by Cleo Folkes
John Badman of Gensler said something that really struck me at the recent Association for Rental Living workshop on social value benchmarking and methodology that I ran in March.
We were discussing BTR, but when John said that delivering social value is like “looking for a canvas to paint”, he could have been speaking for all of real estate.
It’s true: there’s so much scope, so much freedom – and so little definitive guidance to direct business’s choices. Knowing where to start is tough!
As I wrote in my last blog, the social side of ESG lags far behind the environmental focus in our sector, but there’s a growing and increasingly urgent demand for standards and tools that can bridge that gap.
At the ARL workshop, as well as at a recent Society of Property Researchers/Investment Property Forum webinar that I co-organised, and an invitation-only Thrive roundtable for real estate investors, I heard five clear priorities coming from the sector.
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1. The Need for Standardisation
At all three events, the urgent need for greater consistency and standardisation in how social value and social impact is measured and reported came through. The lack of common standards is acting as a brake on many’s willingness to take the plunge into social impact delivery.
Of course, this is a wider debate that transcends the sector – but real estate has particular requirements.
For example, at a very technical level, where should the line be drawn between Section 106 obligations and social value? Without a single rule, different companies report figures that can’t be directly compared.
Then there are questions posed by the long lifecycle of buildings and developments, the legacy of communities they generate, and – as John Badman put it
“how do you metricise where people want to live?” and “what will the metric be to measure what a good asset is in 10 years time?”
The questions go beyond just the here and now. With many businesses and investors working at an international level, the need for standards that work for different countries is growing.
2. The Need for Flexibility
On the other hand, real estate is unavoidably connected to specific places, communities, circumstances, and needs. I am seeing just as much caution about “one-size-fits-all” approaches as enthusiasm for standardisation.
These demands need to be balanced, so that local needs, asset type, and degree of landlord control are taken into account. Too much rigidity and some developers may game the system by focusing on easy impacts rather than those an area actually needs.
Of course, there are some interventions that will always have a positive effect (eg creating more quality green spaces, improving outdoor lighting, responsible supply chain practices). But it is impossible to standardise “place”.
3. Accommodates Varying Levels of Maturity
Many in real estate are unable to afford costly local needs analyses, and a system that over-prioritised sensitivity to place would tend to disadvantage smaller companies.
Most people I speak to want to avoid this. The system adopted must reflect an actor’s ability to make an impact, its maturity, and experience in delivering social impacts. For example, improving local healthcare access is beyond most organisations’ powers!
4. Storytelling and Community Engagement
“Holistic measurement” came up a lot as a formula for optimising standardisation against flexibility – but what does that mean?
Look at it this way:
● It is easy to measure inputs – that’s why organisations often default to it
● Establishing causal links between inputs and outcomes is much harder (even with significant budget to hand) because there are so many potentially intervening factors affecting an asset over time
● Intentionality in impact generation is important: good things can happen by accident!
● Over time, the needs of users, the state of an asset, and its situation in a living community will change
How can you measure the impact of sponsoring – say – a local sports team?
Surveying users and other qualitative research methods play an important part in adding contextualising data.
Granted, real estate has not always been good at community engagement. We must go beyond box-ticking to really understand what people need and value.
Co-creation has been shown, time and again, to lead to better outcomes, better stories, and better legacy.
Measuring the quality of the outcomes – with robust assurance – is essential to holistic measurement.
5. Reporting Requirements
Many real estate organisations have diverse reporting requirements – planning obligations to local authorities, ESG and financial disclosures, joint venture partners, social value KPIs, etc.
Stakeholder-specific reporting and assurance tools must be prioritised.
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Thanks to everyone who took part in these debates, particularly:
● Vivienne King
● John Badman
● Matt Soffair
● Christina Rehnberg
● Matt Sal
Social value in real estate really is a blank canvas right now. But everyone at Thrive is proud to be helping fill in those blanks.
Cleo Folkes
Lead Consultant Real Assets More articles by Cleo >
