Social sustainability – a trend on the rise
Social value creation is on the agendas of more and more companies and organisations. But how do you establish the value of something that can’t be assessed in the normal way? Erik Jannesson, senior lecturer in management control, has just published a book on the subject.
“Essentially it’s about helping make the world socially sustainable. It is possible to build business value while at the same time reducing social problems, and thus doing good for other stakeholders,” says Erik Jannesson.
It’s simply a matter of looking beyond short-term financial data. Happy staff, customers and suppliers leads to reduced costs and increased efficiency.
“There’s a choice: you can build a business model that delivers profits at the expense of other people, or by creating benefits for other people.”
In his book “Så mäts hållbart socialt värdeskapande” (Measuring sustainable social value creation), published by Studentlitteratur, Jannesson and co-authors Gordon Hahn and Lena Hök present a number of examples of how this can be done.
“For instance, Norrköping Municipality got behind the social investment project ‘All kids in school’, to help solve the problem of truancy. For the pupils it meant better chances of finishing school and avoiding exclusion later in life. Also, the calculations showed that in the long term, the municipality could save eight million Swedish crowns by way of smaller resource groups in schools and lower costs for foster care.”
A different type of example is the campaign by the global pharmaceutical company Novo Nordiska to launch its diabetes drugs on the Chinese market.
“Instead of traditional marketing, they invested in things like the education of healthcare workers and increased awareness of the risks of diabetes. The company increased its market share – but also, its investment in education helps save lives.”
Jannesson cites a third example, the German company Mutanox:
“In 2015 it could have secured a large order for barbed wire, which was to be used to stop refugees entering Hungary. But Mutanox cancelled the offer, because their fencing is used to prevent crime, not to close borders.”
For many years, companies and organisations have worked to reduce their environmental impact, which often results in reduced costs (for instance through energy efficiency), lifts competitiveness and makes for a better world.
Will social sustainability be the next trend?
“It already is. In the 1990s an American organisation developed a concept that is now internationally accepted – Social Return On Investment, or SROI. It is used to understand and control value creation from a social, environmental and economic perspective. In the following decade the concept reached the UK, and in 2009 the first international SROI guide was published, and the ideas started to reach Sweden.”
Social value creation often has economic effects. But it is just as important to understand the subjective value of, for instance, how reduced stress at a workplace can benefit an individual.
“Plus, it’s important to analyse the measures that have been taken, to find out how they bring benefits. It’s possible that other conditions are having an impact.”
The book is based on the SROI concept. One tool for measuring consequences and creating reliable information for decision-making is the value creation chain.
“Using it makes it clear how investments in various activities are transformed into values – social, environmental and economic.”
And the insight that social sustainability can increase business value is evident in various ways, including in the companies’ annual reports.
“Previously, many Swedish listed companies described shareholder dividends as the principal purpose of their operations. But over the past decade there has been a clear change in this regard. Today, visions of greater social and environmental responsibility, alongside economic sustainability, are very often presented. Still, it’s not that common that social sustainability is integrated into the core operations. It’s still a sidetrack, with the exception of social entrepreneurs, of course. But many businesses and organisations have made some progress.”
For instance the UN includes social sustainability in its 17 Sustainable Development Goals, and in 2009 the European Commission published the report GDP and Beyond – Measuring progress in a changing world, which stresses the need for tools that measure societal benefits in relation to economic value creation.
There is also a norm-setting international network for SROI, Social Value International, with representatives from some 50 countries. Erik Jannesson has been Sweden’s representative, and was involved in the foundation of a national network in Sweden in 2011.
As an economist, researcher and teacher, you’re at the forefront of this field. Your comments?
“It’s a great feeling when I can see that I inspire others, and can actually make a difference.”
Text: Gunilla Pravitz
Photos: iStock and Gunilla Pravitz
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Last updated: 2017-02-13