New Blog Post: ‘Social value matters….doesn’t it?’

Posted: March 12, 2014 in Uncategorized
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From our media partners Pioneers Post:

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Social value matters… Doesn’t it?

If the term ‘social value’ is just empty words the world is in trouble. Jeremy Nicholls, chief executive of the SROI Network explains how you can make sure social value matters, by learning about SROI, Social Return on Investment.

Social value matters, doesn’t it?

You would certainly hope so. Rising inequality within countries, unemployment, underemployment, youth unemployment, poverty, increases in living costs, drought, flooding…. and on the other hand increases in the number of billionaires. This is what I mean by social value, currently being eroded and destroyed at the same time as the more visible erosion of our living environment.

Not everyone would agree that rising inequality is a problem, the virus eating away at our society, but this is the social value that the SROI (Social Return on Investment) Network thinks does matter. The Guide to SROI states that our aim to is increase equality and decrease environmental degradation. Our vision is to achieve this (and an increase in wellbeing) by changing the way society accounts for value.

This is not a traditional tax the rich and give to the poor approach to inequality. Or even one that says that there shouldn’t be inequality or that inequality is always bad and we should all be equal. Nor does it argue for adding a new approach to sit alongside the current system by which society currently accounts for value.

Our argument is that the current approach, financial accounting, contributes to inequality because it is based on the interests of investors excluding costs and benefits that are not seen as relevant to those investors – despite of course, being very relevant to anyone else effected either positively or negatively by our actions.

We need a new way to account and include this extra value which has less of a tendency to result in inequality and won’t generate such extremes in inequality; an approach that rethinks the nature of the investor, and therefore also rethinks which costs and benefits are relevant. This will shift the relative profitability of different goods and services towards those that on balance create more social value and on balance have taken into account a wider sense of value.

This is what SROI is all about. It provides a consistent framework, based on principles, to account for a wider value, and to decide what should be included and what should be excluded from that wider account. It is an approach based on changes experienced by people that have not already been accounted for and argues that we can create good enough measures or financial proxies for different outcomes which can and should be part of an organisations accountancy framework.

Our approach is based on communities of practice, on sharing, on making judgements and on community discussion regarding what constitutes good practice and good judgements. A bottom up method and one often misunderstood.

Nonetheless if the aim is to change mainstream accounting and not simply to add new information alongside it then we need to show that it is possible it identify which things should be included in a wider account for value and it is possible to value them. If we can do this we can make this a public policy discussion on the nature of financial accounting.

As a network, we have been successful in many ways, increasing membership around the world and making SROI an internationally recognised approach used by organisations in all sectors. And over the two days of our conference there will be a chance to learn about new approaches to increasing the consistency, effectiveness and ease of use of our principles.

But it also seems that we need to rapidly increase the rate at which principles are being used so that we are able to move the debate towards changing mainstream approaches. The increase in interest in social value brings risks as well as opportunities. Discussions in some sectors focus on increasing positive social value and in other sectors on minimising negative social value. Both sides of the same coin but both come with the danger of not recognising that this is really just one conversation.

Any change to how we account for value that has an effect on inequality will mean some rebalancing of power, between charity managers and beneficiaries, between corporates and the communities in which they operate. Some will welcome this as a way of increasing social value and others will resist it as a threat to their organisations.

Our conference is drawing together a unique range of people (take a look) who are seeking to understand, account for, and manage social value; public, private and civil society organisations; from those delivering goods and services, to their advisors and investors; from the growing group of academics interested in social value to those involved in public policy; and from those with responsibility on boards as well as from staff and management.

In general we think we have a pretty good idea on how to account for a wider sense of value and what we need to do to standardise and improve judgements. We want this conference to highlight the similarities between many of the approaches that are currently available, for example CBA (Cost Benefit Analysis), sustainability reporting, IIRC (International Integrated Reporting Council) and GIIRS (Global Impact Investing Rating System) and alongside this to recognise the reason for any differences.

We want to focus on the challenges we face in our different sectors and on the diverse roles and solutions that as a growing network we can work together to implement. This is why the network exists, this is why we’re hoping our conference will be two days of progressive thinking, of shared learning, and of action, and this is why we think – Social Value Matters.

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