The following blog is written by Ben Carpenter, CE of Social Value International
1) Valuation of social impacts I usually start each year by declaring: “This will be the year of assurance!” Each year I predict that users of social impact and SROI reports will start demanding assurance of the information to bring more confidence to support their decision making…Secretly, I have the same feeling again, but I’ll hold back on the prediction! So, what do I think social value practitioners should expect in 2022?
Since 2007 Social Value International, formerly known as the SROI Network, have been promoting a principle called “Value the things that matter”. Quite simply, if you want to make decisions that optimise value, you need to know what impacts matter most (to the people who experience them). Valuation is a pre-requisite for decision making. Often our decisions are driven by implicit valuations or gut feelings. It’s time to make these valuations more explicit, more transparent and more useful for decision makers. Get comfortable with the inherent subjectivity, embrace the many techniques that exist and realise how necessary valuations are for optimising value!
In 2022, SVI will continue to work closely with the Capitals Coalition and other members of the Value Accounting Network, committing to closer collaboration and convergence of valuation approaches. SVI will continue to advocate for the monetisation of social impacts, where appropriate, and have worked with the Value Balance Alliance to publish the case of monetary valuation.
Valuation is now a recognised process step on the new Impact Management Platform and the latest Impact Taskforce report for the G7 recommends that “Enterprises should continue to advance methodologies around monetary valuation”. What are you waiting for?
2) Developing an impact management approach
For all the effort that goes into producing that one brilliant impact or SROI report, it is often only a single document that sits on a website or a dusty shelf! Of course, reports are important, but I predict that 2022 will continue to see an increased focus on embedding ‘management systems’ for organisations to manage impacts.
SVI have worked with Social Value UK in the past to develop the Social Value Management Certificate and we are excited to be working with UNDP to develop and roll out the new SDG Impact Standards. SVI are also delighted to be working closely with the International Standards Organisation as a key liaison to the Technical Committee 309 – Governance of Organisations.
Finally, watch out for the publication of SVI Standard and short guidance for applying Principle 8: Be Responsive.
3) Inspiring youth and diversity into the impact and social value profession
A message that came through loud and clear from our events last year was the need to bring more young people into the profession. As Charmian Love said at SVM2021 “Young people think exponentially”. Across our network there are some really exciting projects (like this one from Embedding Impact in South Africa) that can help us reach new professionals to enrich our community of social value practitioners.
4) Exploring what really matters to investors
The way that capital is being deployed is undoubtedly changing but, for all the headlines about ESG and ‘sustainable investment funds’, is it leading to any meaningful change in the world? Last year the developments with the EU and the IFRS created furious debates about materiality; single, double, financial, inside-out, outside-in, ‘enterprise value’. All these new terms and debates have emerged because we are trying to understand what information matters to investors and for what purpose.
SVI will continue to unpack questions such as “Who is the ‘hypothetical investor’?” and “What do they want from their investments and what information do they need?”. We believe that the hypothetical investor (like you and me) is someone who wants to maximise financial returns whilst contributing (net) positively to the sustainable development goals. We owe it to future generations to be explicit about sustainable development.
In 2022, SVI will continue to engage with you as members and with our partners to participate in public consultations as the ISSB and other standard setters rapidly evolve the information requirements that can transform the impact of global capital markets.
5) An agreement on key terms
Thanks to the Impact Management Project the last few years has seen increased collaboration and convergence between the main standard setters for sustainability reporting and impact management. SVI are committed to more conversations with others to ensure that the meaning of these words and the connectivity between them is clear. Watch out for an updated SVI Glossary of key terms with an exciting new feature!
6) A focus on wellbeing and inequality
Alongside climate change, the greatest challenges we face are rising inequalities and deteriorating levels of wellbeing. “Wellbeing” is a western word but the concept of seeking a full life, being in harmony with other people and nature is a universal concept. SVI are learning about these similar concepts from Maori culture; “He Ara Waiora” and “Whanau Ora” thanks to our network in New Zealand and most recently the African concept of “Ubuntu” thanks to Crispen at Social Value UK. Understanding these concepts and developing ways to measure changes in these frameworks are important if we are to measure what matters.
We all know how the global pandemic has only increased inequalities. The recent “Inequality Kills” report by Oxfam is stark but essential reading on this. I was pleased to see that CDSB are proposing that income inequality is considered a systemic risk for companies. Read SVI’s response to this and our recommendation to consider other inequalities such as gender, race, wealth and health inequalities as well.
7) Partnerships and relationships
Perhaps the most underrated SDG is #17 ‘Partnerships for the goals’. We simply have to work together to achieve the change we want to see. SVI are quite a unique network in that our membership is so diverse both sectorally and geographically. This makes our work powerful as we can bring different people together to form the kind of partnerships we need to achieve our goals.
During the pandemic we have all been working through personal difficulties and I appreciate the respect and compassion shown between us all as partners and fellow members of a ‘movement’ to change the world. This respect and compassion for each other is so necessary as we all work passionately and with fierce determination. It is not always easy. Working in partnership to create international consensus requires patience, empathy and compromise. It is also exciting and can be great fun! Personally, I am grateful for the many strong relationships that exist within our network and the humanity shown to each other.
8) The role of public policy
Whilst our network is filled with examples of best practice in impact management, these are still the pioneers. To ensure that decision making is changed for all organisations we need to see public policies being implemented. We need public policy to reform financial accounting and broader policies that use a definition of value that includes social and environmental wellbeing. We look forward to working with OECD to stimulate more policy dialogue around the work of the Impact Management Platform. We are also delighted to see so many policy recommendations in the Impact Taskforce report for the G7.
Last year, SVI were privileged to be part of an OECD funded Peer Learning Partnership led by Social Value US. One of the outputs from this international collaboration is a White Paper titled: “Towards an Enabling Environment for Meaningful Stakeholder Engagement: Levers for Government and Public Policy. In 2022, we plan to build on this work and also hope other SVI networks can be inspired by the incredible ‘How Do Companies Act’ campaign led by Social Value UK.
9) Meaningful stakeholder engagement
SVI have always built our accounting framework around our first principle: “Involve Stakeholders”. Impact measurement is, as much as anything, about creating accountability to the people who experience impacts. A recent trend is to add the word ‘meaningful’ to stakeholder engagement, which is to suggest that a lot of stakeholder engagement is not meaningful! It is true that as a term, stakeholder engagement has become jargonistic and a catch-all term.
Again, I would like to highlight the excellent work of the Social Value US led PLP where 26 organizations spanning 13 countries, came together with a common aim of amplifying stakeholder voices and improving accountability in impact measurement and management (IMM). It was quite clear that meaningful stakeholder engagement is about sharing power and we must all learn how to do it better.
I couldn’t resist. I do believe that the time for assurance is now. Last year we saw more and more references to verification and the need to tackle greenwashing. Without confidence in impact data or sustainability reports, they simply won’t be used for decision making. Worse, people become cynical and disengage from the process completely. If we are serious about decision making, then we need more assurance.
In 2022, we will continue to expand the SVI assurance and accreditation services with Social Value UK and other networks who are seeing a huge demand. We will continue to support hundreds and hopefully thousands of individuals through the SVI Professional Pathway.
With partners we are delighted to be working with the Capitals Coalition to explore the future of assurance with a detailed roadmap for the profession. Finally, we will be working closely with SDG Impact to roll out the assurance framework for the SDG Impact Standards. The day for assurance is arriving!
I hope some of this aligns with your plans for 2022 – we look forward to working with you!