What does a system lens bring to the understanding and measurement of social value within - and beyond - the built environment?

I am deeply invested in helping organisations to create social value within the built environment, and it has therefore been a huge privilege to walk alongside Kate Wolfendon at 103 Ventures over the last year and half. 

Why? Because Kate takes a systems lens to the issue of social value creation - within and beyond the built environment. Her organisation, 103 Ventures, designs and delivers high impact programmes that contribute to building a sustainable and resilient society by 2050. While working to help organisations to navigate the ambition of reducing global carbon emissions, 103 Ventures focuses on the intersection of decarbonisation and social issues - which got me thinking…  What does a system lens bring to the understanding and measurement of social value?

First, let’s take a step back. What is social value and why does it matter? 

Historically, the interconnectedness of environmental health and social wellbeing has informed approaches to social value - and social impact more broadly (Brundtland Commission, Corporate Social Responsibility, Triple Bottom Line, Shared Value). Explored from this angle, social impact has been linked to human rights and equity - i.e. the right to decent work conditions, living wage, and so forth. Many companies have come to recognise the importance of protecting the socio-economic interests of specific communities and individuals (mostly those that are underserved) to avoid reputation risk and even enhance reputations.

This has led companies to focus on their own activities, and the direct impact they have on specific communities and individuals, but also pay attention to the indirect impact they might have (and the positive social value they can create) through their supply chains. Ben & Jerry’s is a prominent example of a company that has taken a direct stand on various human rights issues and is also committed to fair trade sourcing to create social value.

Nevertheless, social impact (and social value) remain fairly intangible. It is hard for companies to identify the communities and individuals materially affected by their activities, particularly those that are indirect. At the same time, anything to do with the ‘social’ involves long time horizons where both negative and positive impact is not immediately visible to investors who want to see immediate results. It is challenging to measure change when it relates to human rights - and specifically the wellbeing of a community or individual. For these and other reasons (resource intensity, communication barriers, attribution difficulties), companies often struggle to prioritise social outcomes.   

To simplify what is otherwise regarded as complex, stakeholders within the built environment have sought to categorise potential areas of social change based on their activities. The World Green Building Council recently launched a report that framed social impact in terms of Scope 1, 2 and 3, reflecting the well known language of the Greenhouse Gas Protocol. The report helps the sector define the diversity across the built environment, but also establish consistency by creating a centralised scope of action across the entire building and construction industry. 

There have also been innovative attempts to standardise the measurement of social change from a place based perspective, such as the Institute for Global Prosperity’s Citizen Prosperity Index. This is a tool for citizens, businesses, and governments to monitor progress and measure success on policy and plans for a wellbeing economy. It takes a bottom up approach by engaging citizens in the creation of meaningful measures - and reports on factors that people in local areas (such as East London) say support prosperity and quality of life in their neighbourhoods.

However, these are two stand alone examples of reporting and measuring - and there is little connection between them, and certainly, little attention paid to the overlaps and intersections between the work being done within the built environment and other sectors.

Given these challenges, what does a system lens bring to the understanding and measurement of the ‘social’? 

From working with Kate over the last few months, I’ve realised that these three principles have the potential to really shift how we think about - and do - social impact and value creation: 1. Collective impact; 2. Impact leadership, and; 3 Impact trade-offs.

1. Collective impact 

It is still relatively unusual to have a full value chain perspective or even a cross industry perspective when it comes to understanding or measuring social outcomes. Organisations typically work in silos, each creating their own impact ambitions and frameworks with little attention paid to the lessons that can be learned when experiences are shared. Sometimes membership organisations facilitate collaboration, such as the United Kingdom’s Green Building Council on social value, but this is the exception rather than the rule. One of the key challenges for practitioners, then, is that most social impact and value creation activity is done in a vacuum.

A system lens brings together global stakeholders in context of a specific barrier - or problem - and provides actors with the opportunity to share common challenges and experiences. Indeed, the focus is on the relationships between actors in a system, and it therefore allows for a holistic understanding of a shared problem and how it might be addressed from multiple perspectives. From a system lens, all elements are connected and changes in one part affect others. 

An example of this was the work carried out by the World Business Council for Sustainable Development (WBCSD) as part of its Market Transformation Action Agenda coordinated by 103 Ventures. Over 250 organisations were brought together to identify barriers to decarbonising the built environment. Together, the organisations co-designed interventions -  solutions that address both the symptoms and the root causes of problems.

