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Social value has become an increasingly important metric for regeneration projects. What is it and why is it so important?

Head of ESG, Chris Kerr explains:

Social value is a term used to express the wider impacts that a regeneration project can have – not just in terms of money, but also in relation to providing opportunities, spaces and places so that local people can meet, socialise, innovate, grow and learn in an environment that supports these things.

It is important because the built environment affects the quality of life of end-users and communities, impacting every facet of their lives including health and wellbeing, employment opportunities, life satisfaction, levels of loneliness and community, crime rates and more.

So really it is no wonder that developers and investors are increasingly looking beyond financial returns to reconsider what constitutes ‘value’ in their developments and assets. Something we have seen over the course of our work in recent years is that there is a greater focus on the social and environmental impacts of a development/asset and how it interacts with the needs of local communities, both now and in the future.

For local authorities, of course these considerations are not new. Promoting the health and wellbeing of communities has long been a priority for those involved in the planning, growth and development of urban environments. So the increasing focus from the private sector will be a welcome boost to local authorities and the communities they serve.

Accounting for the social benefits of a regeneration or development project can create new opportunities for the private sector too. Perhaps most importantly, it will help to foster excellent relationships with the public sector, often leading to place-based public-private partnerships.

These partnerships are win-win in that local authorities can achieve key social value outcomes and private sector organisations can unlock large scale investment and development projects that wouldn’t otherwise be possible without public sector involvement. The public sector brings much to the table in these partnerships, not least the contribution of land or buildings, borrowing at more advantageous rates to increase funding, de-risking certain projects and stimulating additional investment from other private sector sources.

Any regeneration project with a focus on social value will take time to complete and this comes with a number of risks that must be mitigated. From the outset, parties must be clear in defining what a successful outcome is, both in terms of the commercial return for the private sector party (crucial for it to be viable for them) and the social value outcomes the public sector organisation wants to achieve.

The latter can be difficult to do, and even more so when it comes to finding ways to measure and monitor performance against desired social value outcomes, particularly when they relate to health and wellbeing, community building, employment opportunities and other results which are achieved in the medium to long term rather than soon after the development is completed.

Methods to measure social value are continually being evolved and created, and this will help public sector organisations to incorporate metrics into future partnership agreements. If achieving these metrics can be tied to reward, there is potential for wider private sector investment, e.g. by linking the profit elements of a contract to achieving the intended social value.

Parties should also consider ways to ensure neither side’s interest or output reduces over time. A private sector party may be concerned about the impact of regular elections and shifting political priorities, while public sector parties may be concerned about being left with a part-finished project or a loss of assets invested in with no benefit to communities in the case of a business failure. Although it can be challenging to formalise these issues in a contract, the risks can be mitigated with strong and consistent leadership and long-term vision and commitment.

There needs to be willingness for both parties to share risks and returns, and upfront negotiations around what happens if results are not as expected or there are disputes to resolve. Arriving at such agreements early on will save much time and pain later on.

High quality placemaking has never just been about the built-out development but also the engagement of the community in and around a regeneration project. The economic, social and environmental wellbeing of the end product and the application of the principles of ESG by all participants in the regeneration process will only enhance the quality of the regeneration outputs and their sustainability.


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