Christine L. Rasmussen

July 11, 2023

Social value in urban transformation: Key drivers and ways forward

Social value in sustainable urban transformation is gaining in importance. In this piece, a group of Ramboll experts explains what social value is, what the key drivers are and points to ways forward using real-life examples from across Europe.

Employee images by the lakes in Copenhagen

As the climate crisis accelerates, it is becoming increasingly clear that we need to speed up the sustainable transformation of our cities and urban living spaces. It is also evident that no urban transformation should occur without it being a sustainable one.

Sustainability is traditionally rooted in environmental and technical considerations or change. But as the sustainable transition accelerates, there is increasing acknowledgement that the transition affects our society very deeply, through social cohesion, equity, human health, and life quality, all of which are already under pressure from the recent Covid-19 pandemic and the war in Ukraine.

As such, the environmental and social dimensions of sustainability are closely intertwined. Across Europe, there is a growing focus on the just transition among leading stakeholders, with the sustainability policies and regulations of the European Commission regularly referring to the just transition1. In practitioner and academic circles, the well-known doughnut economics concept introduced by Kate Raworth challenges a traditional view of economics by arguing that social and ecologic factors are part of the same equation and embedded in sustainability thinking.

This article aims to address the juxtaposition between the social and environmental considerations in the sustainable transformation of our cities and urban neighbourhoods. We consider:

  • what it entails to place social value at the heart of sustainable urban transformation
  • three key drivers for placing social value at the heart of urban transformation; and
  • key actions needed going forwards

Placing social value at the heart – what does it entail?

Placing social value at the heart of urban transformation, often referred to as the just transition, highlights the need to share the resulting benefits with as many people as possible. It helps policy and decision makers in urban planning to identify and mitigate risks for the most vulnerable. The just transition should be deeply rooted in citizen and stakeholder engagement, immobilising communities around sustainable urban living and sustainable lifestyles.

How we understand social value

There is no joint understanding of what social value in urban development entails. In this article, we work with social value as encompassing a broad range of values for individual (life quality) and community (social cohesion), created through the physical framework of the city. We ask whether the provision, quality, and accessibility of physical and social infrastructure in the area is adequate or better, e.g., housing, energy, green spaces, roads, and pathways etc. We work from the basis of an inclusive approach, assuming that values should be distributed equally across gender, age, ethnicity, socio-economic status etc.

For the purpose of this article, we distinguish between three key dimensions of just transition:

  • Equity: who benefits and who loses?
  • Governance: Who makes the decisions, and how do we ensure all citizens are heard?
  • Agency: how do we mobilise and ensure citizens’ buy in, while avoiding negative reactions?

Only when we address all three dimensions in a holistic manner, with a clear understanding of the trade-offs and synergies this implies, will we manage to drive urban transformation with social value at its’ heart.

Each dimension involves challenges when delivering social value for all:

The second dimension, governance, concerns those who make the decisions and implement them. To ensure that there is buy-in from citizens to the decisions made during the transition, all relevant stakeholders and citizens need to be meaningfully consulted and encouraged to participate in the development of visions and solutions. We also need to engage citizens as a prerequisite for mobilising them around the green transition, laying the groundwork for agency. Here, the traditional means of citizen engagement evidently fall short, as we see urban decision makers struggling to introduce sustainability laws and taxes. So, one of the most pressing challenges is how to develop new methods that effectively reach out to all?

The last dimension, agency, is focused on ensuring buy-in from all. Here, we need to look at whether all members of society are mobilised around the transition and perceive it to be fair. On one hand, we need to make sustainable lifestyles the preferred choice of living, moving culturally from a society of consumption to one of sustainability. We must design and facilitate more compact living, where the easy choice is to bike and walk rather than use private cars.

#1 Policy demands

Policy demands are the main driver pushing social value considerations to the fore. Below we describe two examples, one from the UK and one from Norway:

In the UK, the Social Value Act2, also known as the Public Services (Social Value) Act 2012, is a UK law that requires public sector organisations to consider social, economic, and environmental benefits in their procurement processes. The Act was passed in response to growing concerns about the way public money was being spent, and the impact of public sector contracts on local communities. Requiring public sector organisations to consider how they can create social value when procuring goods and services rather than simply focusing on the lowest cost, the Act helps ensure that the wider social and environmental benefits associated with a contract are also considered, such as job creation, apprenticeships, and environmental sustainability. The Act also encourages public sector organisations to engage with local communities and businesses throughout the procurement process.

The 2015 amendment of the Act extended its application to cover all public service contracts and to assess how to promote the involvement of small and medium-sized enterprises (SMEs) and voluntary, community, and social enterprise (VCSE) organisations in the procurement process.

Overall, the Social Value Act has been widely praised for its potential to create positive social and environmental outcomes, including ethical and sustainable business practices. There are concerns, however, about the practical implementation of the Act, and the need for clearer guidance and support for public sector organisations to ensure commitments made at the procurement stage are carried forward to implementation.

In Norway, within city policies in general and in urban planning specifically, we have observed an enhanced focus from public authorities on social value and sustainability. In the national expectations regarding regional and municipal planning from the Ministry of Local Government, we have seen more emphasis on social value as an important theme to take into consideration within urban planning3. As part of this trend, larger cities in Norway are increasingly developing guidelines and standards to ensure that real estate developers take socially inclusive urban development into consideration.

