on how our customer, JP Corry, used SustainIQ to track community investment in one their projects.

To explore how SustainIQ can address your social value reporting challenges, reach out to us at [email protected].