Principle 3: Value the things that matter
Standard on applying Principle 3
Making decisions about allocating resources between different options needs to recognise the values of stakeholders. Value refers to the relative importance of different outcomes. It is informed by stakeholders’ preferences.
This Standard sets Principle 3: Valuing the things that matter. This document outlines two options for understanding the relative importance of outcomes:
- Monetary valuation, where money is used to represent the value which stakeholders place on the outcomes they experience
- Non-monetary valuation, where weightings are used to represent the value which stakeholders place on the outcomes they experience
Useful guidance:
Mutually Compatible, Yet Different: A Theoretical Framework for Reconciling Different Impact Monetization Methodologies and Frameworks
Numerous efforts are underway to make these implicit valuations more transparent and informed by an understanding of the value of impacts from the perspective of those experiencing the impact. We believe that making these valuations transparent requires a common measure; otherwise it is extremely difficult for non-experts to assess the decisions being made, though mainstreaming of such assessment is critical toward moving us to a more sustainable and fair economic paradigm. Monetary value is the most commonly understood measurement globally and thus is the best unit for translating impact into intuitive measures. In this paper, we propose a theoretical explanation for how the underlying monetization values from the various efforts and approaches that are being developed can differ and yet still be theoretically sound and co-exist.
The Case of Monetary-Valuation: Reasoning to integrate monetary impacts in accounting systems
Monetary valuation of business impacts is the language business understands, it enables comparability, it incorporates the local context and the complexity of how impacts arise and is relatively easily integrated into traditional accounting systems and decision making.
This document calls on policy makers, standard setters, and other actors to integrate the concept of monetary impact valuation in the relevant processes and frameworks.
Value Game: A method for involving customers in valuing outcomes
The ValueGame is a simple, flexible method for valuation. It is a way of working with service users to find a (financial) proxy for the value of the outcomes they experience from activities, or even the value of the whole service to them. It is a mixture of techniques like participatory impact assessment, choice modelling (or discrete choice experiments) and contingent valuation
Social Value UK: Valuation of a life
Perhaps the most controversial aspect of valuation is the attempt to ascribe a financial value to a human life. Understandably, for ethical, religious or philosophical reasons, many people oppose the valuation of something commonly perceived as priceless, and argue that no monetary figure could possibly compensate entirely for the loss of a life.
Despite the reluctance of some, determining the value of a life is necessary for policy makers and those involved in health and safety. As resources are finite and not every premature death can be realistically avoided, decisions in improving public health through medical procedures or safety regulations are being made. Without this information it may be difficult to target spending and resources effectively.
Social Value UK: A Discussion Document on Assurance of Social and Environmental Valuations
This document is not intended to be an assurance guide, framework or standard; but instead to set out a number of issues that will need to be considered during an assurance engagement that examines data that values impacts (referred to herein as ‘valuation data’), and which should be addressed in the future should an assurance framework or standard be developed for valuation data. This paper is intended to start a discussion, and not to be an exhaustive analysis of all relevant issues.