This informal CPD article, ‘Strengthening ESG with SROI - Four methodological contributions to the new social accounting’ was provided by HGIO - Herramientas de Gestión Integral Organizacional, who offer evidence-based methodologies, tools, and solutions to address the diverse needs of organisations.
The Environmental, Social and Governance (ESG) framework has today consolidated itself as the dominant language of corporate sustainability reporting. The European Corporate Sustainability Reporting Directive (CSRD), the standards of the International Sustainability Standards Board (ISSB), and the International Standard on Sustainability Assurance (ISSA) 5000 issued by the International Auditing and Assurance Standards Board have raised the technical requirements regarding the information that organisations must report, verify, and have externally audited.
Against this backdrop, the academic literature and professional practice have identified specific areas of the ESG framework that require methodological reinforcement, particularly within its social component. This article examines how the Social Return on Investment (SROI) methodology makes concrete contributions to strengthening ESG, with emphasis on four specific inputs that the recent literature has documented.
ESG as an established framework and its areas of opportunity
ESG has consolidated itself as the dominant framework for corporate sustainability reporting on a global scale. The CSRD, in force since January 2024, expanded the universe of companies required to report from approximately 11,700 under the former Non-Financial Reporting Directive to close to 50,000 organisations (1). In parallel, various jurisdictions representing more than 40% of global stock-market capitalisation have adopted or are adopting the ISSB’s international standards, shaping a global system with more demanding requirements in matters of reporting and assurance.
This consolidation is not confined to Europe. Regulatory adoption in Latin America has advanced significantly, with national frameworks converging towards international standards. Brazil, Mexico, Chile, and Colombia have implemented or announced the adoption of the IFRS S1 and IFRS S2 standards, with phasing-in timetables running between 2025 and 2026, accompanied in several cases by progressive external assurance requirements. The institutional analysis by the Economic Commission for Latin America and the Caribbean documents, with evidence from a survey administered to regulators and standard-setters in ten countries of the region, that the development of sustainability requirements is heterogeneous and calls for sustained technical support in order to achieve regional harmonisation (2).
The most recent empirical study on ESG disclosure in Latin America, conducted by Reyes Bastidas, Briano Turrent, and Rodríguez Ariza on a sample of 300 listed companies from Argentina, Brazil, Chile, Colombia, Mexico, and Peru between 2014 and 2023, with 3,000 firm-year observations, shows a rising trend in disclosure but with significant differences between countries and with persistent challenges in terms of consistency, depth, and standardisation (3). This work explicitly recognises that Latin America constitutes one of the geographical contexts least studied in the international ESG literature. The complementary analysis by Quintero García, Gaitán Riaño, and Saavedra Najar, on the relationship between corporate governance and sustainability in the region, further acknowledges that the ESG metrics available may not fully reflect corporate sustainability in Latin American contexts, giving rise to a specific methodological gap (4).
Alongside this regional consolidation, the international literature has identified areas of ESG where methodological quality still presents opportunities for improvement. The seminal study by Berg, Kölbel, and Rigobon analysed the ratings awarded by six recognised ESG rating agencies to 924 companies and found average correlations of 0.54 among them, with ranges between 0.38 and 0.71. The decomposition of the origin of this divergence revealed that 56% comes from differences in the measurement of indicators, 38% from the scope of the categories assessed, and 6% from the weights assigned (5). This divergence particularly affects the social component of ESG, traditionally the least developed from a methodological standpoint: reports tend to favour quantifiable environmental indicators over measurable social outcomes, which limits comparability between organisations and the auditability of the progress declared.
SROI as a complementary methodology
SROI constitutes a methodology that is consolidated both academically and professionally for the measurement of social impact. The systematic review by Corvo and colleagues, based on a final corpus of 284 studies, confirms that the methodology has been applied across all productive sectors with verifiable results, with a growing body of scientific output concentrated in the United Kingdom, Spain, and Italy (6).
SROI is not presented as a substitute for ESG, but as a complementary methodology whose technical architecture enables specific gaps to be addressed that the ESG framework, based on aggregated ratings, has not managed to resolve soundly. Its principal structure — based on eight methodological principles, on the monetary quantification of outcomes through financial proxies, and on the systematic incorporation of stakeholders — offers elements that articulate directly with the emerging requirements of the new corporate reporting regime (7).
Social Return on Investment methodology
Four concrete contributions of SROI to ESG
From a review of the recent academic literature and documented professional practice, four specific contributions emerge that the SROI methodology makes to strengthening the ESG framework:
First: monetary quantification of the social component. This directly addresses the historic weakness of the social pillar of ESG referred to in the previous paragraph. SROI translates social outcomes — employability, health, wellbeing, inclusion, education — into monetary values through institutional financial proxies. This enables the social dimension of corporate reporting to be expressed in the same unit of measurement as the financial dimension, facilitating comparison and integration into existing management systems.
Second: systematisation of stakeholder involvement. The first principle of SROI — involving stakeholders — institutionalises the participation of those who experience the effects of an intervention in defining the relevant outcomes (7). This methodological discipline directly reinforces the double-materiality requirement introduced by the CSRD, according to which organisations must report not only how sustainability factors affect their financial performance, but also how their activities affect society and the environment.
