Realising the ‘S’ in ESG

Simply put, Social Value is how much of a positive contribution a business makes to society. It’s worked out both quantitatively and qualitatively, and presented as a financial value.

Usually, Social Value is calculated as a financial amount. Businesses can work out the financial contribution they make to society, and the local economy, using metrics from public models. For example, the government green book, Office for National Statistics (ONS), local authorities and other national databases. The result then becomes their Social Value.

If you’re an investor you need to see Social Value as more than a return on your investment, and focus on the holistic impact your investments and assets have on society.

The Social Return on Investment (SROI) methodology measures the impact infrastructure and development projects have on the local economy. It considers both the economic uplift and expected deadweight from existing projects. However, this methodology can be limiting. So many other methodologies have been developed using wider metrics that cover more than a business’s economic contribution to society.

Here are some examples:

• UK Green Building Council - UKGBC – Delivering Social Value: Measurement
• Better Buildings Partnership – Responsible Property Management Toolkit

We’re always looking to improve our Real Estate Social Value Model to help our clients report both quantitative and qualitative data relating to Social Value.

Over the past decade, several factors have put the ‘Social’ in ESG (Environmental, Social, Governance) into focus within the building sector:

There’s a shift in the landlord and investor mindset from traditional property management and investment to “purposeful asset management” and “impact investment”. See how our holistic approach considers various stakeholders and groups.

Helping Investors meet The Stewardship Code 2020 principles

The Stewardship Code 2020 principles state that: “stewardship is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.”^[iv]

One of the code’s principles is the “supporting of client’s stewardship”. As an investor, if you sign the Stewardship Code you need to appoint Managing Agents that align to the code’s principles. 

Globally, the Real Estate sector plays a significant role in developing, creating, and sustaining communities. Recently, there has been a growing interest from society, our clients and their stakeholders to understand the impact the industry is having on people and communities. Now there’s a real need to consider existing societal issues as part of the wider decision-making process. 

Covid-19 has also accelerated the need to understand Social Value and make a positive impact within the communities surrounding developments, investments and assets. Supporting society to recover and stabilise from the pandemic will also help investors sustain the value of their investments. For example, communities with high employment rates are more likely to spend money in their local shopping centres and retail parks.

We encourage our clients to help rebuild and sustain communities. By understanding key societal issues and how their investments and assets can be used to tackle social issues, together we can create positive change. As part of this, we believe the Real Estate sector can contribute to 1, 3, 4, 8, 9, 11, and 12 of the United Nations Sustainable Development Goals (UNSDGs).

We understand that our clients want to capture and report their Social Value impact for their funds and assets. In 2020 we appointed a new Head of Social Value and launched our Real Estate Social Value Model 2.0. We also launched our Social Value service to help deliver Social Value through our managing agent business, Managed Services. 

The aim of both is to help our clients identify key societal priorities in the communities surrounding their assets and to develop a Social Value action plan with targeted initiatives. Our Socio-Economic Consultants work alongside our managing agent business to do this. We carry out a local needs analysis and use data from our own mapping tool, such as unemployment rates, education levels and income levels, to tailor the action plan.

Making a positive impact

Sustainability is key to how we manage our clients’ assets and investments. We collaborate with our suppliers and clients to not only meet targets, but identify ways to positively contribute to the communities surrounding the assets.

Here are some examples of how we’re already making a positive impact:

Employment and skills

We currently run a pilot scheme in London that lets our national service partners transfer unspent apprenticeship levy funds to small-to-medium enterprises. So far, our suppliers have transferred £50,000 of apprenticeship levy funds to SMEs via the London Progression Collaboration.

Local economy

In the Beacon, we created a campaign called “Grow at The Beacon” aimed at small and start-up businesses. These business are given a vacant unit free of rent, business rates and service charges for twelve months.

As members of Reading’s Business Improvement District (BID), we work with local businesses and police. We sponsor Merton's Business Network for Climate Action Partnership to help businesses reduce their environmental impact. Plus, we actively promoted local businesses during the government ‘s ‘Eat out to help out’ scheme’.

Community engagement and support

In the Thistle shopping centre, we created a relaxation area within a vacant unit. This included a book exchange, giant chess set, computer workstations and children’s games. Plus, a TV screen displaying information about sustainability to show children how they can make a positive impact on the environment. In another vacant unit we hosted a food donation station. This allowed the public to donate tinned and packet foods, and personal hygiene products, which we donated to local charities.

Mental and physical wellbeing

At the Castle shopping centre we partnered with local charity Dorset MIND to deliver eight free webinars on how to tackle difficult issues relating to different types of loss – money, family member, job, health, etc. These were run by experts in various sectors and offered both practical and psychological support. We have also organised over 40 health checks and prostate cancer information sessions.

• Social impact is the positive or negative impact businesses have in society. This is the next level of understanding what the ‘S’ in ESG truly means. For example, the displacement of existing community groups or pricing-out low-middle income earners from the property market. 
• In 2020, our Managed Service supply chain created £149m worth of Social Value, including contributing to the local economy whilst delivering services and goods on our client’s assets.

Social Value will inevitably evolve as the expectations society puts on businesses expand. We are already seeing it expand in two key areas. Firstly, understanding the holistic social impact on communities, both positive and negative. Secondly, understanding and reporting how our suppliers, occupiers and networks impact society.

Contact Syreeta Bayne today, to see how we can help your business truly realise the ‘S’ in ESG and make a positive impact in society.

^{[i] https://www.local.gov.uk/pas/delivery/delivery-archive/developer-contributions-cil-s106-archived-pages/archived-s106 [ii] https://www.legislation.gov.uk/ukpga/2012/3/enacted [iii] https://www.barrons.com/articles/wealthy-millennials-are-driving-a-rise-in-sustainable-investing-01575496419} _{[iv] https://www.frc.org.uk/getattachment/5aae591d-d9d3-4cf4-814a-d14e156a1d87/Stewardship-Code_Dec-19-Final-Corrected.pdf}