COMMENT: Steve Butterworth, CEO of Neighbourly, argues the case for localisation as a means to both recover from the pandemic and reduce the inequalities it exposed
The pandemic has exposed inequalities in society. Those already living in deprived communities have been at greatest risk of falling ill and have suffered the biggest financial hit. This is widely acknowledged. Political and business leaders can often be heard saying “we must build back better”. But what does “better” look like, and how do we go about it?
One thing is certain: we cannot go back to the way we lived before. We must invest in communities that have been left behind. At the same time, many people forced to work from home or placed on furlough have reassessed their priorities and deepened their relationships with their own communities. As they return to work, they are challenging their employers to think differently about the future.
Social value requires organisations to think beyond standard economic measures
These changing priorities and the clamour for a positive vision are neatly encapsulated in the concept of social value. Social value requires organisations to think beyond standard economic measures such as profit or return on investment to consider the impact they have on the community and on the environment. It is an ongoing ambition to make a difference to society and is embedded in every facet of the business, rather than encompassing a few initiatives.
Examples of social value might be the value we experience from increasing our confidence, or from living next to green spaces. These things are important, but are not commonly expressed or measured in the same way that financial value is. Social value has huge potential to help us change the way we understand the world around us and make decisions about where to invest resources. By changing how we account for value, we contribute to a fairer society and a more sustainable environment.
In the UK, as in many other countries, change is high on the agenda. The UK government has made a strong commitment to “levelling up” by reaching out to communities that have suffered a decline in economic fortunes even while other parts of the country have enjoyed prosperity.
And the government has recognised the role that social value can play in bringing about this transformation. Since 1 January, 2021, all public sector organisations, and their suppliers, are required to look beyond the financial cost of a contract and consider how the services they commission and procure might improve the economic, social and environmental wellbeing of an area.
The government’s new Social Value Model means that tenders for public sector contracts are assessed on a number of additional factors, including support for the Covid-19 recovery, tackling economic inequality, driving equal opportunity and environmental impact. Failure to address these issues will put a business at a significant disadvantage.
But government is not the only stakeholder asking business to make a social impact. Investors, consumers and employees are also demanding more than just a financial return or commercial arrangement. Increasingly, the choices they make are influenced by a company’s reputation for driving positive change in communities, for sustainability and for its approach to the environment.
Investors expect ESG (environmental, social and governance) issues to be integral to a company’s long-term value creation plan. Business leaders are also aware that their companies cannot thrive in communities that are struggling. Businesses themselves are stakeholders in society, and cannot succeed in one that fails, so leaders are increasingly realising they have a purpose and responsibility beyond only delivering value to their shareholders. In fact, their own survival relies on it.
The pandemic has demonstrated the importance of resilience in our communities
As we embark on the journey to “build back better”, the case for localisation is strong. The pandemic has demonstrated the importance of resilience in our communities. Trust in local good causes and trust in a company are intrinsically linked – local causes resonate with people because they know their neighbourhoods and what they need. They can see the difference that local organisations make. In turn, trust is bred when a business shows it is a vested citizen of that community too.
Our new publication, The power of local in delivering social value, highlights that global problems are solved by billions of local micro actions. We must build on all we have learnt from the pandemic, and reinforce the positive role of business in society. Truly localised ESG strategies will be especially vital in enabling society to bounce back better in the months ahead, driving long-term sustainable value creation, purpose and trust.
Steve Butterworth is CEO of Neighbourly
Covid-19 pandemic social value purpose #buildbackbetter Neighbourly sustainable business Social Value Model