The complexity of defining and measuring social value

Articles

By Sarah Blankfield, GRESB

The built environment holds immense sway in shaping our communities, serving as the backdrop for daily life, work, education, and leisure. However, when it comes to ESG reporting, environmental and governance metrics often take precedence over social aspects. Reporting on social value faces hurdles due to the intricate nature of social issues, with outcomes increasingly tied to human decision-making processes. Measuring positive social outcomes and impacts in the built environment often requires a more sophisticated approach compared to quantifiable factors such as reductions in energy and water consumption.

In response to these hurdles, investors are increasingly seeking reliable information. This push has spurred real estate management organizations to redouble their efforts to deliver social value and measure progress. Nevertheless, the market has long grappled with the lack of a consistent framework for assessing social impact.

This is changing, with new frameworks and tools launched over the last couple years. In 2022, the Property Council of Australia (PCA) released a Collective Social Impact Framework that builds on a common language for social sustainability. The framework defines communities as “socially sustainable” if they are equitable, diverse, connected, and democratic – and provide a good quality of life for their residents. In building the framework, the PCA drew on other industry standards including the UN Sustainable Development Goals and GRESB.

In December 2023, during the United Nations Climate Summit COP28, the World Green Building Council (WorldGBC) published a new position paper about social impact in the built environment. It presents four “scopes,” including entity and internal practices, building users and site, community and surroundings, and supply and value chains. The overarching scopes hope to address the complexity of global challenges interplaying with inherently local issues.

In addition, there are now tools available, such as Social Value Portal’s Real Estate Social Value Index (RESVI), to assist with the procurement, measurement, management, and reporting of social value for in-use real estate assets. Compatibility with major ESG frameworks, platforms, and tools such as the RESVI can help organizations enhance the good that they and their suppliers do. GRESB asks participants to report on a wide range of social issues, practices, and – to some extent – metrics in both the Real Estate and Infrastructure Assessments, including tenant engagement, health and well-being of communities, community impact, human rights, labor practices, and more.

In November 2023, the RESVI was accepted as a full-points certification by GRESB for its Real Estate Assessment, the first to cover the S in ESG for GRESB. More structured and in-depth data will enable the measurement and analysis of social value data on a comparable basis. However, what does GRESB data tell us about the progress made to-date?

The 2023 Real Estate results see participants continuing to grapple with Diversity, Equity and Inclusion (DEI), a key issue for many GRESB Investor Members. The GRESB Foundation considers it the highest-priority social topic for the further development of the GRESB Standards. Improving DEI is not just a moral imperative for real estate managers; it is proven that more diverse companies are more likely to outperform industry peers on profitability. According to McKinsey research spanning 1,000 large global companies, those in the top quartile for gender diversity in executive teams were 25 percent more likely to achieve above-average profitability compared to peers in the lowest quartile (McKinsey, 2020).

GRESB Real Estate Assessment data highlights that while participant members are making strides in diversifying their workforce, the same is proving more challenging for strategic management positions. Focusing on gender diversity in Asia, the employee ratio averages a 39:61 split in terms of female-to-male representation, yet in strategic management positions it dwindles to 21:79. The needle has hardly moved over the past three years and it is increasingly clear that organizations cannot make progress alone: industry collaboration is crucial for identifying and sharing effective strategies.

Collaborating on social impact will enable real estate managers to define metrics and approaches that better demonstrate to their investors the crucial role they play in creating and sustaining communities, as well as ensuring equitable outcomes. Feeling good about delivering social impact, but also being able to measure and report on social value in a comprehensible way, will be vital for future success.

View the original article on the GRESB website: https://www.gresb.com/nl-en/the-complexity-of-defining-and-measuring-social-value/