Social Return on Investment (SROI): measuring the social impact of investments
In a context where companies and organizations are seeking to reconcile economic performance with positive impact, Social Return on Investment (SROI) is emerging as a key tool. This method makes it possible to measure and value the social, environmental and economic benefits of a project or activity, by translating them into financial terms. More than a simple indicator, SROI offers a global vision of the value created, beyond mere financial profits.
What is SROI?
SROI, literally “Social Return on Investment”, is an approach that assesses how much social or environmental impact is generated for every euro invested in an initiative. This concept is based on an analysis of the tangible and intangible benefits brought to different stakeholders, such as employees, local communities, partners or the environment. For example, a company that trains people in difficulty in technical trades could calculate its SROI by measuring results such as reduced unemployment, increased income for participants or reduced costs for public services.
How does Social Return on Investment work?
The SROI is based on a structured methodology, including several stages:
- Stakeholder identification: Identify all the people or entities impacted by the project.
- Definition of results: Identify the changes generated by the activity (employment, well-being, reduction in inequalities, etc.).
- Valuing impacts: Translate these benefits into monetary values, using figures or specific research.
- Calculating the SROI ratio: Compare the total value of the benefits to the initial investment. A ratio of 3:1 means that every euro invested generates 3 euros of positive impact.
Why use SROI?
SROI is particularly relevant for companies committed to corporate social responsibility (CSR), NGOs and investors wishing to assess the impact of their funds on social or environmental projects.
- Valuing impact: SROI enables us to demonstrate the added value of responsible initiatives.
- Help decision-making: By identifying the most effective actions, it guides investments towards high-impact projects.
- Greater transparency: By quantifying results, organizations can better communicate their commitments to stakeholders.
An evolving tool
While SROI is a powerful concept, it remains complex to implement. Collecting reliable data, putting a monetary value on intangible impacts and taking externalities into account require specific expertise. However, with the rise of impact investing and societal expectations, SROI is asserting itself as an essential lever for transforming commitments into measurable results. By placing social value at the heart of strategy, it offers a new and ambitious perspective for the future of responsible companies.
