The social earnings ratio, sometimes abbreviated to S/E, is a single-number metric, used to measure the social impact of various organizations. The non-financial metric is similar to the price-earnings ratio, but instead focuses on valuation against social impact, rather than projected earnings. The ratio was founded in 2011 by Olinga Ta'eed and a team of financial experts, in order to find a way of measuring financial investment against real social impact. It began as a university collaboration in the United Kingdom, before becoming an internationally recognized form of measurement, when the CCEG was founded. In 2013, it was identified in a news article as "the most rapidly adopted metric in the world".
History The Social Earnings Ratio (S/E) is a form of measuring sentiment and converting it into financial value. The ratio began as an idea to develop a single number metric to measure social value. In November 2011, a university collaboration was formed to manage this development. Around 18 months later, the Centre for Citizenship, Enterprise and Governance (CCEG) was formed in April 2013, to act as the standards body to curate the ratio globally. The standards body would be run as a non-profit. The Board for the CCEG was to include Professor Nick Petford, who was also the Vice-Chancellor at the University of Northampton. Following the establishment of the CCEG, Olinga Ta'eed was the keynote speaker at the Global Citizen Forum. In early 2015, it was announced that Seratio would be launched as a spin-off organization to control the licensing of the Social Earnings Ratio platform. Barbara Mellish would be the CEO of Seratio. By late 2015, the CCEG had over 37,500 members, including a number of key sustainability leaders. The UK Intellectual Property Office accepted the terms "Social Earnings Ratio", "S/E Ratio" and "Seratio" as having "acquired a distinctive character as a result of the use made of it." Full Registration rights have been granted. This is an important milestone for the Social Earnings Ratio which will allow it to achieve parity to the Price Earnings Ratio. Serat.io was launched as a subsidiary project by the CCEG, for the measuring of personal value. Pre-launched at the Clipper Round the World Yacht Race in September 2015, PV targets 1 million users. It is a campaign backed by celebrities such as the former First Lady Cherie Blair, broadcaster Jonathan Dimbleby, Italian footballer Gianluigi Buffon, politician Rt Hon Peter Hain, as well as the Desmond Tutu Foundation. Personal Value was formally launched in December 2015.
Algorithm
T o t a l V a l u e = F i n a n c i a l V a l u e + N o n F i n a n c i a l V a l u e = p / e + s / e {\displaystyle TotalValue=FinancialValue+NonFinancialValue=p/e+s/e}
Interpretation S/E Ratio is a financial metric that converts sentiment into financial value, and purports to be the currency of intangible values.
The S/E utilises financial value data, claimed outcomes and independent verification within a Citizenship Framework. S/E provides digital articulation of value across micro, meso and macro levels. Regardless of the organisation or market that is measured, the same algorithm is used. In a similar way to comparative currency flow, it means that both simple and sophisticated correlations can easily be compared. The ratio was developed using a university collaboration, involving over 90 universities globally. The framework examines the influences between the value formed at citizen, family, community, team, organisation, regional, national, and global levels. A principle rule is that S/E is never applied to negative actions. An example of this would be that slavery would never be measured directly, but it would be treated as a lack of freedom. Similarly, violence and safety levels wouldn't be measured, but the level of peace and its absence could be used in the framework. Some have compared its application similar to that of a digital non-financial currency. The framework utilises deep academic analysis tools, which are commonly used for calculating the financial value. Since the initial collaboration between the United Kingdom universities, a number of interdependencies have been discovered.
Interdependencies Time dependency - Value changes over time Direction - Value changes depending on which stakeholder viewpoint is assessed The 1/r2 rule (Distance) - Value dilutes over increasing distance Multiplier effect - Enhancing, diminishing, neutral processes Tracking Movement - Transfer between stakeholders
Metrics
Reception It is often difficult or not possible to compare Social Earnings Ratio with other forms of financial measurement. Comparing S/E to other social impact tools is something that is more common. Social Return on Investment (SROI) is one example of this and is quite a popular search on most search engines. When its results are compared to that of S/E's, its clear that SROI has a greater amount of coverage.
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