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What's driving the interest in Social Value?

Increasingly, we are seeing the words 'social value' being used in relation to the real estate sector.

6/4/2019 12:00:00 AM

Although it is still a fairly nebulous term (as there is no universally agreed definition), it increasingly affects how developments, and therefore communities, are taking shape. It goes beyond "corporate social responsibility"; it is about maximising the public benefit and creating outcomes that support the public good. The UK Green Building Council categorises social value into three sectors: Jobs and Economic Growth; Health, Wellbeing and the Environment; and Strength of Community. All of these require consideration, effort and planning when applied to the built environment.

So what are the drivers for this trend?

1. Impetus from within the investment sector:

There is a growing trend to have regard to how monies are invested, rather than merely focussing on the returns generated.

As evidenced by the increasing provision of green, sustainable and ethical funds and pensions, the UK National Advisory Board on Impact Investing reported in 2017 that the UK was at a tipping point where impact and ethical investing was becoming mainstream.

For example, Legal & General have launched the Future World fund with HSBC. This tracks the FTSE 100, considers the environmental impact of investments and includes a specific mandate to divest from carbon intensive companies.

2. Government Involvement:

The Public Services (Social Value) Act 2012 (the 'Act') requires those commissioning public services to consider how they can secure wider social, economic and environmental benefits.

The Act has focused attention on the importance of considering social value at all points of construction and development in the public procurement process. In August 2018, the Strategy for Civil Society[1] announced the aim of strengthening use of the Act by government, and to consider suggestions to include social value in other areas of public decision-making.

3. Strategies of Developers:

Policies by developers that provide social value cover a range of areas including hiring locals to ensure construction spend remains in the local economy, limiting buyers of residential properties to owner occupiers, creation of a "Considerate Constructors" Building Social Value assessment tool, involvement of the local community in a development process to help communities thrive and so on.

The range of examples of "social value" (in terms of impact on society), underlines why it is so difficult to measure the impact in bald financial terms but what is clear is that many developers are supporting the notion.[2]

4. Planning process:

The National Planning Policy Framework ('NPPF') requires that sustainable development (a measure which includes many of the elements of social value) is the presumption for any new development. However, this presumption is rebuttable and social value is not mentioned in the NPPF anywhere.

That said, some local authorities are including social value in the planning process. One approach is to require developers to create a social value strategy before construction and prior to occupation. Coventry City Council, Brighton and Hove City Council and Manchester City Council are all looking into this option.

5. The Greta effect:

The climate crisis is now, more than ever, on the agenda

There is an increasing sense that steps must be taken to achieve net carbon zero buildings. 45% of total UK carbon emissions come from the built environment and 72% of domestic emissions are from heating /hot water.[3] There is much to be done.

Philip Hammond announced earlier this year that gas boilers will be banned in new homes from 2025 forcing developers to look to alternatives.

It seems that we are likely to see social value even more closely embraced by the real estate industry in the future.

[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/732765/Civil_Society_Strategy_-_building_a_future_that_works_for_everyone.pdf

[2] UKGBC Social Value in New Development https://www.ukgbc.org/wp-content/uploads/2018/03/Social-Value.pdf

[3] https://www.designingbuildings.co.uk/wiki/Sustainability_in_building_design_and_construction

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