Green technologies and services advisor Tolu Omideyi explains the concept of social value, how it’s used in procurement and why businesses should be embedding it in everything they do.
What is Social Value?
Put simply, social value is an umbrella term for capturing the full net value an organisation provides to society. This can include how an organisation supports the local economy, for example by helping local people into employment or buying from other local businesses; or activities that provide other benefits, such as promoting opportunities for disadvantaged groups or reducing waste. Another way to think of it is as a social and environmental return on investment. For every £1 you generate, how many pounds in wider value are created for society?
The Social Value Portal, which helps public sector organisations and others to calculate social value in monetary terms, splits the concept into five principal themes:
Jobs: Promoting local skills and employment for all
Growth: Supporting the growth of responsible local business
Social: Fostering healthier, safer and more resilient communities
Environment: Providing cleaner and greener spaces, promoting sustainable procurement and safeguarding the planet
Innovation: Promoting new ideas and social innovation.
Social value in the public sector
Under the Public Services (Social Value) Act 2012, local authorities have to give regard to social value when procuring and awarding contracts. Since 2014, all tenders for contracts awarded by the Greater Manchester Combined Authority have been evaluated on the basis of price, quality and social value. The weighting of the social value element has risen from as little as 5 per cent to up to 40 per cent in some cases today.
Local companies that can demonstrate a strong commitment to social value therefore have a growing competitive advantage. In Preston, one of the trailblazers of prioritising social value in procurement, the city council and other ‘anchor’ institutions like universities and hospitals managed to collectively increase their spending in the city’s local economy from £38 million to £111 million between 2013 and 2017.
As an example of what local authorities are looking for, Manchester City Council has produced a Social Value Toolkit for suppliers.
Social value in the private sector
While the use of social value in procurement has been pioneered by the public sector, the private sector is catching up fast as corporates steadily increase pressure on their supply chains to demonstrate ethical and environmental good practice.
You can see social value in action in the corporate world through the UN’s Sustainable Development Goals (SDGs). These are 17 different social and environmental agendas for businesses, governments and the wider international community to work towards, including zero hunger, gender equality, clean water, quality education and climate action, to name a few. The SDGs are basically a Social Value Charter for the planet, and they are rapidly being adopted by the biggest companies around the world.
Social value and COVID-19
Social value was already on the rise before the outbreak of COVID-19, but the current crisis has put it in the spotlight like never before. The virus has had an enormous impact on people’s livelihoods, health and wellbeing, and will continue to have wide-ranging social and environmental implications as we rebuild the economy.
As we enter the recovery phase, governments, other public sector institutions and corporates will be under pressure to ensure their investments reflect genuine value to society.
Looking back at the Social Value Portal’s five principal themes, it’s clear that they’re all crucial to the recovery:
Jobs: A huge number of people have already been put out of work by the Coronavirus, with more expected to follow during the resulting recession
Growth: Businesses, especially smaller companies embedded in local communities, are under unprecedented strain
Social: There are clear knock-on implications for homelessness, poverty and the physical and mental wellbeing of people in vulnerable situations
Environment: Climate change, air pollution, wildlife loss and the other environmental crises remain as urgent as ever despite the pandemic
Innovation: Existing social practices and approaches to work have become impractical due to social distancing.
Thankfully, COVID-19 has already shown us what good social value looks like in practice. During lockdown, many of the nation’s manufacturers pooled together to produce critical supplies like hand sanitiser, PPE and ventilators for the NHS. Supermarkets created thousands of temporary jobs for hospitality workers who had lost their jobs. An estimated 10 million people spent time volunteering. Air pollution plummeted as people embraced remote working, and new measures are being put in place to encourage walking and cycling on a permanent basis.
To keep this positive momentum going, there’s a growing movement to ‘Build Back Better’ as the economy recovers, supported here in Greater Manchester by mayor Andy Burnham and the city region’s Local Enterprise Partnership. Prioritising social value is at the heart of this movement.
The call for policies that support a ‘green recovery’ is also gaining traction. In the UK, hundreds of businesses, investors and business networks have called on the government to drive investment in low carbon industries and the uptake of solutions to tackle climate change, and the government has started to deliver in response.
Meanwhile, the disruption caused to supply chains during lockdown is making companies re-assess their supply chain strategy. As a result, we can expect environmental resilience, sustainability and localisation to play a more prominent role in corporate procurement going forward.
Social value and you
Hopefully, COVID-19 is only temporary. But the shift towards social value is certainly here to stay, so businesses should take note. My colleague and environmental business advisor at GC Business Growth Hub, Clare Fallon – who specialises in helping SMEs to demonstrate social value – explains:
“The most successful businesses in future will be those who can differentiate themselves from competitors by demonstrating social value in everything that they do. The recovery from COVID-19 is the perfect time to start, for example by continuing to support remote and flexible working after lockdown, encouraging active and sustainable travel or supporting charitable activities in the local community. These are the sorts of measures that public sector buyers and other social value-minded organisations are looking for when awarding contracts.
“Another way to demonstrate social value is to embed it in your own supply chain. We helped the HOME venue in Manchester to do this by developing a sustainable procurement policy and scoring mechanism to compare existing and potential suppliers, which they have used to great success.”
Whether it’s delivering social value in your day-to-day activities, demonstrating it in tender responses or embedding it your own procurement process, our specialist advisors can help you to get started.
This post was originally published on the GC Business Growth Hub website here.
Posted under General Interest on 22 July 2020