This is a transcript from a video interview with Property Week as part of their climate crisis challenge. Watch the full video here.
What do we mean by social value?
Social value refers to the network of benefits or value-add that the built environment confers on society.
Social value encompasses environmental, economic and social wellbeing – so when we talk about social value we aren’t talking about the S in ESG, we’re talking about quality of life overall.
Depending on the asset, stakeholders will differ – local, for instance, doesn’t necessarily mean proximate to the project but it almost certainly will move beyond the occupiers or the immediate building users.
Crucially, social value is about outcomes – we are interested in the change that has been precipitated as the result of a development. This change should be measurable in terms of quality of life or wellbeing of stakeholders.
Broad consensus of agreed principles:
- Social value needs to be considered across the whole project life cycle: however, most effort is currently focused on social value through delivery and construction.
- Measurement is essential to understand social value more deeply, but this can be done in many ways and there is not yet a full set of metrics and processes agreed (or a desire explicitly referenced for this). When we say measurable, we aren’t necessarily talking about quantification in dollar terms but rather solid KPIs that can track outcomes not just inputs.
- Understanding local needs, the wider context, and learning from post-occupancy studies can create learning loops for better outcomes in future projects.
- The language of social value is still confusing and ambiguous. It needs to be tailored depending on sector and client needs.
The built environment sits at the heart of public health and wellbeing. We spend some two thirds of our lives in urban environments, and approximately 90% of our lives indoors. It is well documented that continuous and rapid urbanisation will increase the exposure of urban populations to health and wellbeing risks. The UN 2030 Agenda on Sustainable Development demonstrates the intersection of the built environment with health and wellbeing. This crossover occurs across the development lifecycle.
Why should we incorporate a social value programme into a portfolio net zero strategy
Firstly, it will inform a more compelling conversation with your investors who are increasingly showing that they want to get behind the data and reporting to see what’s meaningful.
Commercial real estate is about strategic programmes of land that shape our interaction with people and place for the mid to long term. As with net zero pathways, social value considered and embedded strategically is about de-risking assets and increasing their resilience.
Human health, building health and planetary health can’t be decoupled; which is why the narrative of co-beneficial solutions is so important.
For instance, when we consider biodiversity and green and blue infrastructure (simply, our natural assets), these can be enhanced or restored so that they alleviate flood risk, absorb carbon, support wildlife habitats – this not only makes our assets better equipped to withstand escalating climate risk but it increases the quality of life of those interacting with the built environment.
Simply put, green and blue infrastructure refers to our natural environments – watercourses, forests, hedgerows and so on. It is very difficult to retrofit these so their value needs to be recognised at the outset
Net zero necessarily involves taking a whole life approach to understand carbon throughout the asset lifecycle. The principles are very similar for social value. Both can be addressed most effectively this way.
What does good look like?
First and foremost, for asset and fund managers, best practice is addressing this at a portfolio level; commercial real estate involves strategic programmes of land so a macro level view of commercial and sustainability impacts is essential. By taking a portfolio approach, investors can build a comprehensive understanding of where the stressors are, which drivers apply and select the relevant enablers.
Once you have a strategy, this can be applied to individual assets; effectively, this is about thinking globally but delivering locally. When we just focus on individual asserts, focus can become narrow; ambition becomes stymied, and availability of data becomes inconsistent.
The risk of not embedding social value as a strategic programme follows a similar trajectory to failure to decarbonise; a loss in premium tenants, access to investment, lower footfall, loss of productivity; social segregation at community level.
Most often when we talk about CRE, we are talking about programmes of land in urban areas. Social value done properly can create multiple benefits (or resilience dividends) and maximise the value of every dollar spent; reduce and prevent the impact of shocks and stresses, and improve quality of life. This is important when we think about the pressure our cities are going to be under – two thirds of the global population urbanised with massive growth in secondary and emerging cities as well as our primary cities.
Instead of asking, is it expensive to embed a social value programme, we should be asking is it expensive to not to. The answer is yes.
- Heat mapping ESG impacts
- Stakeholder engagement including tenants and suppliers
- Take a landscape approach – Best in class
- Drawing in industry partnerships and thought leadership
- Landscape approach to management of NZ pathway and ESG integration
- Moving on from charities / input driven approaches to outcome approaches – measuring the change in quality of life
- E and S particularly material in BE
What does innovation in social value look like?
Innovation in social value terms recognises the interconnection between climate-resilience, and low-carbon, equitable futures.
Project Etopia is one of the most disruptive examples of the appetite to turn real estate – particularly residential at this stage – on its head. Founded by Joseph Daniels, Project Etopia addresses the housing crisis for what it is; an environmental and social one. Their build system connects energy, construction, and technology to create scalable, intelligent, and affordable buildings. There are some fantastic stats around the impact of project Etopia’s buildings; they are fast to build, hurricane proof and an Etpioa house saves 13 tonnes of CO2 over 25 years.
Etopia harnesses sustainability, affordability, and scalability; and this is the type of disruption that we will keep seeing in the market especially with all the weight behind net zero. There are huge lessons for the CRE to take from this space. Projects like Etopia show us the value of looking for co-benefits over siloed solutions and the commercial real estate sector can learn from this’; in designing out carbon, we are also designing in things like air quality, affordable energy, social connectivity and environmental wisdom.
On the CRE side, we’re seeing investors, including our clients, understanding that social value needs to be captured across the asset of a lifecycle.
Where it was traditionally confined to the construction phase of a development with limited metrics, innovative approaches in the industry are charting the change in social value from land acquisition stage through design, construction, retrofit, operation and decommission.
The research behind the Better Places Toolkit is a first mover example of the industry taking a strategic approach to quantifying social value outcomes. The toolkit is in development at the moment and in the end will support the planning and delivery of strategic land development for community, climate change, and commercial outcomes.
Initiatives like this show that innovation in social value doesn’t need to be done in isolation; finding the right partners to assist in executing a strategy at landscape level is essential and will mean investors don’t need to reinvent the wheel.
Carbon Intelligence is committed to supporting organisations develop credible decarbonisation pathways to drive carbon reduction and net zero goals. Contact us today to find out how we could support you firstname.lastname@example.org
- Download | Net Zero: The Guide for Commercial Real Estate
- This is a transcript from a video interview with Property Week as part of their climate crisis challenge. Watch the full video here.