Social Return on Investment (SROI): a review of the technique

Abstract

There is an increasing need and request from society to account for the social, economic, and environmental value that results from organizational activities. This trend has led organizations to initiatives like, e.g., Integrated Reporting (IR) and Corporate Social Responsibility (CSR). Nevertheless, at the level of investment projects, the focus of traditional investment appraisal techniques (like, e.g., Net Present Value) is still on future quantifiable operational cash flow after tax. Social or environmental effects of the investment are often not included in the calculation because these effects are typically hard to quantify. Social Return on Investment (SROI) is an investment appraisal technique that is explicitly designed to include these social and environmental effects into the project assessment. In this contribution, the SROI technique is introduced and reviewed. Results from literature, and interviews with four experts indicate that SROI has strong points. However, there is still room for improvement in areas like capacity (and experience) building, verification of the projects, and in fine-tuning of the technique itself.