> See Built Environment Market Transformation Action Agenda for further details 

2. Impact leadership

One of the ways in which organisations deal with the lack of clarity - and their own intransigence - when it comes to social impact and value creation is to focus on community engagement. By engaging with the communities and individuals affected, organisations can gain a deeper sense of what and how to measure any significant or positive changes that solve or at least address social injustice. However, this places the emphasis on communities and individuals themselves to come up with the answers, many of whom are often tired,  and overburdened, by consultation. Consultation fatigue leads to limited feedback and lack of motivation to continue – particularly if communities and individuals do not feel part of the process or hear how their stakeholder participation influenced the outcome. 

A system lens turns this on its head, shifting the attention away from consultation to how organisations themselves can be better leaders. Sound like a top down approach? Well, then, think about this: if organisations do not know how to deliver on their promises and effectively lead in the areas in which transformation needs to happen, then consultation is fruitless. System leadership requires organisations to really think about what it takes to deliver, understand their unique capabilities and address their core needs to drive positive change for communities and individuals. Many organisations speak about their readiness, but often have not done the work of recognising where they can make a real difference.

An example of this is the work being carried out by The Crown Estate (TCE) as part of its commitment to system transformation. 103 Ventures has been working with TCE to assess its readiness to drive change - at the level of the individual (personal and professional), company (vision and purpose) and system (USPs). As a result of this work, and as part of laying the foundations for systems leadership, TCE has evaluated what it needs to deliver for the organisation and also for the United Kingdom to meet net zero, nature and social impact targets. It is now developing three pilot projects to trial new approaches to contributing to systems transformation.

> Read Kate’s blog on System Leadership and the need for it here 

3. Impact trade-offs

The interconnection between net zero, nature and social impact are critical. However, when it comes to the measurement of impact and creation of value, environmental and social outcomes are often disconnected from one another and are frequently treated as separate entities. In practice, compromises must be made because the mitigation of environmental impacts can often lead to increased social risks. This paradox occurs when actions intended to protect the environment inadvertently harm communities, disrupt economies, or exacerbate social inequalities. At the same time, of course, activities in the pursuit of social value (e.g. affordable housing) can lead to difficult decisions that can undermine climate action. Understanding the dynamic between net zero, nature, social and other areas of impact requires taking into account all the elements in the system and how they interact. 

When explored in the context of relationships, we realise that there are trade-offs. A system lens makes these trade offs visible, and because it focuses on bringing stakeholders together to collectively identify barriers and solutions, it also maps potential routes to impact across multiple areas. How can we achieve desired environmental outcomes as well as secure the future and livelihoods of workers and their communities? There are also opportunities where environmental and social goals align, creating benefits across both domains.

An example of this is the work 103 is carrying out on behalf of Laudes and the Just Transition Finance Lab (JTFL) at London School of Economics Grantham Research Institute. Laudes is a major systems change funder with strategic partners across labour rights, just transition finance and the wider sustainable finance movements. JTFL has been established as a centre for experimentation and excellence in the financial solutions needed for a just transition. As part of this work, JTFL is supporting finance institutions to tackle climate challenges from a people-centred perspective. It recognises that this might involve making tough choices, ensuring those impacted have a seat at the table. 103 Ventures is supporting Laudes and JTFL to bring together diverse stakeholders within their networks, each with their own interests, to harness collective aspiration through creating a shared vision for just transition finance. 

> Learn more about the work of JTFL here

So what are the learnings for the social?

First, what would it look like to bring together stakeholders from the full value chain to explore common barriers and co-design solutions? Already, we know that understanding the most material issues and measuring social change poses challenges for most organisations. A system lens would enable global stakeholders across the value chain to systematically come together to share their experiences -  and codesign solutions that address the issue of both materiality and measurement (among other barriers). 

Second, what would it look like to enable organisations to become better leaders? While community engagement is fruitful in light of the fact that there is lack of clarity around what social impact - and value creation - mean in practice, it also potentially leads to further industry fragmentation (each organisation has its own unique approach). Turning this on its head, a system lens would help organisations ready themselves as leaders - and identify the core needs required to do so.

Third, what would it look like to examine the trade-offs between different kinds of impact? We know that there is no silver bullet when it comes to driving positive change across environmental, social and other areas of impact such as nature. A system lens provides a view of all the elements in the system and how they interact - enabling a holistic approach to impact and a responsible and respectful approach to balancing the needs and requirements of all actors.

If the above struck a chord, we’d love to hear from you. We’d be delighted to walk through these three principles and case studies in more detail. Please reach out to either myself ([email protected]) or Kate ([email protected])