What is social value in business? The complete guide
Social value has become a hot topic for businesses in recent years. You’ve probably seen the term popping up alongside CSR and ESG, but it’s easy to get confused about what exactly social value means and how it applies in a business context.
In this guide, we’ll be walking you through everything you need to know about social value in business:
What is social value?
What is social value in business?
Background: where did social value come from?
Why is social value important for businesses?
What does social value mean for your business in practical terms? (Including social value examples)
The sum-up on social value in business
Let’s start with the basics, shall we?
What is social value?
According to Social Value UK: “social value is the quantification of the relative importance that people place on the changes they experience in their lives.”
This means that social value is the quantified result of a project’s positive impact. It’s a different way of measuring success – moving beyond direct financial benefits, social value allows us to holistically measure other benefits.
And it’s not one-size-fits-all; there are several social value themes. For example, some benefits of social value could include:
Social improvements: supporting the activities of local community groups and charities, and establishing community amenities like libraries, playgrounds, and gathering spaces
Indirect economic rewards: creating new jobs in local communities, more money circulating within local supply chains, new opportunities for skill development within the local workforce
Environmental gains: lowering carbon emissions, restoring natural habitats, and safeguarding biodiversity
Wellbeing enhancements: initiatives that promote physical and mental health in workforces and communities and provide fairly compensated, meaningful employment
These benefits then have to be reported and quantified in monetary terms. It might seem confusing to try to quantify the value of a new community play park in £s, but you don’t need to be a social value coordinator to figure it out. There are simple methods and tools you can use – like Social Value Portal’s calculator – to get your final quantified result.
So, what is social value in business?
We know that social value is the positive impact created by a project. So, social value in business is the positive impact a company creates through its operations, products, services, and initiatives.
Lots of businesses create social value through their environmental, social, and governance (ESG) strategies and corporate social responsibility (CSR) policies. Some businesses will even specifically create a social value policy as a basis for creating and measuring impact.
Businesses are increasingly expected to contribute to society beyond just generating profit. Now more than ever, consumers, investors, and talent expect businesses to contribute positively to the planet and communities.
Specific social value jobs have even been created to help businesses ensure they’re maximising their positive impact.
Background: where did social value come from?
Environmental and social responsibility have become more and more important for businesses in recent decades – for consumer satisafaction, investor appeal, and talent attraction. Social value specifically, however, is a relatively recent focus for businesses.
Social value gained prominence in the UK with the introduction of the Public Services (Social Value) Act 2012, also known simply as the Social Value Act.
In short, the act requires public service commissioners to consider how their decisions can also deliver broader social, economic, and environmental benefits.
Before starting the procurement process, commissioners need to assess whether the services they plan to purchase — or the methods they use — can provide added value to the community or stakeholders.
Though it was the public sector that laid out the guidelines for social value in procurement, since then, businesses have stepped up to the plate. As Social Value Portal CEO Guy Battle put it:
“Initially, the public sector was leading the way. But while the private sector initially might have seen this as ‘red tape’, the natural good manner and honesty of most businesses has come through. So, we’re now seeing the private sector start to lead, and doing even more than the public sector thought it could ask for.”
Why is social value important for businesses?
In today's business environment, consumers and stakeholders are increasingly looking for companies that not only deliver financial returns but also contribute positively to society. This shift has led businesses to prioritize social value in their strategies to meet customer expectations and gain a competitive edge.
By demonstrating tangible social value, businesses can attract and retain talent, delight consumers, and ultimately boost their bottom line.
But don’t take our word for it – the proof is in the numbers.
Why social value matters to your employees:
Turnover drops by 52% when recent hires participate in a company’s charitable programs, such as structured volunteering
Nearly 70% of employees say they wouldn’t work for a company without a strong purpose.
8 out of 10 workers say participating in charitable activities is important for their wellbeing
Why social value matters to your consumers:
77% of consumers are motivated to purchase from companies committed to making the world a better place
Consumers are 4x more likely to buy from, trust, champion, and defend companies with a strong Purpose
90% of consumers will switch brands to support a good cause and boycott a brand due to irresponsible business practices.
Why social value matters for your bottom line:
Companies that provide their employees with a sense of purpose and clear direction and expectations outperformed the stock market, achieving returns 6.9% higher than the market
85% of executives believe that being a purpose-driven company drives profit
73% of investors say that to win their support, companies must first show how they're supporting communities and the environment
Read OnHand’s handbook on the ROI of social and eco impact to learn more.
So, what does social value mean for your business in practical terms?
It means taking a holistic approach to business success, where financial returns are balanced with social impact. Companies that can successfully define social value within their operations are more likely to build trust with consumers and stakeholders, which can lead to long-term success.
It might sound complicated, but in the most practical terms, there are plenty of straightforward initiatives your business can get stuck into to start building its positive impact.
Here are a few key social value examples to get the ball rolling.
Reducing CO2e with a cycle to work scheme
Collecting donations for a local foodbank
Encouraging employees to volunteer
Supporting local charities
Recycling company computers and other tech
Enhancing employee wellbeing
Businesses of any size can get started on social value with these simple, impactful actions.
The sum-up of social value in business
Incorporating social value into business practices is no longer optional: it's a strategic necessity.
By understanding and implementing social value in your business, your organisation can meet legal and societal expectations and drive sustainable growth and enhance its competitive advantage. It’s a win-win.
