GUEST COLUMN:
Owen Derbyshire
CEO
Keep Wales Tidy
One of the biggest challenges in implementing Environmental, Social, and Governance (ESG) initiatives is how to accurately measure their impact. For financial directors and decision-makers used to tracking every penny on a P&L, it’s difficult to capture the full scope of ESG activities in purely financial terms. Yet, as we’ve come to realise, the value of these initiatives often extends far beyond what can be quantified in a spreadsheet.
Consider a community garden project in a deprived urban area. Traditional reporting might reduce this to a line item: garden installed—tick the box. But this approach overlooks the wider benefits the garden can create. Yes, the physical presence of the garden is important, but what about the health improvements for those who use it? The mental wellbeing benefits of spending time in a green space? The biodiversity gains? The skills developed through community engagement and training? These outcomes don’t show up on a balance sheet, yet they are integral to the success of both the project and the community it serves.
This is where traditional methods of impact measurement fall short. To fully understand the value of social initiatives, we need to look beyond headline statistics. ESG projects often bring significant improvements in quality of life, public health, environmental sustainability, and community resilience. But these impacts often go unnoticed because they don’t easily fit into conventional reporting frameworks.
A more comprehensive way to measure these broader impacts is through Social Return on Investment (SROI) models. SROI attempts to quantify not just the direct financial outcomes of a project but also the wider social, environmental, and economic benefits. By accounting for more intangible outcomes like community wellbeing, mental health improvements, and skill-building opportunities, SROI models provide a fuller picture of the true impact of a project. It helps organisations understand the ripple effects their initiatives have on people’s lives and communities.
Despite the clear benefit of this approach, many organisations are slow to adopt these models, often defaulting to financial data alone to judge success. This limits our understanding of what these projects achieve and reinforces a narrow view that equates success solely with financial performance, rather than capturing the long-term benefits of social and environmental projects.
Shifting to a more holistic view of impact requires a change in mindset. We need to move away from focusing solely on the immediate financial considerations and start recognising the broader value these initiatives generate over time. This includes everything from improved public health and environmental sustainability to stronger community cohesion and enhanced skills.
Measuring social value well may be hard, but it’s important. By adopting models like SROI, businesses and organisations can gain deeper insights into the long-term effects of their ESG efforts. This allows for more informed decisions about where to invest resources and time, ultimately fostering projects that deliver lasting value to businesses, communities, and the planet alike.
In the end, a more holistic approach to measuring social value helps us build a future where businesses and communities can thrive together – ensuring a more sustainable, equitable Wales for future generations.
