Social value is when businesses positively impact the economy, society, and the environment by virtue of how they operate and the goods and services they offer. There are many ways to create this social value, ranging from social procurement and workplace diversity services to investing in charities your employees want to support.
Now that we have a broad overview, let’s zoom in on what social value is and why it matters. Below are five important points all business leaders should know about social value:
1. Social Value Creates a Competitive Edge
In a highly competitive marketplace, social value can help businesses stand out from the crowd. As consumers become more socially and environmentally conscious, they tend to favor companies that hold similar values. When consumers vote with their dollars, socially aware businesses grow and investors take notice.
Furthermore, as social and environmental issues become more severe, regulators reign in on the worst excesses. Any business that falls on the wrong side of the tracks might see its brand reputation take a dive as customer loyalty withers. With that will go market share and profitability.
2. Social Value Promotes Transparency
Businesses that set unambiguous goals and metrics for tracking social value make their intentions clear while providing a way to track how well they do. This is key. Outlining a set of clear metrics fosters a sense of transparency.
Customers, shareholders, and other relevant stakeholders will appreciate the ease with which they can track and report the company’s impact over time. Whether they meet the targets or not, tracking progress gives valuable feedback. Furthermore, if they reach the goals, then companies can justifiably celebrate their achievements.
3. Social Value Attracts Talent
In a world where climate change and social issues dominate the headlines and pose serious problems, employees want to find ways to help. Many aren’t content working for an organization that only focuses on the single bottom line of profit. Instead, they want businesses that focus on the triple-bottom line: people, profit, and the planet.
Social value is a powerful way for businesses to show their commitment to something larger. This attracts talent, and that talent boosts productivity and innovation.
4. Social Value Fosters Positive Social Change
Positive social change results from businesses that embrace social value. It’s easy to see why. When a business sources its material from a diverse group of suppliers—especially marginalized groups that face barriers to entry—that creates economic opportunities and social inclusion for those communities.
In addition, workplace programs such as training, mentoring, and apprenticeships, help improve the skills and employability of current and future workers.
5. Social Value Reduces Risks
Lastly, it’s important to consider the risks and costs associated with social value. In both cases, it creates a buffer that benefits businesses.
Social value reduces risks by encouraging businesses to diversify their supply chains. If you depend solely on one supplier, you’re at their beck and call. If their supply chain gets disrupted or they choose to raise their prices considerably, there’s not much you can do. However, if you cultivate a network of multiple suppliers, then you have more options. When uncertainty arises, you can rest easy knowing you have quite a few backup plans.
In addition, integrating social value into your business keeps you in compliance with relevant laws that affect your industry. Furthermore, it mitigates reputational damage (which is costly) and lowers your environmental footprint.
Whether in your hiring practices or daily operations, incorporating social value into your business model is a great way to create a positive impact. It lifts up people and the planet while contributing to your profitability.