Blended value

Blended Value refers to an emerging conceptual framework in which non-profit organizations, businesses, and investments are evaluated based on their ability to generate a blend of financial, social, and environmental value. The term is usually attributed to Jed Emerson, and sometimes used interchangeably with triple bottom line. Blended value propositions are founded on the notion that value cannot be bifurcated, and is inherently made up more than one measurement of performance. For example, under a blended value proposition, a for-profit businesses would consider their social and environmental impact on society alongside their financial performance measurement. Within the same context, non-profits would consider their financial efficiency and sustainability in tandem with their social and environmental performance. Blended value suggests the true measure of any organization is in its ability to holistically perform in all 3 areas.

Blended value activity is most apparent within 5 sectors, or “silos”, in which organizations are more likely to intentionally seek a blend of social, environmental and financial elements of performance. The 5 silos are:

Organizations that incorporate Blended Value business models are actively seeking to maximize their value to society while maximizing their financial efficiency. An example is a fair trade coffee cooperative, which creates social value through the guaranteed minimum prices paid to coffee farmers and direct community development investments. Their model's ability to yield blended value depends on its financial viability. Blended value suggests that all 3 components (social, financial, and environmental) must be integrated into any value assessment. Another example is a social enterprise such as Aravind Eye Hospital. Aravind offers high quality eye care on a sliding scale fee model—which means that those who cannot afford medical care are treated for free, and those who can pay, do. Even after having served over 32 million patients (the majority of the surgeries being free or subsidized for impoverished people); they have still managed to be a highly lucrative hospital. Their financial sustainability, blended with their impact on the eye health of millions of rural Indians, allows Aravind to yield a high level of blended value.

A business model's supply chain is also considered when assessing their blended value creation. Under the blended value framework, an apparel company, for example, that sources its clothes from a sweatshop factory—like the factory involved in the 2013 Savar building collapse—would generate a low level of social value. Blended value propositions dictate organizations (for-profit and non-profit alike) should actively try to choose suppliers who also generate high blended value; to continue the example above, an apparel company that sources from a fair trade certified textile manufacturer would yield a high level of blended value.

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