Social Procurement Slow But Steady - Report

Social procurement is gaining momentum in Australia but is far from widespread, according to new research undertaken by Social Traders.

Over 67 per cent of respondents to the survey undertaken by the social enterprise Not for Profit reported that they are currently undertaking, or intend to undertake social procurement in the near future.

The results showed that In 2013, over $905 million was directed to social procurement by 11 businesses.

This figure is expected to rise quickly with another 18 respondents committed to commencing social procurement initiatives by 2014.

According to the report, social procurement, the use of procurement to generate social benefits beyond the products and services required, can create commercial efficiencies and new value streams and also jobs and opportunities for people who may have struggled to find work, reinvigorating depressed or marginalised communities and driving better business outcomes.

“Social procurement has emerged in the wake of trends in business and government towards the creation of positive social and environmental externalities through the procurement process,” the report said.

“Beyond the participants and findings of this research, the fact remains that most businesses are not currently socially procuring.

“Social procurement practice will need to develop quickly to keep up with growing expectations and rising pressure from corporate stakeholders.”

The research included a detailed literature review, followed by a survey of 31 businesses operating in Australia, with a market capitalisation of $221 billion.

A number of industry sectors were represented including Aviation, Banking and finance, Mining, Oil and gas, Professional services, Retail, Telecommunications, and Utilities.

The study was undertaken to better understand the way in which corporate Australia is participating in social procurement and what its aspirations are, with a specific focus on how goods and services are procured from social enterprises.

It found the greatest challenges to the development and implementation of social procurement are capacity/time, identifying appropriate categories of spend and establishing clear organisational commitment

“In order to grow social procurement, there is a need for stronger supplier networks and increased promotion of social procurement and its benefits,” the report said.

However, it suggested tangible outcomes were being achieved in a range of social benefit areas including local economic development, employment and training for disadvantaged groups, and providing credible and diverse alternatives in the supply of goods and services.

The most commonly used pathway for initiating social procurement was contract clauses (35 per cent) followed by supplier identification and development (29 per cent).

According to Social Traders, this reflects a strong corporate preference for directly approaching social enterprises and other social benefit providers or encouraging sub-contracts with existing vendors.

Social Traders and procurement advisor The Faculty have worked in partnership over the last two years, with the intent of raising awareness and promote the value of social procurement to leading Australian businesses.

The organisations formed the Corporate Board for Social Procurement in 2011 to provide a forum to share experiences of social procurement in practice.

Read the full report here.