Implementing change

  • The public sector has a role to play in taking a lead for setting out the social and environmental needs of their area, and expectations of the receiving community in terms of the societal value that should be created by development.
  • It is more difficult to incorporate societal value requirements into development criteria in places where there is low investor interest. Regardless of market conditions, the needs of the population should be reflected in the requirements of the commissioners or regulators.
  • The public and private sectors could start to influence a change in culture by publishing case studies which record the benefits of investing in societal value.
  • Investment in societal value presents some serious challenges for investors and developers. This has been described as the split-incentives dilemma where some of the benefits of investment are returned to the investor, but other benefits go elsewhere.
  • The creation of societal value is a main driver for the public sector and the private sector is also beginning to embrace this. Some are making this a key part of their branding and marketing offer.
  • Institutional investors (especially American funds and pension funds) are now increasingly interested in responsible investment and are therefore looking more closely at social and environmental impact.
  • Many occupiers have set high benchmarks for the environmental performance of the places they occupy. There are now signs that this environmental focus is widening to include social value.
  • There is real potential for regulation to influence the incorporation of societal value during the planning process. This could be by providing guidance to help all parties focus on the creation of place and societal value. This would assist prospective developers to focus their proposals to benefit the widest number of people in the area.
  • There is an opportunity for a thorough review and updating of the guidelines and requirements for public consultation and placemaking. This would align stakeholder needs and aspirations with development proposals. This process should occur much earlier in the process.
  • Public authorities in negotiation with developers (including their legal advisors) would benefit from better tools to build in societal value into arguments to justify less than market value. Best consideration could be used to lever more pro-social, and environmental investment into schemes if the was the case.
  • There is evidence that investors are becoming increasingly interested in understanding and benchmarking the societal impact of their investments. Many already integrate societal (mainly environmental) factors into their investment models and policies. There is growing desire to improve the way social value is understood, measured and benchmarked.
  • There is a need to overcome the tension between preserving financial viability for investors and adding more societal value into development projects. One solution could be to create new funding vehicles to plug the gap between standard and enhanced societal value projects.

A list of references is available in the full report at trowers.com/realvaluefullreport.

"Ideally, it begins with investor partners who are prepared to take a long-term 'patient' view. Taking a development-wide long-term view can give weight to the ‘softer’ social metrics which ultimately make projects and places more resilient thereby reducing investor risk."

Andrew Turner, Argent