Can the Social Return on Investment bridge the link between CSR and financial performance?
The study "Social Return on Investment (SROI) and Performance Measurement" draws on survey and interview data to analyse how firms in the health and social care sector use and understand SROI.
The authors Ross Millar and Kelly Hall highlight that:
- SROI is an internationally recognised measurement tool for social companies to measure social impact, but it is underused and undervalued due to practical and ideological barriers.
- In 2012, 59% of UK companies in the health and social care sector measured their social and/or environmental impact, but only 30% used the SROI as a measurement tool.
- SROI is perceived as irrelevant and a burden for many companies, which prefer developing internal tools for their day-to-day integration into processes and targets.
- One of the drawbacks of SROI is the subjectivity of the assessment of firms' social outputs, showing the limitation of applying private sector reasoning to public and non-profit organisations.
- This approach could be improved by adding social accounting or value chain considerations and combining multiple numerators to assess social returns to different stakeholders.
In spite of its popularity, there is limited empirical evidence on the use of SROI by social enterprises, and the literature suggests practical and implementation issues with its use.
The challenges faced by social enterprises in demonstrating their social, economic, and environmental value are often not specific to the SROI and mostly come from the subjectivity of social outcomes' measurement.