Alternative approaches to societal valuation
- Measuring social and environmental change allows the added value of a scheme to be considered alongside conventionally assessed financial returns. This is a comparable method to employ as it is expressed in terms of monetary value and makes it easier for non-technical stakeholders to understand the implications of the options and trade-offs that might be considered in the design stage.
- Understanding societal value is important, not just to ensure equity across society, but also for the financial sustainability of the economies in which they are built.
- There is a growing desire in some parts of the real estate sector to better understand and report on the societal impact of development. There is also growing recognition of the need to provide appropriate legal incentives to encourage broader appreciation of the impacts of organisational and policy decisions on people.
- Tools are being developed to measure, monetise and report societal value in the built environment. Some reports on the societal value of development have already been released, but the discipline is young and is in development. Many in the real estate industry have yet to explore societal value approaches, and this would explain the modest adoption rate to date.
- Many practitioners recognise that elements of some development do generate societal value but accept that there are very few schemes that systematically collect the information required from stakeholders that could confirm this belief.
- Changes in working practices and culture, legislation, and investment mechanisms would accelerate the adoption of societal value into common practice in the built environment.
- While existing practice is sufficient to calculate societal value, there is a need to regularise the approach, possibly in the form of a parallel guidance document to be used in addition to existing market-based guidance.
- Specific changes to planning law (such as Section 106 agreements and the justification of the disposal of land and assets under best consideration) would allow societal value to become part of the definition of viability, thus ensuring that a wider number of people benefit from investment in property.
- An extension of the Public Services (Social Value) Act to include the development and planning process could lead to a requirement for applicants to submit a social value statement on how their development will add to the social and environmental value of the area.
- A common response to proposals to add pro-social and pro-environmental elements to development projects is that the increase in costs is uncompetitive and is not justified in terms of the return on investment. Monetising the benefits of these features and integrating them into the wider local economy changes the nature of this conversation.
- An understanding of potential added societal value could be the precursor to a discussion about how to fund the ‘gap’ between conventional and sustainably enhanced development.
We have selected the following projects as great examples of those which incorporate societal value. The full details can be found in the full report at trowers.com/realvaluefullreport.
City Islands – London
Western Harbour – Malmo, Sweden
Develop Croydon – Croydon
Peddimore Industrial Development – Birmingham
Peckham Levels – London
Blue House Yard – Wood Green, London
Wood Wharf – Isle of Dogs, London
Chilmington Green – Ashford, Kent
Elephant Park – London
Deptford Market Yard – London
New Street Square – London
Bilston Urban Village – Wolverhampton
Old Oak, Park Royal – London
UK Central Solihull – Urban Growth Company – Solihull