Social Impact Investing

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Reception
It is often difficult or not possible to compare Social Earnings Ratio with other forms of
financial measurement. Comparing S/E to other social impact tools is something that is
more common. Social Return on Investment (SROI) is one example of this and is quite
a popular search on most search engines. When its results are compared to that of
S/E's, its clear that SROI has a greater amount of coverage.
It could be argued that the history of SROI and the fact it was released in 2002, nine
years prior to S/E, could indicate why it has a greater number of search engine results.
Equally, HACT claims to "have created the largest bank of methodologically consistent
and robust social values ever produced." By this they are referring to a database of
financial proxy data which can be used in conjunction to SROI, although in August 2015
they have criticised SROI comprehensively in the "Seven Principle Problems of SROI."
Continuing with the comparison, in 2014 Lord Loomba presented a report to the House
of Lords, "Social Impact Analysis", which included metrics from Business in the
Community and Benefit Corporation, as well as SROI and S/E. The steep rise in S/E
take-up in 2013 represents the automation of the metric and not necessarily any
indication of quality. A 'big-data' approach has been provided by CSR-Hub who have
harvested 417 metrics; in May 2014 they announced an MoU with CCEG to explore
S/E.
S/E has undergone considerable analysis and critique in recent years. Most recent
comparing IIRC (International Integrated Reporting Council) to S/E, concluding
"Together, the Framework and the S/E Ratio provide a powerful set of metrics and
analysis for both founders and funders to evaluate value as well as strategic risk."
Earlier in 2015, The Guardian wrote: "Since 2013, there has certainly been an increase
in the number of online measurement tools. But the challenge of calculating social
impact goes back to the early 1990s. One measure, called LM3, allows organisations to
calculate the local economic impact, while another, called SROI, calculates social return
on investment. But both are very complex and are based on lots of assumptions that the
people who do the evaluation will have to identify, agree and sign off." Perhaps we need
a simpler tool such as the social earnings ratio, which doesn’t require lots of
assumptions and is based on a one-size-fits-all approach."
The focus on the broad context of applications of S/E have drawn sometimes heated
debate amongst the international academic and social innovation community in Italy,
Romania, and Russia. Mohammad Yunus, a Nobel Prize laureate, has also spoken
publicly about the framework. These discussions surrounding the concept of a 'universal
metric' draw both praise and scepticism.
Criticism of the timeframes to calculate the data has been made, with many wondering
how accurate statistics be drawn in such a short period of time. other debates about the
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