The link between poverty and poor health has been thrown into stark relief by the current crisis, highlighting just how urgent the task of designing more equitable cities has become.
Social value is, at its core, about the benefits business can bring to local communities. Since the Public Services (Social Value) Act 2012 marked a shift from lowest bid to best value procurement, all local authorities must now calculate the financial worth of a contribution to a particular local group, and take this into account when procuring a service. Not only does this offer potential savings but it also sharpens the focus of commercial efforts on priority needs such as affordable housing. This is only set to increase in a post-Covid world of ever tighter public sector budgets.
The link between poverty and poor health has been thrown into stark relief by the current crisis, highlighting just how urgent the task of designing more equitable cities has become. Local government demand for property developments that combine commercial and social benefits is therefore likely to rise sharply. Alongside health and wellbeing, local governments will want to see people furthest from the labour market given secure, fair job opportunities, and businesses owning their environmental responsibilities. In the next few years, today’s public health and economic crisis paired with commitments to zero carbon emissions by 2050 will require social value deliverables to meet three key targets:
+ social inclusion
+ financial resilience
+ environmental responsibility.
But social value isn’t just one-way. It’s mutually beneficial, with private businesses seeing impressive returns from property assets that create social value. Our insights show that prioritising social value offers real estate businesses invaluable opportunities to:
1. Strengthen your partnerships
Businesses which deliver social value enjoy stronger relationships with local authorities, and the added help that brings with seeking planning permissions. Other anchor institutions such as colleges, universities and hospitals are likely to play a greater role in helping local government hit health, economic and climate resilience targets, making them increasingly important stakeholders for businesses seeking to create social value.
We know from pioneer initiatives that these partnerships can in turn unlock more value for business by providing access to additional human resources and social capital. For example, a business linked with a college can tap into a vibrant local student community. That could yield new market opportunities and reduced costs if students operate aspects of an asset such as a community cafe to gain work experience.
2. Diversify your customer base
As Future of London reports, economic-led regeneration too often happens in isolation without attention to the interconnectedness of people and communities across neighbourhoods. In a post-Covid world, developing products and services that appeal to a wider range of end users will be essential. For retail asset owners, this could involve attracting working parents who want access to both employment opportunities and affordable childcare services outside of their immediate neighbourhood.
By nurturing stronger ties and tapping into unmet local needs, businesses can provide compelling evidence of their positive impact on a community. This will be a win-win for environmental and social corporate governance (ESG) investors keen to show how they fulfil ESG criteria beyond simply donating a percentage of their profits or encouraging employees to volunteer locally.
3. Build trust in your brand
Recent research from Grosvenor highlights a concerning lack of trust in real estate businesses, with 75% believing that developers care only about making or saving money. Building your reputation within and beyond the local community has never been more important, particularly given the fact that younger customers prefer businesses that prioritise community interests.
Public confidence will be at a low ebb in the aftermath of coronavirus, making trust a key factor in drawing people back into cities. Tenants, end users and visitors will want to see landlords focus on social responsibility as well as financial return. Community, clarity of information and trust will be vital, and securing a positive shift in perception of your brand will drive business growth.
Whether at the financing, planning and development or leasing stage, businesses that promote social inclusion, financial resilience and environmental responsibility, stand to see markedly higher returns and elevated asset value. That’s why we’re convinced that social value is a win-win for business and society.
Let’s work together to create places that put people first. Please get in touch at firstname.lastname@example.org. We would love to explore new business opportunities with you.