Sustainable decision making is an overlooked necessity in business today. By considering
financial, environmental, and societal impacts holistically during strategic decision-making, your
business can improve profits and longevity.
SROI stands for Social Return on Investment. In the simplest of terms, it is a financial
framework that accounts for the value created from decisions made by organizations. Financial
executives should think of SROI as a cost-benefit model that accounts for and measures companies
value more broadly than purely financial return on investment from capital investment decisions.
An SROI model specifically seeks to measure the value an organization can have on a broader
community and environmental landscape from internal business decisions taken to grow revenue,
increase profit, introduce new products, enter new markets, or to optimize existing processes.
The Value of SROI Modeling
By considering financial, environmental, and societal impacts holistically during strategic decision-making, your business can improve profits and longevity.
The SROI Network has defined a process and structure for companies to develop their own, customized Sustainable ROI financial models. It lays out six principles that should be adhered to in the process of defining, building and analyzing a cost-benefit framework, with most of them echoing the principles held by the Global Reporting Initiative (GRI) when it comes to its guidelines for developing corporate sustainability reports. Those include:
- Involve stakeholders
- Understand what changes
- Value the things that matter
- Only include what is material
- Do not over-claim / overstate
- Be transparent
- Verify the result (usually through an outside party)
The SROI Network has codified a process for developing Sustainable ROI models. Those are detailed in eight stages:
Stages in the developing of an SROI financial decision-making model:
- Determine Scope of SROI Analysis (e.g., project, market-entry, process)
- Identify and Communicate with Relevant SROI Stakeholders
- Map expected outcomes (includes inputs and outputs)
- Develop Financial Indicators
- Monetize Financial Indicators to Facilitate Comparable Analysis
- Develop Base Case Models and Scenario Planning
- Report and communicate Findings
TripleWin Advisory develops customized SROI financial models for its clients. These models seek to provide the financial function of a business with a more holistic tool for making key strategic business decisions that impact long-term investments, revenue, profit and ongoing costs for a company. TripleWin Advisory’s goal is for business to optimize its key decision-making so that strategic business objectives are perfectly aligned with stated sustainability goals.