Investing in social value: Perspectives from the real estate sector

KEY POINTS

• “Social value is huge with investors now…you cannot escape it”. Social value is undoubtedly growing in importance in influencing real estate investment decisions, driven my multiple factors – demands from clients and local authorities for a social return, competitors’ behaviour, and an interest among employees.
• However, investors and developers are at different points along the social value journey. While some were using “off-the-shelf” tools to measure social value, others had developed more bespoke approaches to suit their business model and social objectives so that social value is authentically imbued in an organisation, rather than a tick-box exercise.
• “The time is coming…when the S is equal to the E”. But there were mixed views on what exactly social value is, including whether it covers all aspects of ESG, rather than just the “S” component.
• “I do not think it is very clear where the buck stops when nothing materialises… it happens all the time”. Accountability remains an issue when it comes to social value. This raises the risk of “social value washing”, akin to “greenwashing” where firms deceptively portray their green credentials.
• Pursuing social value is increasingly seen as consistent with pursuing profit. Long-term decline in global interest rates is encouraging investors to think more about the role of social value in generating longer-term returns. Interviewees also argued that social value and “placemaking” are strongly-linked concepts, with the latter crucial for generating long-term, consistent returns
• “COVID really brought to people’s attention that society can be quite fragile”. The pandemic has further elevated social value in the agenda. In part, this is due to public health restrictions leading to a stronger focus on society and community, and raised questions on the re-imagining of urban centres.