Social Procurement

For businesses, the act of social procurement is to purchase goods or services from a supplier/provider that will have a social, economic, or environmental benefit as part of the purchasing process. It’s all about ensuring your purchasing decisions aren’t just about getting what you need, but also providing a benefit to others.

As an example, a construction company could engage a social enterprise that specialises in landscaping and provides jobs to people with disabilities. By working with this social enterprise, the construction company has helped support workers with disabilities and contributed to a broader social good. Another example would be engaging with a landscaping company that utilises more environmentally conscious practices and contributes 50% of their profits to reforestation efforts.

At its core, social procurement is a conscious choice businesses can engage in to benefit society on a broader scale rather than just working with purely for-profit companies.

Like in other countries, social procurement within Australia involves the purchasing of goods and services from social enterprises and/or diverse suppliers. For businesses, they may set their own social procurement targets in order to support a more diverse supply chain or to simply ensure their business relationships lead to social good.

Depending on the state or territory, social procurement can also be a requirement for securing contracts. For example, in Victoria, the government has a Social Procurement Framework. This means that Victorian government departments and agencies must adhere to social procurement mandates that ensure that any goods, services, and construction also benefit the Victorian community.

By extension, this means that companies who choose to bid for contracts with the Victorian government must also account for these procurement targets. If a construction company bids for a Victorian build project, they must be able to demonstrate exactly how their work will benefit the broader Victorian community. This could include contracting an Indigenous carpentry enterprise to support Indigenous workers or purchasing building supplies from a social enterprise that employs people with disabilities.  

Government-mandated social procurement targets differ around the country, as do comparable targets that could be set for major contracts or by other large businesses. 

Businesses that engage with social or disability enterprises, work with Indigenous-run businesses, or collaborate with NFPs that seek to address environmental or social issues can all result in great benefits to the community at large. 

Similarly, businesses that want to improve their ESG (Environmental, Social, and Governance) targets and drive more ethical and social impacts greatly benefit from integrating social procurement into their operations.

There are a host of benefits that come from organisations engaging in social procurement. These benefits aren’t just purely related to contributing to social good (though this is undeniably the most meaningful benefit), but also how they can strengthen an organisation’s operational resilience. 

Whether you engage in social procurement for hitting tender requirements for a government contract or it’s a fundamental endeavour of your organisation, the benefits include: 

• Strengthening your ESG performance, particularly the “S” (Social) pillar
• It supports compliance with government procurement frameworks and tender requirements (such as those set out in the Victorian government’s Social Procurement Framework)
• Enhances the reputation and brand credibility of your organisation with clients, investors and communities
• Drives measurable social impact while maintaining positive commercial performance for your company
• It diversifies your supply chains, which reduces risk and improves your organisation’s resilience
• It provides you with a competitive advantage in bids where social value weighting applies
• It actively creates employment pathways for underrepresented or disadvantaged groups, so you know your procurement efforts are making a genuine difference to people’s lives

Social procurement very often involves engaging with a range of social enterprises, Indigenous-run businesses, disability enterprises, and NFPs. For a business, this means you could arrange agreements involving various parts of the supply chain where work could be undertaken by marginalised groups and individuals. This could include Indigenous people, members of the LGBTQ+ community, people with disabilities, and more.

This allows your business to extend its diversity and inclusion (D&I) commitments beyond your internal workforce and apply these same principles to supply chain practices. This, in turn, creates economic participation opportunities for marginalised communities and empowers them further.

It can also help drive more employment pathways for often overlooked individuals, reinforce an inclusive workplace culture (both internally and externally), and strengthen your D&I targets.

A wide range of organisations and industries utilise social procurement services, whether as part of government-required procurement targets, other external frameworks, or internally-defined goals. Some common examples include:

• Government departments and/or agencies that have mandated social procurement targets
• Tier 1 and Tier 2 construction and infrastructure companies, especially when submitting bids for government-related projects - this also applies to organisations bidding on government or large-scale contracts that include social procurement mandates
• Corporations seeking stronger ESG performance and reporting
• Property developers and asset owners with community impact goals
• Enterprises operating in regulated or highly scrutinised industries - this can include regulations that involve set social procurement targets
• Medium to large organisations formalising procurement governance
• Businesses looking to strengthen their supplier diversity programs

At The Fair Co., we pride ourselves on being a social procurement and consultancy service provider that offers our clients end-to-end support. Whether you’re just entering into the world of social procurement or you’re looking to improve upon your current efforts as part of ESG initiatives, we can help you. We work with a diverse range of businesses to help them implement social procurement frameworks, diversity and inclusion solutions, and maintain these objectives for the long-term. 

Our services include a social procurement health check to assess how your current efforts are tracking, assisting in the mapping out and implementation of relevant frameworks, and working with you to navigate tender documentation for larger contracts that have mandated social procurement targets as part of the bidding process. Whatever assistance you need in these fields, we can make it happen.

Ready to work with The Fair Co. team? Get in touch today.