Companies are increasingly seeking to put £s to their social impacts, to calculate the social value they have either generated or plan to. We call this ‘monetisation’. But how to monetise?
‘Monetised values’ are the financial proxies that are applied to social impacts to calculate social values. The most robust are those that are compiled through valuation methods that align with HM Treasury Green Book and/or OECD (2006, 2013) guidance or that have been used in government policy analysis. These are based on ‘welfare’ economic methods and measure changes in people’s wellbeing or welfare. Values within the HACT Social Value Bank and Calculator are calculated in this way.
Values prepared in different ways (e.g. based on the cash value of staff time spent on an activity) are nowhere near as robust and should be treated with caution.
The most meaningful measures of social value are changes to people’s wellbeing or welfare (‘outcomes’) resulting from interventions or activities (‘inputs’).
For example, it’s relatively easy for a company to measure – and perhaps even monetise – their inputs (e.g. time spent by staff mentoring unemployed people) but it’s much more meaningful – albeit more difficult – to identify, report and monetise the results of those inputs (e.g. people entering sustained full time or part time work as a result of that mentoring).
There’s a trend for companies to project the value of the social value they claim they will create in delivering a contract, when responding to an invitation to tender.
This approach should be treated with caution, because:
Yes – it’s complicated and it requires training, but it’s a great way to monetise social impacts in a way that stands up to scrutiny.
Follow the lead of Transport for London and other progressive clients and use this approach to integrate social considerations into a procurement process.Read Article