Social Return on Investment: Measuring the Welfare Effects of CSR Activities

Abstract: During past decades, investments in Corporate Social Responsibility (CSR) activities have increased significantly, but the welfare effects of the activities generally remain unexplored. The focus of this study is to determine how welfare effects of CSR activities can be measured. Social Return on Investment (SROI) analysis is a method for understanding the social and environmental value created by organisations through investments in CSR activities. In this study, a general approach for conducting SROI analyses is formulated based on merged knowledge from existing SROI approaches and economic theory. This SROI approach is then applied to a case study where the welfare effects of the CSR activity Med Gemensamma Krafter, financially supported by Electrolux, are quantified. The evaluation of the approach highlights the challenges of quantifying welfare effects. We conclude by providing recommendations for how SROI can be improved in order to become the internationally accepted standard for measuring welfare effects of CSR activities.