#2 Regulative sustainability demands

The introduction of the Corporate Sustainability Regulation Directive3 (CSRD) is a game changer in this regard. The Directive introduces more detailed sustainability reporting requirements and a requirement to report in accordance with the EU's mandatory Sustainability Reporting Standards (ESRS). Among the 13 ESRS themes, four themes directly refer to what may be considered social themes, namely ESRS 1 Own labour force; ESRS 2 Workers in the value chain; ESRS 3 Affected communities; and ESRS 4 Consumers and end-users.

Also, the CSRD introduces requirements for a double materiality assessment4, where companies not only have to consider the company's development, performance, and position, but also the company’s impact on social and environmental matters. This introduces social value as a prerequisite in companies performance reporting. From 2025, larger companies – including large property investors and urban developers - will be required to report on ESRS standards. This will be extended to smaller companies over time.

In Denmark5 we see large urban development investors and property owners - particularly those concerned with purpose and societal impacts – starting to become aware of the new regulations. Some are even taking the first steps to identify relevant reporting measures and indicators on social value. There are concerns that as the regulatory demands are extensive, the response will be compliance rather than the actual change of businesses’ mindset. However, as a lever for raising awareness and embedding new reporting standards and methods, the implementation of regulations will invoke some degree of change in the field.

#3 Citizen demand – or opposition?

The level of support for sustainable urban transitions varies among citizens and communities. In general, there is growing recognition among people around the world of the importance of sustainable long term urban change. As an indication of this, more and more cities are today setting ambitious targets for decarbonisation. Taking Denmark and Norway as examples, many municipalities have climate plans, which set targets and actions for the city to be in line with the Paris Declaration6.

This recognition is driven by the increasing awareness of the environmental, social, and economic challenges that cities face and the need to address these challenges in a sustainable way. But many citizens also support sustainable urban transitions because they recognise the benefits that they can bring to their communities, such as improved public health, opportunities for adaption and increased resilience to climate change, and greater social and economic opportunities. Also, citizens may be motivated by a desire to protect natural resources and biodiversity and promote more liveable, inclusive, and equitable places.

Sometimes, these citizens put pressure on local policy makers to speed up regulations on car traffic, limit the use of fossil fuel cars, introduce city gardens and the greening of areas to buy into ambitious targets on carbon reductions.

Looking ahead

As we look to the future, we have identified three crucial needs for embedding social value in the heart of urban transformation.

#1 We need to build a common language and promote cooperation across stakeholders

To ensure that social value lies at the heart of urban and environmental policies, we need to build a common language and awareness across stakeholders. This will support the understanding and the need to map the social risks and benefits of placing social value at the core of sustainability policies.

We also need to ensure a strong dialogue and cooperation across sectors in both the public and private sectors going forwards. Only then can we start talking about social visions, risks, and best practice in a way that will truly deliver socially sustainable outcomes for residents and stakeholders.

#2 We need to embed citizen engagement deeply in climate policies and planning, so that engagement drives policies and implementation.

At the heart of urban transformation lies a need to develop stronger governance models to anchor policies and decisions in local communities, while mobilising and activating citizens around a sustainable urban transition. Traditional engagement processes, characterised by time limited engagement or one-off consultations on decisions already developed, are no longer acceptable and are not sufficient to deliver social value locally.

We need to move towards more collaborative forms of planning and decision making, including those who normally are hard to reach. Developing an integrated approach to engagement, beginning with a social piloting of the local context, can lead to engagement in the setting of visions and targets. Citizens can then get involved in the design and implementation of agreed interventions, in their ongoing involvement and follow-up.

#3 We need a data driven approach to ensure a strong social analysis of the situation and consequences

So far, a data driven approach to the social context and social implications of climate policies are largely unaddressed in local urban policy and planning. Indeed, there is no coherent set of indicators for measuring social values and implications of the climate plan in Danish local climate action plans – nor is there a common understanding of how to balance social wins and risks. In the UK, data is not currently collected in a way that facilities review and analysis of how our currently policies are doing in relation to delivering a just transition. This needs to change. Although awareness and demand are growing, there is a need to develop data, metrics, methods, and analysis of how urban sustainability policies impact people’s lives – and how we release the social potential inherent in urban climate planning for people and communities.

We also need stakeholders to work together to develop shared business cases. These will maximise the value (social and wider) that investment in cities can realise and increase the likelihood of successful delivery.

About the article

The article is written as part of Ramboll Management’s Global Thought Leadership Programme on social sustainability, authored by Christine Rasmussen (Denmark) with contributions from Stefanie OGorman (UK), Vanessa Ludden (Belgium) and Ronny Kristiansen (Norway). The dialogue with researchers in the Crown Princess Mary Fellowship has been valuable input to the article.

Want to know more?

  • Christine Lunde Rasmussen

    Senior Market Manager

    +45 51 61 68 57

  • Stefanie O'Gorman

    Director Sustainable Economics UK

    +44 7971 877065

  • Vanessa Ludden

    Business Manager

    +32 487 69 33 32