Social value in urban transformation: Key drivers and ways forward

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

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 first, equity, focuses on how we ensure the benefits of the transition are equally accessible for all, while juggling sometime contradictory needs. Related challenges could include: 1) how do we ensure the development of new and sustainable green areas which remain accessible for the economically disadvantaged create value for the majority, while acknowledging those carrying the costs?

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.

Key trends and drivers

Placing social value at the heart of urban sustainable transformation is not easy. In fact, the complexity of meeting the related environmental targets often forces social considerations further down the agenda. In spite of this, we see more and more cities starting to address these important questions and respond to a growing need and demand to make the urban transition just. Across Europe, we have observed three main drivers: policy demands, regulative demands, and a growing popular demand.

#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 Act^2, 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.

One of many examples that show how the cities in Norway work with social value is the FutureBuilt programme, where the municipalities within the Oslo region and in the City of Bergen collaborated on pilot projects to support a change in the way buildings and urban areas are developed. Based on the belief that the visibility of good examples is important for making a change, the programme has focused on climate related themes since 2010 and has in recent years developed criteria for social sustainability. At the same time, we see that both private and public actors find it challenging to grasp the “what and how” of social value in urban transformation, yet we expect the policy demands to be a huge driver in coming years, forcing everyone to take social value seriously.

#2 Regulative sustainability demands

The increasing European regulation for sustainability is another key driver, rooted in the Green Deal. The EU Commission has developed a series of key proposals, commitments, and a detailed roadmap to achieve net zero emissions in the EU by 2050. These EU-level policies and regulations generally refer to the need for a just and fair transition, and therefore seek to cover the social dimension. So far, the related policies and regulations at national level have, to a very limited extent, introduced requirements for setting targets and documenting social impacts that are comparable to the requirements set for the environmental dimension.

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.

It is also clear that not all citizens are equally supportive of such change, and many cities face serious barriers to delivering change on the ground, particularly when citizens experience threats to their current lifestyle or the quality of the urban area or anxiety about the changes brought about. A good example of this occurred during the 2019 local election campaign in Norway, where protests took place against road tolls and congestion charges in major cities. Similarly, we see urban areas all over the world oppose to projects that involve replacing parking spaces with bike lanes and establishing car free/restricted zones in urban centres. In the UK, there has been popular opposition to the ‘15 minute neighbourhood’, where online conspiracy theories link the concept to plots by “tyrannical bureaucrats" to take away cars and control lives of citizens leading to a real-life Hunger Games scenarios”.⁷

In summary, popular demand may be a strong driver – or the opposite. When demand acts as a driver, decision makers need to foster wider, deeper, and longer-term engagement with communities and stakeholders to deliver on their aspirations of sustainable urban development. To counter the opposite reaction, we need to strengthen citizen engagement and ensure strong consultations that root the changes securely within communities.

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.

^[1] A Just Transition Mechanism has been established – https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/finance-and-green-deal/just-transition-mechanism_en^[2]https://www.gov.uk/government/publications/social-value-act-information-and-resources/social-value-act-information-and-resources#:~:text=The%20Public%20Services%20(Social%20Value,social%2C%20economic%20and%20environmental%20benefits. ^[3] https://www.regjeringen.no/contentassets/cc2c53c65af24b8ea560c0156d885703/nasjonale-forventninger-2019-engelsk.pdf^[4]Corporate sustainability reporting (europa.eu)^[5]FISMA - Sustainable finance (europa.eu)^[6] Field research under conduction by CBS students as part of Ramboll Liveability project. ^[7] The push for local climate action plans in Denmark was introduced as part of the DK2020 partnership, where an ambitious cooperation between Realdania, The Danish Regions and CONCITO ^[8]https://www.abc.net.au/news/2023-02-27/the-15-minute-city-conspiracy/102015446