Transparency and Impact: How Social Value Elevates ESG Reporting
Article by Chris Beales
Targeted policies, data systems and improvement plans are three ways a social value measurement framework can help sustainability reporting
Interest in sustainability and ESG information continues to soar. Whether its investors wanting more detail on how their capital is delivering good as well as return, or corporate tenants asking how their company’s home helps them to achieve their own sustainability goals, demand within the real estate sector for transparency and reporting on sustainability factors is higher than ever.
But reporting sustainability and ESG performance can provide challenges. Investment firms, need processes in place to capture and validate sustainability data, conduct analysis in a consistent and thorough manner, map results to internal policies and external frameworks, and communicate sustainability performance in a way that provides value to investors and other key stakeholders.
And while reporting around greenhouse gas emissions, waste management, energy consumption and the environmental area of ESG is now commonplace, reporting above and beyond environmental targets is fast becoming expected.
As the investment world’s approach to ESG continues to evolve, attention is turning to robust reporting and transparency around the social impact of an investment strategy. Incorporating social value into an ESG policy allows for consistent and quantitative reporting of all the good an ESG approach is delivering. Here are three ways a social value framework can help real estate investment firms with sustainability reporting:
1 – Create a Policy That Matters
The first step is targeting the initiatives that matter most. An ESG policy should define how an investment approach aims to deliver for society in terms of a selection of targeted outcomes and measures. This involves understanding the needs of an asset’s community and underpinning an ESG policy or sustainability approach with a selection of social value measures.
Social value measures are selected from a framework of outcomes such as providing employment, improving skills, sustainable procurement, working with MSMEs and opportunities for disadvantaged people. Focusing a policy on a set of material and specific social value measures will provide more concise and targeted reporting, and align different areas of a business’s operations to a common goal.
2 – Sing from the Same Datasheet
Operating with an underlying measurement framework provides structure. Clarity around the social value measures that a firm is looking to incorporate allows the people on the ground – whether property managers, suppliers or occupiers at an asset or corporate employees – to pull in the same direction, target important initiatives and collect consistent data.
Social value is generated from a range of sustainable activities such as voluntary hours, donations, recruitment, training, as well as emission and waste reduction. Systems around how to track, submit and validate social value data are vital to communicating the value generated by a social value initiative.
3 – Improve Your Value
Social value reports allow an asset, fund or company to showcase how much value has been generated for society aligned to an internal policy and the UN SDGs, on a quarterly or annual basis in terms of a pound sterling value. By evaluating social value delivered per m2 of property, by the amount of corporate funding or through a particular partnership, corporations can benchmark and target social value delivery in future years.
Being transparent around the social value that is being generated at a real estate asset site or within a property fund as a whole is becoming a key area of sustainability and ESG reporting in the real estate sector. Implementing a robust reporting process can lead to more transparency, consistency and a greater understanding of how to maximise the good an investment strategy can deliver for society.