At the start of the pandemic, many were calling for the international system of late-capitalism that caused the long-expected global catastrophe halting all of our lives to be rebuilt, reimagined, and repurposed to better suit the needs of individuals and the planet.
It’s a big ask, but one that is desperately needed if we are to avoid such disasters again and live in harmony with a planet already pushed to the brink while ensuring everyone is looked after.
COVID exposed that a system focused on economic growth over wellbeing no longer serves us. The entire world now has an opportunity to ‘build back better’, establishing a new economy that not only accounts for financial value but also the social value of things.
So, how do we do that?
One of the approaches is to apply new value measurements to things when we make policy decisions. This means a shift away from quantifying things and decisions purely on financial costs and terms and towards an inclusion of the impact that decisions have on individual well being or their ‘social value’.
Think of the way that Rio Tinto failed to account for the social value of Juukan Gorge, understanding it purely in financial terms. That not only led to severe consequences for the wellbeing of the Puutu Kunti Kuurama and Pinikura peoples but a sharp drop in Rio’s share price, demonstrating that social value is a less well understood but potentially more important factor in driving financial value.
Bhutan is a country that already adopts such an approach. Its domestic policy is framed not around gross domestic product, or GDP, but gross national happiness, or GNH. It’s been doing so since 1998 and the approach has spawned a whole new global understanding of how we value societies and rank their attributes.
The UN now releases an annual World Happiness Report, ranking happiness on a scale from 2.5 to 8, where they take into account things like GDP as well as social support, individual freedom, life expectancy, generosity, and corruption.
Finland has topped the happiness index for the fourth year in a row this year with a score of 7.8, just ahead of Demark, Switzerland, Iceland, the Netherlands, Norway and Sweden. Australia sits at number 11, just behind our neighbours New Zealand at number 9. The UK is 17th and the US 19th with Afghanistan, Zimbabwe, Rwanda, and Botswana at the bottom.
In order to bring this kind of approach into practical application in Australia, wellbeing measurement organisation Huber Social is leading an Australian-first creation of a guide for measuring social value for Standards Australia, the nation’s peak non-government, not-for-profit standards organisation.
“It’s very practical and, and will really help inform decision making”, Huber Social CEO, Georgina Camp tells The Latch.
Globally, the only country to publish a guide of this kind has been the UK, with a 2021 “Handy guide” for “Enhancing Social Value”. Sweden is also following suit with a national Social Impact Measurement standard to be drafted later this year.
Huber Social expect that this guide will become “the bible” of social impact measurement in Australia and beyond to help streamline and standardise the concept and the metrics across the world.
“Social value as a concept is getting a lot of momentum,” Camp said.
“We’re seeing [they type of emphasis on social value] that typically came through the welfare system and charities and not for profits is now also appearing as corporate social responsibility and now, more and more, investment and particularly impact investing”.
“So we’re seeing this across all these industries, which is contributing to a huge proliferation of approaches for how we actually demonstrate social value.”
Camp highlights a lack of consistency in social value approaches along with a lack of integrity in how those decisions are made. For example, a super fund manager deciding which ethical companies to invest in has no easy or standardised way to compare the social value of two companies that measure their social value via different methods. This could result in a less ethical company being invested in over a more ethical company — something no ethical super fundholder would want.
Setting standards and making clear definitions for policymakers, Camp said, is integral to creating a social value-based understanding of the economy and society.
“We need a way to measure and demonstrate the value of these things,” Camp explains.
“Social value is recognised as the net positive impact on our well-being. That’s now recognised by the UN, the SDG Impact group, the OECD, and all these other different authorities in this space.
“To measure the social value of things, in simple terms, we look at how much something contributes to the well-being of people.”
Camp said it is possible to quantify social value numerically, looking at things like subjective impact scores, individual satisfaction, and quality of life standards. However, this approach may not be the best one to take, as it can easily get amalgamated into financial value. What she’s talking about is a system beyond financial value.
Without measuring social impact, Camp said you’re essentially missing the whole picture.
“An analogy we use is like latitude and longitude. At the moment, we’ve only got latitude to measure progress, that’s the value of things, but we need to have this other unit of value, which is social value, to be able to balance the two and decide overall what pathway is going to maximise benefit.”
From the end of the Second World War, the world has focused on economic measures of human progress such as GDP alone. Decisions about where to allocate resources and how to prioritise activities have been made based primarily on financial criteria.
Social impacts were not factored into decision making in any meaningful way, which has resulted in many of the issues humanity is now facing.
Today, both regulation and public opinion are demanding social impacts are taken into account. The public sector is under pressure to demonstrate that resources are being applied to achieve social outcomes; addressing social issues and creating social value. The private sector is being judged on its environmental, social and governance performance, as well as its financial performance. A return to shareholders is no longer enough to justify existence.
Measurement of social value is therefore becoming increasingly important in informing decisions across government budgets, procurement, policy development, legislation, private sector investment portfolios and everyday decisions about what we buy, where we work and who we vote for.
How the Guide Will Work
The guide is therefore designed to help users assess whether the social impact measurement approach they are using is ‘fit for purpose’ for the decisions they need to make. It’s aimed at investors, donors, policymakers, regulators, researchers, and social impact service providers.
The guide advocates for a scientific methodology, empirical proof, and the measurement of social value in its own right rather than converting it to a monetary equivalent, as the whole point of social impact measurement is to recognise that there are things you can’t measure in money.
It’s built around the measurement of social impact in terms of subjective wellbeing and the lived experience of people, aiming to create a guide that is actionable, comparable, and transparent.
Camp says that the biggest impacts of such a guide would be in where money is spent to create social change effectively and being able to measure political success not on how rich it makes a country, but how happy.
“It’s so that we can be tracking progress along that measure, not just GDP. We’ll see more, as the financial economy has input into people’s well-being.
“We can establish a system that would do that, elevating well-being as a measure of progress for humanity”.
The guide is currently available for review online before it opens for comment and feedback.
Standards Australia will then take that feedback into consideration before the report goes to peer review and it should be published early next year.
The next task will be getting industry leaders to engage with it and use the guide as a way to understand their own social value.
Camp said there should be no reason why the guide wouldn’t be globally applicable and that doing so would give us a better way to understand how we create societies that benefit all.
In parts of Africa, she said, societies score the highest on statements like “my life is important” and “I have purpose in life”. In Australia? Not so much.
Creating this new value system would enable us to not only see where we’re going wrong but to address those problems more effectively — and hold our leaders to account for not doing so.
It’s a fundamental shift in the way we view people and the planet and it might just be the one we need to save us all.
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