Since 2008 SVI have been collaborating with practitioners across the world to develop a principles based approach for accounting for value. The Principles of social value are:
1. Involve Stakeholders
2. Understand what changes
3. Value what matters
4. Only include what is material
5. Do not overclaim
6. Be Transparent
7. Verify the results
8. Be Responsive
When these principles are applied to the standards set out by SVI they create a framework for accounting for value. Principles 1-5 are about accounting for value (you may call this impact measurement). Principles 6 and 7 are about reporting the value (impact) and the newly introduced 8th principle is about responding to the data, taking action (impact management).
Each of the principles are borrowed from more established practices of cost benefit analysis, traditional evaluation, sustainability reporting and financial accounting.
As a set of principles together, they have been designed to be a framework for organizations aiming for two things:
– Increasing accountability to the people (stakeholders) whose lives are materially affected by their activities
– Supporting decisions to optimize value for all stakeholders that are materially affected by their activities.
Principle 1–Involve stakeholders–cuts across all of the other 7 principles. By stakeholders we mean people who affect or are affected by the activity being analysed.
|Here’s how it works
The principles of social value are a voluntary set of principles that can be adopted by any organization. SVI has developed standards for applying each of the principles and short guidance documents to help practitioners meet the standards.
Here is a short description of each of the principles and how stakeholder involvement/engagement runs through them all.
|Social Value Principle
|To meet the SVI standard for stakeholder involvement, a sample of your stakeholders must be involved in the following tasks:
|(Principle 1) Involve stakeholders means “Inform what gets measured and how this is measured and valued in an account of social value by involving stakeholders (the people who experience change as a result of your activity).”
|– Identifying who the stakeholders are.
|(Principle 2) Understand what changes means “Articulate how change is created and evaluate this through evidence gathered, recognising positive and negative changes as well as those that are intended and unintended.”
|– Defining what outcomes are relevant for measuringFor each outcome:- Establishing the amount of change in each outcome- Establishing how long each change lasts—duration and how quickly each changedrops off
|(Principle 3) Value what matters means “Making decisions about allocating resources between different options needs to recognise the values of stakeholders. Value refers to the relative importance of different outcomes. It is informed by stakeholders’ preferences.”
|For each outcome- Establishing the relative importance (value) of the outcomes
|(Principle 4) Only include what is material means “Determine what information and evidence must be included in the accounts to give a true and fair picture, such that stakeholders can draw reasonable conclusions about impact.”
|Information is material if it supports the purpose of optimizing value for each stakeholder group
|(Principle 5) Do not overclaim means “Only claim the value that activities are responsible for creating. Understanding the role of your activities in a system of change”
|For each outcome:- Establishing the level of counterfactual (likelihood it would have happened anyway)- Establishing the level of attribution (from your activities and others)- Establishing any displacement of value to other stakeholder groups
|(Principle 6) Be Transparent means “Demonstrate the basis on which the analysis may be considered accurate and honest, and show that it will be reported to and discussed with stakeholders.”
|Reports should be produced explaining the stakeholder involvement processes and any risks involved in the approach.
|(Principle 7) Verify the results means “Ensure appropriate independent assurance.”
|Ensuring that stakeholders are Involved in reviewing the final results and verifying them Assurance is being provided on behalf of the people who experience the changes in their life
|(Principle 8) Be Responsive means (work in progress) “making decisions that optimize value for all stakeholder groups materially affected. Consideration of risks and rigour of data in context of decisions being made”
|– Involving stakeholders in reviewing the options for optimizing value
To read the full SVI Standard for applying Principle 1 Involve Stakeholders see: https://socialvalueint.org/social-value/standards-and-guidance/
Assurance & Accreditation
SVI offer various assurance and accreditation services that provide confidence that the Principles of Social Value have been applied:
- Report Assurance: tests whether the author has demonstrated a good understanding and application of the principles of social value.
- Social Value Management Certificate: tests whether an organization has embedded the principles of social value into their systems and processes. The certificate has three stages: commit, implement and manage
The two main benefits are:
- Increasing accountability to the people (stakeholders) whose lives are materially affected by their activities
- Supporting decisions to optimize value for all stakeholders that are materially affected by their activities.
In addition the principles have the other following benefits:
- Principles are flexible so they can be tailored and applied to different contexts.
- The information provided by the principle-based framework is always proportionate and decision useful.
- The principles are recognized internationally and applied in a wide range of contexts.
- Where the relative importance of outcomes is expressed in monetary terms (and compared to the value of the inputs in monetary terms) this allows for the creation of a Social Return on Investment Analysis with a ratio of $1:X social value.
Prepared by Ben Carpenter from Social Value International.