Social Return on Investment (SROI): Measuring Tangible Impact with Doktar

Social Return on Investment (SROI) is a framework for measuring and accounting for the value created by an organization. It's particularly important in the context of social enterprises and NGOs, but increasingly, its principles are being adopted by businesses committed to sustainable and responsible practices. As an innovative agtech company, Doktar has partnered with Ernst & Young and incorporated SROI calculation into its Climate and Sustainability Initiatives programs to measure tangible impact. This approach not only showcases Doktar's commitment to societal value but also highlights the effectiveness of its Climate and Sustainability Initiatives programs. In this blog, we’ll explore how Doktar uses SROI, focusing on three key areas: understanding what SROI is, Doktar's approach to SROI, and the tangible impacts measured by Doktar.

When analyzing published social projects, it's evident that SROI ratios vary significantly. Instead of comparing projects solely based on their SROI ratios, it is recommended to evaluate them based on their own objectives such as achieving project goals, fostering stakeholder development, and making progress in project planning.

What is Social Return on Investment?

The SROI metric reflects the value created per unit of investment. “It tells the story of how change is being created by measuring social, environmental, and economic outcomes and uses monetary values to represent them.”¹It goes beyond the concept of 'value for money' and focuses on “value for many”.

To calculate SROI, the social impact of an activity is quantified in monetary terms and compared to the investment required to achieve that impact. The ratio of benefit to cost provides the SROI. For example, a ratio of 3:1 indicates that an investment of £1 delivers £3 of social value. Ratios above 1:1 indicate a successful project impact. The "1000 Farmers 1000 Prosperity" Program's SROI calculation, which resulted in a 1:3.23 ROI, is considered a successful outcome. This measurement has been calculated by Ernst & Young.

It goes beyond the concept of 'value for money' and focuses on “value for many”.

Key Components of SROI Analysis

The SROI analysis is based on 8 fundamental principles and is completed in 6 stages², involving stakeholders, understanding the changes, valuing what is important, including only the essentials, avoiding overstatement, being transparent, validating results, and being responsive. Doktar actively involves stakeholders, including farmers, employees, and community members, in its SROI process, ensuring that the impacts measured are relevant and significant to those affected by its activities.

Doktar employs specific criteria such as deadweight, displacement, and attribution in its SROI calculations.

1. Deadweight

1. 1. Understanding Deadweight: In SROI analysis, deadweight addresses whether the same or similar benefits could have been achieved without the activity in question.
   2. Impact on Value: The percentage expressed as deadweight implies that the effects attributed to the activity could have occurred naturally, without any intervention. As deadweight increases, the value generated by the outcomes decreases.
2. Displacement
   1. Assessing Displacement: This factor considers whether the activities have prevented or eliminated issues that, in turn, could lead to other outcomes.
   2. Effect on Impact: An increase in the displacement value results in a decrease in the impact created by the outcomes.
   3. Program Feedback: Participants of the "1000 Farmers 1000 Prosperity" Program reported no displacement effects during the program, leading to a 0% displacement value.
3. Attribution
   1. Calculating Attribution: This criterion examines whether other individuals or institutions have contributed to the change facilitated by the activities.
   2. Determining Impact Share: The higher the attribution percentage, the less impact is solely attributed to the project's activities.

1. Tangible Impacts Measured by Doktar