Gone are the days when procurement was solely about cost avoidance. Today, procurement teams are evolving to be value-creators and driving positive change in their procurement practices.

Social enterprise procurement can help deliver on that – contributing to a fairer, more equitable and sustainable economy. It’s a growing trend, but what exactly does it entail, and how can it supercharge organisations to deliver on their Environmental, Social and Governance (ESG) and Diversity, Equity and Inclusion (DE&I) goals?

Understanding social enterprise procurement

At its core, social enterprise procurement is procurement for impact. It’s about making deliberate choices to purchase goods or services from social enterprises – who are an innovative breed of businesses that exist to create a fairer and more sustainable world.

Social enterprises must do three things:

1. Have a defined primary social, cultural or environmental purpose consistent with a public or community benefit, and
2. Derive a substantial portion of their income from trade, and
3. Invest efforts and resources into their purpose so that public/community benefit outweighs private benefit.

At Social Traders, we’re the leading intermediary in social enterprise procurement and the only certifier of social enterprises in Australia. Our certification identifies genuine social enterprises, de-risking for procurement teams and safeguarding against social washing.

When organisations buy from a social enterprise, they’re purchasing quality goods and services that they need at the right price, while generating social or environmental impact in the same transaction. The best part, it’s allocated spend – money you would have spent anyway but in a way that creates social value.

It's not just about transactions; it's about strategy. Social enterprise procurement empowers organisations to fulfill the Social (S) in their ESG goals. When organisations switch some of their procurement spend towards social enterprises, they can directly address societal challenges, create jobs for marginalised communities or contribute to positive environmental impact, all while delivering on their organisational goals.

Social enterprise procurement is catching on

In the financial year 2023, organisations and governments invested a remarkable $237.2 million in certified social enterprises, according to the Social Traders FY23 Impact Report.

This figure adds up to a total of $843 million over six years, showcasing a clear trend toward purpose-driven purchasing. It's a trend that organisations simply can't afford to overlook. Employees want it, customers expected it, investors and shareholders are calling for it.

Over 160 organisations are already doing social enterprise procurement and our reporting shows that in FY23:

• 69% of organisations maintained or increased the number of social enterprises they procured from
• 72% maintained or increased the number of categories of social procurement spend
• 58% maintained or increased their overall social enterprise procurement spend

Building the business case

Embracing social enterprise procurement is a smart business strategy for a competitive advantage.

Here's why:

1. Resilient supply chains: Local and diverse suppliers will strengthen your organisation and mitigate against external risks.
2. Employee engagement and talent attraction: Employee retention is higher for organisations where the purpose is clear. When organisations back social enterprises, it sends a clear message that they care about making a difference and putting it into action. And you know what? That's a big draw for top talent.
3. Brand equity and profitability: By engaging with social enterprise procurement, it enhances your organisation's brand equity by demonstrating a stronger purpose-led brand. Consumers prefer brands demonstrating genuine commitment to their purpose and according to research, consumers are willing to pay a 10% premium.
4. Government partnerships: Last year the Federal Government recommended a social enterprise national strategy, social procurement policy, and endorsement of Social Traders certification. By conducting social enterprise procurement, organisations position themselves as desirable partners, winning contracts with governments.

Don’t get left behind, switch to good today

Simply put, social enterprise procurement is a win-win. Organisations achieve their strategic social goals while also fostering a more inclusive and sustainable economy. As the trend towards purposeful purchasing continues to gain momentum, it’s time to seize the transformative power of social enterprise procurement and pave the way for a brighter future.

With our expertise, we can help bring your ESG and DE&I strategy to life while amplifying your organisation’s social and environmental impact through buying with certified social enterprises.

"When someone asks what you did at work this week, you could say - I did great risk mitigation and saved costs. Or, you could say - I helped remove plastic from the ocean and support women escaping domestic violence to recover their sense of self-worth. That's the power of buying from certified social enterprises." - Tara Anderson, CEO Social Traders.

Let us help you unlock business for good and work together to make a difference!