Social Enterprise and Social Procurement in Australia – Can we build a social value marketplace?

Posted on the 18th September 2019

With the Australian Social Value Bank (ASVB) recently becoming a certified social enterprise, I was keen to attend my first Social Traders Conference in Melbourne. I wanted to gauge the current momentum behind the social enterprise movement here in Australia, and see if there was a place for the ASVB in it?

I’ve always been aware of social enterprise as a mechanism used to tackle poverty in developing countries; like microfinance initiatives for women living in Asia. And I’d certainly heard of some of Australia’s leading social enterprises, like: STREAT, CERES and Vanguard Laundry. What I hadn’t fully comprehended, prior to attending my first Social Traders Conference, was the collective will and government support to create a social enterprise sector in Australia.

For those not sure of what a social enterprise is, they are generally defined as “businesses led by a social purpose, deriving a substantial portion of their income from trade and reinvesting most of their profits to fulfil their purpose”. The beauty of the true social enterprise is that it finds a gap in the market where it can leverage market forces to address social, economic and environmental issues.

Governments are realising the potential of social enterprise to address some of society’s most pressing issues, but here’s the kicker, they can support its growth without having to invest additional money, instead just leveraging their existing spending. Such is the power of social procurement!

The Victorian Government has always been viewed as leaders in the space, having released their Social Enterprise Strategy in February 2017, which outlined their plans to grow the sector. Then, in April 2018, they released “Victoria’s social procurement framework; Building a fair, inclusive and sustainable Victoria through procurement.”

The framework sets out their objectives for leveraging maximum value from the Victorian Government’s significant buying power, specifically their ongoing investment in infrastructure.

The framework will achieve this by increasing job opportunities for under-represented groups and providing greater support for businesses that prioritise social impact alongside the delivery of competitively priced, high-quality construction projects, goods and services.

Victoria’s Social Procurement Framework

The brilliance of the framework is that it articulates the start of a new market. David LePage, Managing Director of Buy Social Canada and long-time advocate for creating a social value marketplace, encapsulated it simply in his slide about “The Evolution of Procurement” where considerations of “value-for-money” are no longer just focused on price and quality but now must also include “social” (impact) and “green” (environmental impact).

Building a social value marketplace

David LePage presenting at the Social Traders Conference 2019

From a personal perspective, one of the main reasons I am passionate about the work that I do with the ASVB, is that I believe the “important information” (namely the social and environmental impact) are often left out of the decision-making process when it comes to investment. In my mind, considering only profit and not the true costs of initiatives, is one of the main contributors to the current “mess” our planet and society is in.

In part, I believe this lack of consideration for social and environmental impact in decision making is due to a lack of motivation, as I’m sure many mines would not be seen as viable propositions if both of these factors were included in the cost-benefit analysis, but I also believe it is partly due to the fact that, particularly the social impact, is difficult to quantify. And that’s where I see the role of the Australian Social Value Bank.

If we are to create a “social value marketplace” as David LePage describes it, we need to be considering social and environmental impact along with price and quality in all procurement decisions. Initially, it will suffice for businesses to state that they create social impact; for example, we can provide quality, cost competitive catering, but we also train and provide employment to disadvantaged young people. However, as this marketplace begins to mature, we will need a standardised way to quantify social value that can be compared.

It is at this point that the ASVB becomes integral to the social value marketplace. When, for example, developers competing to build the next tunnel can say, “we can deliver the project for $X Billion and our suite of training, employment and place-making activities will deliver $X of social value”.

It is only when we start to quantify the net social benefits of activities that we will truly be able to compare procurement options across all four domains: price, quality, social and green.

I left my first Social Traders Conference heartened by the political will to support the growth of a social enterprise sector, certain of there being a place for the ASVB within it, and optimistic that we can create a social value market place, which can use market forces, to get us out of this mess we’re in.

Min Seto is the Executive Officer of Alliance Social Enterprises.

 

The views, information, or opinions expressed in this article are solely those of the individual and do not necessarily represent those of Alliance Social Enterprises.

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