Maximising social value through asset management

On Wednesday 9^th December at 14:00 we were delighted to have Mariana Goncalves, who is a Sustainability Consultant at Savills and Ed Dean, the Director of Sustainability at Landsec, to join the discussion on how social value can be maximised through asset management.

So why are we talking about this? In recent years there has been a shift in focus in the investment community from just thinking about the bottom line, to thinking about both purpose and profit (helped by BlackRock’s Larry Fink publishing an open letter in 2019: “profits are in no way inconsistent with purpose – in fact, profits and purpose are inextricably linked”). Within the real estate sector this means thinking much more carefully about how, where and why assets are built and the approach that is taken to how they are managed.

Delivering social value through the construction period is nothing new because contractors and their suppliers have historically been very good at running employment initiatives aimed at driving job opportunities for local people or those that are further from the labour market, like ex-offenders. Additionally, they often deliver volunteering schemes, school engagement activities and employee wellbeing programmes. However, the construction period is actually a very small part of a new development’s lifecycle and research shows that it often only accounts for 15% of an asset’s total social value over a 20-year period. The bulk – the 85% – is unlocked through how that asset is ultimately managed, supplied and occupied.

Asset and property managers have a critical role to play in driving the positive social, economic and environmental outcomes generated by an asset – regardless of whether it’s an office, an industrial park or a retail centre. Thoughtful decisions made around suppliers, local partnerships and environmental initiatives can have a long-term impact on the local area and on society as a whole. For example, there is more social value in sourcing your building’s coffee supplies from somewhere like Redemption Roasters than from a national chain. It costs the same, but one organisation trains prisoners in roastery and barista skills before employing them in coffee shops ‘on the outside’, and the other just provides you with (not even as tasty…) coffee.

It is often through having an engaged, considered, and collaborative property management team that occupiers feel empowered to do more themselves. And it is the occupiers of an asset that have the biggest opportunity to generate positive value through the size of their workforce and what that brings in term of resource, time, expertise, ideas and passion.

The ‘S’ in Environmental, Social, Governance (ESG) has been left trailing behind its friends ‘E’ and ‘G’ because there was a sense that delivering, measuring and reporting social value was too difficult. Social Value Portal is committed to dispelling that myth and working with investors, developers and asset managers to help them understand how to deliver more value for the communities where they work and, importantly, how to measure and value it so that those benefits can be maximised in the long-term.