What is social earnings ratio?

Social earnings ratio (S/E) is a metric used to measure the social impact of an organisation. This non-financial ratio concentrates on measuring sentiment and converting it into financial value.

Where have you heard about social earnings ratio?

You may have heard it mentioned in conjunction with the price earnings ratio which measures the current market price of a company share, divided by the earnings per share of the company, and is accepted on all stock markets around the world.

The social earnings ratio began as a university collaboration in 2011 and is now used by private and public organisations as a form of measurement on a global scale. In 2013 the Centre for Citizenship, Enterprise and Governance (CCEG) was formed as a not-for-profit academic institution that acts as the governing body for the ratio.

The Centre for Citizenship, Enterprise and Governance has a subsidiary project called Seratio which has received public endorsement from notable figures including Desmond Tutu, Jonathan Dimbleby and Cherie Blair.

What you need to know about social earnings ratio.

Social earnings ratio is calculated with an algorithm that analyses big data and sentiment, including social media signals.

An organisation can calculate its total value by adding the financial value (p/e) to its social value (s/e).

The creation of the ratio and growing awareness of social impact is influencing how large organisations interact and transact.

In 2013 the Social Value Act came into force and requires public bodies to consider the social and environmental benefits of a company, as well as cost, when awarding contracts.