Social Impact Accounting: Measuring What Usually Goes Unmeasured

Most of what creates value never appears in a spreadsheet. A job changes a family's trajectory. A training programme rebuilds someone's confidence. A community relationship keeps a supply chain running. Social impact accounting exists to put those changes into the same conversation as financial returns—carefully, transparently, and without pretending the numbers are more precise than they are.

What SROI actually is

Social return on investment, or SROI, incorporates social, non-market outcomes into decision-making alongside financial returns. That is the whole idea. There is no universal standard for calculating SROI, so the method is best understood as a disciplined framework for judgement—not a formula you can copy from one organisation to the next.

If you have seen a ratio like 4.50:1, that means an estimated $4.50 in social benefit per $1 invested. In the NSW guide, that figure is an illustration, not a general benchmark. Treat any ratio you encounter the same way: as a claim that needs its scope, evidence and assumptions examined.

Start with people, not the ratio

SROI guidance treats the work as a theory-of-change exercise, not simply a ratio calculation. You define the scope and stakeholders first, then map how activities and inputs are expected to lead to outputs and outcomes. Ask: who is affected, and how would we know a material change occurred in their lives?

• Define scope and identify stakeholders.
• Map inputs and activities to outputs and outcomes.
• Choose indicators and gather evidence of material change.
• Combine qualitative, quantitative and comparative information.

Monetisation is judgement, made visible

Where outcomes lack market prices, analysts may use financial proxies, surveys or other valuation techniques. Proxy choice should be justified; unsuitable proxies can undermine the result. This is where most of the credibility is won or lost. Write down why a proxy fits, what it leaves out, and how sensitive your conclusion is to changing it.

Do not over-claim impact

A change you observe is not automatically a change you caused. SROI practice accounts for deadweight (what would have happened anyway), attribution to other factors, displacement, duration and drop-off. Report your assumptions and test sensitivity. If the result only holds under one generous assumption, say so plainly.

Where this sits with IFRS S1, S2 and HKFRS

Human and social capital are relevant sustainability concepts—but they are not automatically balance-sheet assets. The ISSB has described company value creation as linked to dependencies and impacts involving human and social capital, including relationships across value chains.

IFRS S1 and S2 focus on investor-relevant sustainability disclosures: sustainability-related risks and opportunities that could affect an entity's prospects. An SROI assessment of broader social value is not, by itself, a substitute for those disclosures.

In Hong Kong, the timelines are moving. HKEX climate-related requirements took effect on 1 January 2025, including mandatory Scope 1 and 2 emissions disclosure for listed issuers, with other climate disclosures following different comply-or-explain and mandatory timelines by issuer category. HKICPA issued HKFRS Sustainability Disclosure Standards aligned with IFRS S1 and S2, available for voluntary application from 1 August 2025. HKEX was scheduled to consult in 2027 on mandating the standards for listed publicly accountable entities, with an expected effective date of 1 January 2028.

Keep valuation and assurance boundaries clean

Keep financial-statement valuation conclusions distinct from an SROI estimate unless the relevant accounting or valuation basis supports recognition and measurement. For professional work, document boundaries, evidence, proxies, uncertainty and assurance scope. The sources reviewed establish SROI methodological considerations but do not establish a specific IVS rule for recognising social value.

If you want to go deeper into the mathematics behind these choices, see Social Impact Accounting in Practice: A Mathematics Guide for Sustainability Professionals. For the underlying guidance, read the NSW SROI Approach Guide, the IFRS Hong Kong SAR jurisdiction profile, and the ISSB Chair's remarks on a common language for sustainability reporting.