Social value has been a legal requirement for any procurement exercise since 2012, but it remains an often vaguely understood term.
Despite a Government review in 2015 which recommended that “[the] measurement of social value needs to be developed,” there is still little specific guidance as to what measures organisations need to implement to fulfil this requirement. However, this leaves organisations with the flexibility to define ‘social value’ in a way that is most fitting to their industry and their way of working.
In any case, social value is only set to become more important, since both the Government and service users are increasingly aware of, and concerned by, issues such as sustainability and workers’ rights.
Learn more about social value and procurement below.
What is social value?
Social value may mean a commitment to environmental issues in procurement, for example ensuring sustainable or low-carbon practices are prioritised. But social value can also encompass elements that are ‘closer to home’ for businesses.
Companies treating their employees well is a type of ‘social value’. Paying the living wage to all workers, for example, contributes both to employee wellbeing and the local economy.
Malcolm Harrison, CEO at the Chartered Institute of Procurement & Supply, has previously emphasised that it is a misconception to think that social value is only important in local government procurement. Social value has become increasingly important for central government, national governments around the world, and the private sector too.
Social value needs to be considered in all procurement exercises, not only large-scale procurements with central government. Mr Harrison stresses that, for social value, “It all starts in terms of leadership”.
Social Value starts at the top
Social value needs to be written into every step of the procurement exercise. In fact, it is increasingly important for ethical practices to be thought about at every step of the supply chain.
Social value should not be an additional ‘benefit’ of procurement projects, but something integral to the very nature of the projects undertaken. Social value needs to be embedded in projects themselves, the public sector should invest in communities rather than projects, and ask what community is served by construction projects.
Ben Carpenter of Social Value UK and Social Value International suggests that it is vital to have board-level buy-in to allow for effective social value. It cannot simply be something ‘added on’ as a final consideration in a procurement exercise; to be effective and meaningful, social value needs to be central to the entire organisation’s way of doing procurement.
Understanding social value
Social value is only set to become more important to buyers, businesses and end users increasingly concerned with issues such as sustainability, fair trade and equal pay.
There is a clear appetite for organisations to understand how to integrate social value into their procurement strategy. At Procurex National 2019, the ‘Get Strategic with Social Value’ session, led by Ben Carpenter, was among the best-attended sessions of the day.
Social Value UK and Social Value International are leading a global network of practitioners and help organisations across the world develop principles and standards for social value accounting.
Mr Carpenter says that organisations must think about how their activities impact on people’s lives, He has stressed that organisations must measure and manage this effectively. This year Ben will be speaking online at Procurex National Engage on 9 September, with a presentation that aims to helps businesses grow through embedding international standards for social value.
Is social value achievable?
The short answer to this is yes.
However, it’s impossible to know what the cost of this is to all of us as taxpayers as these elements are included in the costs of procurement exercises and their cost and impact are rarely objectively quantified.
All contracting authorities should continue to resource training and support for all staff responsible for procurement exercises so that, expertise and time permitting, public sector procurement exercises can continue to lead the way in promoting and delivering positive socio-economic and environmental outcomes as part of relevant procurement exercises.
While I think that it would be possible with infinite resources and time to deliver sustainability through virtually every procurement, this does not reflect a reality where the results may be affected by:
- The motivation, expertise and experience of procurement staff, budget holders and other key stakeholders to make sustainability an integral part of their procurement strategy and processes (beyond what is required by the relevant legislation).
- The relative capability and capacity of organisations.
- The provision of relevant training and tools to enhance the capability and capacity of procurers and budget holders.
- The nature of the procurement.
- The time available.
How Can Contracting Authorities Make a Difference?
- By listening to their customers, understanding stakeholders needs and learning from other organisations
- By making sure sustainability is considered in all new contracts, frameworks and dynamic purchasing systems (and importantly getting to a position where this is just a normal everyday part of procurement, and not something that needs a separate discussion each time).
- By reviewing current contracts and relationships to identify socio-economic and environmental opportunities.
- By working with suppliers so they are ready to respond to their socio-economic and environmental challenges.
- By providing tools and guidance to staff and other stakeholders to help build sustainability into procurements and measure the success of any initiatives and requirements.
- By making these tools available not only to their organisation but free of charge to others to use on their procurements.
- By making sure that information about their sustainability and other related policies is available on their website so that stakeholders and potential suppliers know about it.
- By monitoring government policy and best practice to stay up to date.
Is your organisations achieving social value?
Communication is vital when it comes to social value. Not only will supplier relationship management software discipline your organisation’s processes, but it will also support your employees to strategically plan and manage interactions with suppliers.
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