Third: translation of outcomes into defensible financial proxies. The existence of internationally recognised institutional banks of proxies — such as the UK Social Value Bank administered by HACT, with 88 outcomes validated across 11 categories (8), or the WELLBY adopted by HM Treasury in the United Kingdom (9) — provides auditable reference values that mitigate arbitrariness in the valuation of social impact. This responds directly to the criticism concerning methodological divergence between ESG rating agencies (5): the use of common and traceable proxies reduces dispersion and improves comparability.
Fourth: compatibility with external assurance. Given that SROI outcomes are documented with empirical evidence and valued with proxies traceable to institutional sources, the methodology integrates naturally with the requirements of the IAASB’s ISSA 5000 standard, in force for periods beginning on or after 15 December 2026. This compatibility positions SROI as one of the technical tools fit to produce sustainability information verifiable by independent external auditors.
Empirical evidence of the contribution
The contributions set out above are not methodological promises: they have been materialised empirically in diverse contexts documented by the scientific literature. The analysis on public health conducted by Ashton and colleagues identifies SROI as a suitable framework for demonstrating the social value generated by public interventions, with verifiable applications in the social determinants of health (10). The systematic review by Corvo and colleagues documents applications of SROI in employability, housing, education, culture, the environment, and sport, with ratios obtained that enable organisations to quantify their impact in terms comparable to the investment made (6).
At an institutional level, the governmental adoption of the wellbeing valuation approach that underpins SROI — the United Kingdom through HM Treasury’s Green Book (9), New Zealand through its Treasury, and banks under development in Denmark, Canada, and the United States — constitutes a significant validation of the methodology’s rigour. When national treasuries incorporate a methodology into their official public-policy appraisal guidance, the standard of technical robustness they require is comparable to that of traditional accounting standards.
Implications for the organisation and the professional
For the organisation that already reports under ESG, the progressive incorporation of SROI methodology into its social pillar does not entail replacing the existing framework, but strengthening it with technical instruments that improve the auditability and comparability of the information reported. This strengthening is particularly valuable in the context of the new external assurance requirements under ISSA 5000.
For the professional working in corporate reporting, sustainability, audit, or corporate governance, mastery of the SROI methodology constitutes a distinguishing competence in a market that is progressively demanding integration between disciplines that have traditionally developed separately. Developing fluency in this methodology, alongside the underlying academic literature in impact assessment, positions professionals to meet the technical demands that the new corporate reporting regime will increasingly require.
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References
1. European Commission. Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting. Official Journal of the European Union. 2022;L 322:15–80. Available at: https://eur-lex.europa.eu/eli/dir/2022/2464/oj
2. Núñez G, Velloso H, Lehuedé H, Da Silva F, Poveda L. ESG Disclosure, Corporate Reputation and Financing Costs: Evidence from Latin America and the Caribbean. Santiago: Economic Commission for Latin America and the Caribbean (ECLAC); 2023. Project Documents LC/TS.2023/124/Rev.1. Available at: https://www.cepal.org/en/publications/68029
3. Reyes Bastidas C, Briano Turrent GC, Rodríguez Ariza L. Disclosure information on environmental, social and governance (ESG) criteria in Latin America. Sustain Dev. 2025. doi:10.1002/sd.70324. Available at: https://doi.org/10.1002/sd.70324
4. Quintero García LT, Gaitán Riaño SC, Saavedra Najar RA. Corporate governance and sustainability in Latin America. RAN Rev Acad Neg. 2024;10(2):313–31. doi:10.29393/RAN10-20GCLS30020
5. Berg F, Kölbel JF, Rigobon R. Aggregate confusion: the divergence of ESG ratings. Rev Finance. 2022;26(6):1315–44. doi:10.1093/rof/rfac033
6. Corvo L, Pastore L, Mastrodascio M, Cepiku D. The social return on investment model: a systematic literature review. Meditari Account Res. 2022;30(7):49–86. doi:10.1108/MEDAR-05-2021-1307
7. Nicholls J, Lawlor E, Neitzert E, Goodspeed T. A Guide to Social Return on Investment. 2nd ed. London: The SROI Network; 2012. Available at: https://www.socialvalueuk.org/resources/the-guide-to-sroi/
8. Housing Associations’ Charitable Trust. Methodology Note for Wellbeing Values: UK Social Value Bank. London: HACT; 2024. Available at: https://hact.org.uk/publications/methodology-note-for-wellbeing-values/
9. HM Treasury. Wellbeing Guidance for Appraisal: Supplementary Green Book Guidance. London: UK Government; 2021. Available at: https://assets.publishing.service.gov.uk/media/60fa9169d3bf7f0448719daf/Wellbeing_guidance_for_appraisal_-_supplementary_Green_Book_guidance.pdf
10. Ashton K, Cotter-Roberts A, Clemens T, Green L, Dyakova M. Advancing the social return on investment framework to capture the social value of public health interventions. Public Health. 2024;226:122–7. doi:10.1016/j.puhe.2023.11.004
