When businesses do good, they become agents of social change

THE Covid-19 pandemic has raised awareness among businesses on the importance of helping their community and brought this to the forefront of many people's minds. Can businesses be about more than profitability? How can they prioritise giving back to the community in line with profits for shareholders? Even as we reassess how we want to "build back better", we also need to ensure that we are building more sustainably and equitably, creating places where communities can thrive.

As organisations give back, they need to increasingly quantify their impact, especially now that people are more purpose-driven than ever. A 2020 global survey by the IBM Institute for Business Value showed that sustainability is top of mind for consumers today. Some 40 per cent of respondents were found to be purpose-driven, seeking products and services aligned with their values. A similar 41 per cent look for good value for money. An Accenture-WWF study in Singapore similarly found consumers demanding more sustainable options, and understanding that they need to take greater ownership of their actions and impact on the planet.

As a precinct developer and place maker, we believe in investing in communities beyond just constructing a building. Our social imperatives include sustainable economic growth through creating learning and skilling opportunities and job creation; community inclusion by enabling resilient communities and facilitating accessibility; and, health and wellbeing.

A focused approach towards creating and measuring social value to improve the lives of our community, particularly vulnerable groups, is paramount in creating a socially just space for communities to thrive. What we need is for businesses to power inclusive growth.

Why should businesses care?

Social value is created when an activity makes a positive impact on an individual's quality of life or improves the resilience of a community. Building a company culture of compassion can serve to attract people, from partners and customers to employees, who are engaged with their community and passionate about solving real-life problems.

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Increasingly, business stakeholders from investors, financial institutions to shareholders want a way to compare how companies perform in terms of Environmental, Sustainability and Governance or ESG. While environmental metrics are commonplace, metrics for social impact are harder to come by; stakeholders do not have a common tool to measure social impact.

We have been looking into a rigorous method to measure social impact, supported by international databases. This promotes transparency and openness on how we invest in our communities.

In fact, during the recent COP26 meeting, it was announced that the International Sustainability Standards Board or ISSB will provide the foundation for consistent and global reporting on ESG standards.

A holistic approach to creating social value includes fostering economic prosperity, community inclusion and well-being within communities that the business operates in to demonstrate a genuine commitment.

It is the right thing to do and we believe that this is our greatest challenge - to ensure that we meet our communities' needs while helping to uplift the community. We measure it to understand how we have created impact.

How can we measure social value?

Companies are beginning to partner with respected global organisations that apply rigorous and objective methodologies to measure and report on social value in an easy-to-understand way.

There are two common ways that social value can be measured: social return on investment and social impact statements. These methodologies use a cost benefit analysis to calculate the net benefit in monetary terms.

Social return on investment (SROI) is a framework that takes into account economic, social and environmental value created or destroyed by an activity. It is the ratio of the total value created by the activity to the investment cost incurred.

SROI is much broader than the traditional financial return considered in the business world as it also includes incremental environmental and social value created for the key stakeholders involved. For example, for every $1 that the Lendlease Foundation invests, we expect a SROI of $5 through our external partnerships.

Also known as corporate social responsibility statements, social impact statements outline the steps a company has taken to improve the social and environmental standards of its business operations. In essence, they underline the importance of impact transparency in our era and how this will encourage more people to align their consumption habits and career choices with their values.

Ultimately, there is no one-size-fits-all approach to social accounting. As more companies double down on making meaningful, quantifiable contributions to the community, it is heartening to see innovative methodologies being pioneered.

So, where do we start?

Organisations will have to leverage their deep understanding of the markets in which they operate and build strategic partnerships to create social value. In doing so, we can unlock new potential for businesses to make a tangible contribution to the long-term progress of the community.

A good starting point is to identify and understand the groups which need our help the most and how our company can uplift these groups of people.

Businesses can become agents of social change if they go beyond purely project and asset obligations to shift the focus to social value creation. When leaders recognise that such commitment brings positive results to their business' top and bottom lines, organisations will become more vested in creating values to contribute further to their communities and society.

• The writer is managing director at Lendlease Singapore. She is also chairman of Lendlease Global Commercial Trust Management.