The concept of social value has been around for a while, but interpretations of what it means and what actually constitutes social value can differ, leading to confusion among those tasked to deliver it.

In this blog, we take you back to the basics of what social value means, where it applies, how it can be addressed and crucially, how you can measure and report on it.

What is it?

According to Social Value UK, Social Value is about quantifying the relative importance people place on the changes they experience in their lives. So, when it comes to companies being asked to create and measure their social value, it’s about the actions they take that help to change people’s lives for the better. These changes could be economic, such as providing work or training opportunities or using local suppliers; environmental, such as reducing emissions and improving air quality or community-based, such as volunteering to clean up a local area or supporting community organisations and events.

The concept has gained considerable traction in recent years and this is down to a combination of government legislation and businesses embracing their responsibility to add value beyond profit.

Who needs to consider social value?

Companies involved in tendering for public contracts are required to demonstrate the social value they will add through their involvement. For companies in the construction sector in particular, social value has been an integral factor in public procurement in the UK for the last decade.

The private sector is quickly catching on to the potential to add social value through procurement, though this is on a voluntary basis rather than a legislative requirement.

Aside from procurement however, companies interested in the impact they have on society and the environment should consider the social value they can add through their actions as well as how to measure and communicate this to stakeholders.

Is social value the same as ESG?

Increasingly, the concept of social value is part of the lexicon around ESG reporting for companies across all sectors. Caution should be applied though in simply equating the S in ESG, which stands for social, with the idea of adding social value. As touched on above, social value can be added by addressing environmental or economic issues which help to benefit the lives of individuals.

This makes social value a much broader concept in many ways. It’s also more focused on positive action than compliance and disclosure, which is where ESG reporting comes from.

The new model for social value in public procurement

Since January 2021, a new model for social value in central government procurement has been in place in the UK. PPN06/20 outlines the need for a more rigorous approach, with social value being fully evaluated and not just considered as was previously the case. A minimum weighting of 10% of the score in a tender must be allocated to social value and five themes have been identified in the new model:

1. Covid-19 recovery
2. Tackling economic inequality
3. Fighting climate change
4. Equal opportunity
5. Wellbeing

Outside the UK, procurement within the EU has more of a green focus, with Green Public Procurement (GPP) guidance having been in place on a voluntary basis for a number of years now. For those tendering within Ireland, GPP will be applied as a mandatory requirement in public contracts by the end of 2023. Wider social considerations are encouraged as good practice, but there isn’t a legislative requirement for social value to be include in procurement.

In NI, social value requirements in public contracts are in place since 2021, with themes similar to those listed above for the UK.

How to create social value

Until recently, social value in procurement was equated with the number of apprenticeship opportunities a company could create in delivering a contract. Thankfully, things have moved on a bit and the new model and themes outlined above show that the creation of social value is now applied more widely.

Top tips for integrating social value within your business:

• Engage stakeholders, decide what’s material to your business and where you can add the most impact – local needs may be the best place to start
• Consult your employees on what matters to them – their support will be much easier to secure if they’re on board from the start
• Make it more than a box ticking exercise – do it because it aligns with your vision, purpose and sustainability aims and not just as a tender requirement
• Decide at the outset what you hope to achieve and how you’re going to measure success
• Establish what data you need and how you’ll measure it
• Make sure you capture data in real time and review progress regularly

Measuring social value

The hardest part of the social value agenda is measuring impact and that all comes down to having the data. Start with outputs – the numbers involved in an apprenticeship scheme or the economic benefits of a local supply chain – and work from there. Without the quantifiable data, further analysis of impact will be impossible.

Thereafter, you may start to investigate financial proxies to quantify the social value generated. This may be where things get a bit more complex, but luckily for you, SustainIQ has you sorted!

SustainIQ’s ESG and sustainability platform is the ideal starting point for measuring every aspect of social value. We can help you measure social value outputs, and thereafter use our social value calculator to determine the impact your business in having across all activities. Why not book a demo to see how it could work for you?