Social value has come of age in property.
In the decade or so since we first started linking social outcomes to financial performance in our buildings, I never thought we would see such a dramatic shift in our industry, with pinstripe suited executives swapping their tassel loafers for TOMS alpargatas.
But 2020 has taught us to expect the unexpected.
Why the sudden enthusiasm for the ‘S’ in ESG? Clearly this is partly down to the extending arc of the climate crisis and acknowledgement of our impact on planet and people.
This has been accelerated by the pandemic, which has profoundly moved us as investors, property owners and as people to think more sincerely than ever about our communities and what matters.
There is something deeply human about altruism, hardcoded in our DNA, steeped in thousands of generations of evolution. And during times of existential crises, we revert to type.
There is also a more proximate cause: our recognition that as stewards of the built environment, we are inimitably positioned to make a positive impact. This realisation is not new, but in a crisis like today’s, the time between the flash-to-bang of our actions and outcomes has been so dramatically shortened.
We can see that we have a greater impact than we realised, and it can happen much faster. Our efforts manifest in real time rather than an in some sort of invisible, undefined future social good.
But while we can see the social value we are bringing to our communities today, there is growing scrutiny of our effectiveness in driving social outcomes. Our buildings sit within dynamic urban systems with multifaceted, entrenched social issues moved by a wide range of invisible levers from business, government, social influences, and the rest. Hence the drive for our industry to identify the impact we are having, and to measure it.
At FORE, going through the rigorous B Corporation certification process last year gave us renewed urgency to tackle the question of measurement. Social entrepreneurs have been grappling with quantifying the effectiveness of their programmes for decades, while philanthropists have long analysed the impact of their donations.
We can learn a lot from the frameworks created by the third sector and the property world is adopting some of their measurement tools. But we seem to be focused on defining social value in terms of the economic value we bring to communities – for example, so many sandwiches bought at local shops by employees in my new building – or the value of the things we donate, like the price of renting a community space that you give a charity for free.
These approaches fall short, only measuring the activity, not the outcome. I may give away a room worth £500 for an evening, but what is the value this brings, say, to someone who attends a job skills workshop there? And is that workshop bringing more or less social value than a class focused on ending food poverty?
Other measurement tools are broader and consider environmental as well as social outcomes. GRESB is one that investors are gravitating towards; this global benchmark has been adopted by more than 1,200 property companies with a combined $5.3 trillion asset value.
FORE has embraced GRESB and is proud of its performance, especially as a small firm – five stars in each of the past three years and top of our peer group in three categories, making us ‘industry champions’. But GRESB doesn’t purport to measure social value at a granular level, which is where we need to get to.
Once we identify and measure social value, only then can we use it as a tool to maximise impact – surely the outcome to which we must hold ourselves. Great work is being done in this space by firms like Chicago-based Mission Measurement, which uses AI to scour data derived from thousands of programmes and calculate a robust cost per outcome across hundreds of social issues.
This data can be used to benchmark programme efficacy. Want to know the cost per child of improving literacy rates in inner-city communities? And which initiatives have succeeded with the lowest cost per outcome, so are more effective? Check.
We need to broaden our horizons, as many more tools are emerging outside the world of property, including the new Sustainability Accounting Standards Board standards in the US, Deloitte’s social impact measurement model and MSCI indices. All are focused on consistent data collection in a messy and siloed world.
We have come far in thinking about social value in property. But it feels like we’re still in primary school when the rest of the world has moved on to do their PhD. We must step up the level of discourse and create a deeper understanding of what the ‘S’ is all about.
Basil Demeroutis is managing partner at FORE Partnership