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Social Earnings Ratio

An international high level social impact metric, benchmarking across private, public, third and community sectors
by

Olinga Taeed

on 29 December 2013

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Transcript of Social Earnings Ratio

Social Earnings Ratio
2012
Finding your way through the Social Impact fog
2011
Trends in Social Innovation
1990
2000
2020
2010
1900
Corporate Social Responsibility
Philanthropy
Sustainability
Social Impact
Citizenship
2014
2013
Pilots
Live Reporting
S/E .v. Share Price
Manually conducted 100 organisations using UG and PG students
S/E Ranking
Creation of Social Value
Framework
Free
2000 in USA
5000 worldwide
Global standards
Cloud Hub engine
GRI-4 online template
Creative Commons 4.0
In-depth In-org dashboard
Network of international universities
Support
Local University staff and student resource

Commercial partners eg. software platform

Central support
International Standards
GRI-4: Global Reporting Initiative, standardising CSR categorization

IIRC: International Integrated Reporting Framework, communicating value creation

B Corp: Benefit Corporations, legislative framework for businesses creating material positive impact

XBRL: eXtensible Business Reporting Language,
standardising financial
reporting
Interpretation
Targets
All organisations across multi-sectors are targeted including accepted financial indices that need to begin to report social indices
Measuring Social Impact
Function of

CASH benefits
PEOPLE sentiment
ENVIRONMENT improvement
Publically Available Information
Financial Data
Audited Financial Accounts and for listed companies share price which represents financial sentiment tracking perceived financial value

CSR Data
Organisational Report of Intangible benefits:

CSR report
Sustainability report
Social Impact report
Citizenship report
Sentiment Analysis
Measuring positive sentiment through 100+ social media feeds, fluctuating up and down like financial sentiment but tracking perceived social value
Professor Olinga Ta'eed
olinga.taeed@cceg.org.uk
+44 (0) 7798 602987
Curator
Total Value = Financial Value + Social Value
Organisational Value
Financial Value = f (shareholding # x share price $, NAV)
Intangible (hidden) Value
Cash
Cash invested to achieve Social Impact - the "CSR Spend"
Money leveraged to benefit chosen causes thro' intervention
Tax avoidance
Not statutory spend or business spend
Environment
People
Staff sentiment
Staff-board pay disparity
Community sentiment
Customer sentiment
Supplier sentiment
Not statutory obligation or business obligations
Financial Value = Financial Capital
x Financial Sentiment
Social Value = Social Capital
x Social Sentiment
P/E Ratio
S/E Ratio
Price Earnings Ratio
Social Earnings Ratio
Tangible (Visible) Value
Acquires Wealth
Gives some of it away
Transactional Relationship
Demonstrating
Conscience
Cash
People
Environment
Causes
Benefits Received
Corporate
Receives 'good' Brand
Charity
Receives Cash
CSR Output $
Staff
Board
Shareholders
Customers
Suppliers
Community
Statutory
Environment
Total Value of Organisation
Social Earnings Ratio
S / E = Social Value
____________

CSR Spend
Price Earnings Ratio
P / E = Financial Value
________________

Profit
Profits 'lost' to CSR spend can now be captured in created social value
The P/E Ratio, Price Earnings Ration, is the single number metric globally adopted to represent financial value on a daily basis
Financial Value
Total Value
Financial Sentiment
Social Sentiment
Carbon Reduction
Carbon Offset
Landfill reduction
Water reduction
Financial Metric
Developed metric
Tested on sample
Manual scaling trials
"2. The need to create common frameworks to understand the potential of the market and move towards standardisation in impact measurement”

#2 out of 3 targeted outcomes, G8 Social Investment Forum, July 2013
The Commission:
To Develop a Universal Social Impact Metric to change individual, institutional and organisational behaviour
One Number
EASY TO ARTICULATE

you cannot articulate more than a one number metric to the public however complex the task
Objective
REPEATABLE

no subjective measures, no financial proxies, three people on different sides of the world would come out with the same answer
Benchmark
CROSS SECTOR

able to benchmark within and across all sectors - private, public, third and community - large to SME to micro
Public Data
INDEPENDENT

use publically available information not necessarily requiring any organisational intervention
EFFICIENT
FAST and CHEAP

With 165+ million corporations in the world, and 1+ billion organisations, the technique must be fast and cheap, capable of automation
Social Earnings Ratio
MODEL T FORD OF SOCIAL IMPACT

the dawn of a new age in Big Data social impact measurement cutting through white noise demonstrating the business case for CSR
Implementing quality control systems
Manual pilot: 100 organisations
Automated pilot: 20 organisations
SOCIAL IMPACT AS % OF CAPITALIZATION
(increase in net worth due to CSR)
SOCIAL EARNINGS RATIO
(spending less but having more impact)
BENCHMARK
(compare against competitors, industries, sectors)
Like S/E, Social Impact % of Capitalization is a ratio, allowing benchmarking small to large
Report Social Value every 10 seconds with cloud computing engine
Reporting financial value and social value together as a stock market ticker
Scalability
3 KPI's every CEO needs to track
S/E Engine
Calculates Social Impact
Quality Control
Integrity Check
Traceability
Big Data
Data Mine of all collected sets
Benchmarking
Interrogation engine
Security
Reporting
Publication of league tables
Live ticker generation
Online resource
Individual reports
Open Source
Creative Commons License 4.0
International R&D
Forum for dialogue
Adjudication
Financial Data (iXBRL)
Sentiment Analysis
CSR Data (GRI-4)
Private
Public
Third
Community
Dashboard for in-organisation management with API to existing metrics and niche sector specialism using standard BPI, OR & Systems Analysis techniques
Builders
Insurance
Banks
Utilities
Pensions
Food
...
Arts
Community
NGO
Charities
Voluntary
...
Individual
Families
Towns
Regional
Country
International
....
Local Authorities
Health
Fire
Police
Justice
MoD
...

Other metrics
Other benchmarks
Kite marks
QA Standards
Awards
...


Commercial Partner
Local University Partner
Target Channels
The Social Earnings Ratio is a powerful tool to change behaviour. Interpretation requires embedding into our routines through implementation of dashboards to improve daily practice
the difference between Total Value and Financial Value ... is Social Value
financial sentiment
(share price)
social sentiment
Financial value is an artifact of the Board and the shareholders. Traditionally all other stakeholders are a slave to this goal
<IR>
Compliant with
B
$
Tax Avoidance
Movement in Government Corporate Tax Payments
Board Remunerations
Board Executive and NED bonuses, shares
Pay Disparity
Staff salaries and benefits
Shareholder "Pay"
Fluctuations in shareholder dividends
Detailed Computations
for example
Full transcript