Thought Leadership

Learn more about what social value is, what we do, and how we came to be with articles written by members of Social Value Aotearoa.

Unlocking the Potential of Social Investment: The power of the Principles of Social Value

Unlocking the Potential of Social Investment: The power of the Principles of Social Value

Unlocking the Potential of Social Investment: The power of the Principles of Social Value

As social and environmental needs become increasingly complex and interconnected, the push for effective investment in addressing these challenges is understandable. We are not alone. Governments, organisations, and communities globally are seeking ways to ensure that their efforts and resources translate into tangible, positive impacts. Here in New Zealand, the commitment to social investment has the potential to create sustainable, meaningful change where it is needed most.

Social value is an internationally recognised framework that provides a cohesive and practical approach to determining how we measure, manage and maximise the positive impact of social investment. Within the social value approach, are tools that can be used to do so, such as Social Return on Investment, and the SDG Impact Management Standards. What sets social value apart is its inclusion of eight principles, which, taken altogether, are designed to ensure that investments are truly delivering long term, sustainable outcomes that are of value to people. Social value encapsulates the social, economic, and environmental benefits created through various activities, going beyond financial metrics to capture the broader impact on people’s lives and communities. Social value is about more than just the ratio produced in an SROI analysis; it involves understanding how value is delivered, identifying opportunities to maximise impact, and gaining a deep insight into what truly matters to the people you work with to inform decision-making. It’s underlying principles have been derived from social accounting and audit, sustainability reporting, cost-benefit analysis, financial accounting, and evaluation practice.

These principles act as a guide for organisations to maximise their positive impact, while ensuring accountability and transparency. Social Value International has established a set of standards and guidance documents to ensure best practice across each of these principles. Below, we explore how these principles support informed decision-making in the social investment context.

1. Involve Stakeholders

True social value is generated when the voices of those affected are heard and valued. By actively involving stakeholders, we ensure that initiatives are responsive to the real needs and aspirations of communities. This approach ensures that social investment is not just a top-down directive but based on inclusive collaboration.

2. Understand What Changes

Measuring social value requires a deep understanding of what changes for individuals and communities as a result of interventions. This principle encourages a thorough analysis of outcomes, both intended and unintended, to truly grasp the impact of social investments. Understanding actual changes is critical for long-term success.

3. Value the Things That Matter

Not all impacts are easily quantifiable, yet they hold significant value for those experiencing them. Effective social investment requires recognising stakeholders' values and preferences. This principle ensures that decisions reflect the relative importance of different outcomes based on stakeholder value, using either weightings or financial approximations. By valuing what matters to stakeholders, organisations can make informed choices that maximise positive impact.

4. Only Include What is Material

Materiality ensures that decision-making is informed by relevant and significant information, this principle is about ensuring that a true and fair picture of value is being given. It focuses on deciding which outcomes to include and exclude, ensuring that only material outcomes—that would influence stakeholder decisions—are reported. Using an assurance process gives decision makers further confidence that all material issues have been considered.

5. Do Not Overclaim

Credibility and trust are built on transparency and honesty. The principle of not overclaiming includes concepts such as deadweight and attribution, considering what would change anyway if services aren’t provided, and if some of the change is due to the contribution of others. This principle ensures that reported impacts are realistic and substantiated and guides realistic investment, maintaining public trust and accountability.

6. Be Transparent

This principle involves open communication about methodologies, data, and decision-making processes. It is essential for building trust and collaboration among stakeholders, which is the foundation for successful social investment.

7. Verify the Result

Verification adds a layer of assurance to social value reporting, ensuring that claims are accurate and reliable. Independent verification is an important step when results are being reported for external audiences, or supporting significant investment decisions.

8. Be Responsive

Being responsive means acting on the findings from social value assessments to continually improve practices and outcomes. This principle encourages a dynamic approach to social investment, where feedback and learnings drive innovation and adaptation, and stakeholder contribution is acknowledge and valued.

Social Value Aotearoa, with Social Value International, champions the understanding and application of social value principles to drive better outcomes. Being guided by these eight principles provides a foundation for maximising the positive impact of social investments, encouraging sustainable and inclusive growth.