Business and government can achieve significant social, environmental and economic value by switching their spend to social benefit suppliers including certified social enterprises.
What is social procurement?
Social procurement is when organisation's use their buying power to generate social value above and beyond the value of the goods, services or construction being procured.
Social procurement involves purchasing from suppliers dedicated to social or environmental impact, including local businesses, certified social enterprises, Indigenous businesses, Australia Disability Enterprises, majority women owned and operated businesses. This approach delivers high-quality goods and services while fostering a fairer, more sustainable world.
Benefits of social procurement
Organisations and governments can use social procurement as a lever to drive social improvements through purchasing actions. It’s a lever to meet sustainability and ESG goals by incorporating diverse suppliers into their procurement strategies. Here are some of the benefits to social procurement:
- Robust supply chain: Build a diverse and robust local supply chain to help shield against supply risk
- Build demand and loyalty: Respond to growing demand from consumers, employees and shareholders, to contribute towards positive social impact and community benefit. Elevate your brand, reputation and value proposition further
- Thriving workforce: Create employment opportunities for marginalised Australians that would be typically shut out of work. Use your buying power to enhance social and economic inclusion.
Learn more about the benefits of social procurement
Social Traders
Social Traders is at the forefront of social procurement. Between FY2018 and FY2023, $843 million was spent by Social Traders business and government members with certified social enterprises, growing at an average annual spend rate of 36%. 160 business and government members of Social Traders are trailblazing social procurement to drive social and environmental impact.
Partner with Social Traders to harness the power of your procurement spend for lasting positive impact.
Social procurement in practice
The Property Council of Australia
To effectively implement social procurement, the Property Council of Australia outlines as a first step, to set clear objectives and building awareness among key stakeholders. Define the benefits for your business and society, ensure alignment with your values and strategy, and secure a senior sponsor to drive engagement, all while leveraging existing resources and forming strategic partnerships.
Victorian Government Social Procurement Framework (SPF)
The Social Procurement Framework (SPF) supports buying from Victorian social enterprises, Aboriginal businesses, and other social benefit suppliers. It also set a 3% social procurement spend target on the $30 billion Big Build pipeline. Victoria is the most mature social enterprise procurement market in Australia, accounting for 54% of all social enterprise procurement activity.
The Victorian Government identified social procurement as an “innovative and powerful policy lever to harness government spending” to “drive social, environmental and economic outcomes” - Victorian Government submission into the Workforce Australia Employment Services Inquiry. The Victorian SPF has been a catalyst for social procurement across Victoria driving demand from businesses and creating sustainable growth for social enterprises.
Global approaches to social procurement
- The Organisation for Economic Co-operation and Development (OECD): Advocates for integrating social and environmental criteria into public procurement practices. This includes developing clear strategies and legislation that mandate the inclusion of social and environmental considerations, promoting the use of social enterprises, and ensuring procurement decisions align with broader societal goals. “Enabling access to public and private markets” will “provide the conditions for the social economy to thrive.”
- United Kingdom: The Social Value Act (2012) requires considering broader social, economic, and environmental benefits in procurement. By 2018, the UK Government mandated that major contracts “explicitly evaluate” social value with a minimum 10% weighting and report on social impact, supported by the Social Value Model.
- Canada: Employs a Social Procurement Policy focused on "best value" rather than lowest cost, ensuring procurement decisions balance resource use with achieving socio-economic objectives and advancing government policy goals.
- Scotland: Scotland's Sustainable Procurement Duty, under the Procurement Reform (Scotland) Act 2014, requires public bodies to consider economic, social, and environmental well-being in procurement, focusing on reducing inequality. It promotes SME involvement, innovation, and ethical practices, while incorporating Community Benefit Clauses to drive local employment and training opportunities.
- New Zealand: New Zealand’s Government Procurement Rules for Sustainable and Inclusive Procurement promote sustainability, supplier diversity, and ethical practices by ensuring agencies must consider how they can create opportunities for New Zealand businesses such as Māori, Pasifika, regional businesses, and social enterprises.