Australia’s Hidden Social Value Act

Posted on the 26th February 2020

You might be aware that the ASVB is based on a model that was developed by the UK housing sector, the UK Social Value Bank. The tool was developed in response to their Government’s introduction of the Social Value Act in 2012.

The UK Social Value Act requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits. This made being able to demonstrate social value, alongside cost effectiveness, a priority for the UK housing sector.

We don’t have an equivalent Social Value Act here in Australia but we are starting to see our State Governments seek these additional benefits through their social procurement initiatives. At this stage, it is most prevalent in initiatives that involve large government investment, such as the development of infrastructure.

TENDERING ON SOCIAL IMPACT

Companies involved in development and construction are already being asked at the tender stage to outline their strategies to deliver social impact. It is one of the criteria that their bids are being assessed on.

There are a couple of  main strategies that these companies are using to embed the creation of social impact in their tenders.

PURCHASING SOCIAL VALUE

The first is to include their own social procurement strategy within their organisational approach. This means that they commit to purchasing goods and services from social enterprises that contribute positive social outcomes as part of their standard business operations.

For example, they may contract a social enterprise, who is an inclusive employer, to clean up waste on their construction sites and divert usable resources away from landfill. This approach would include environmental outcomes as well as employment opportunities for people with a disability who are hired by the social enterprise.

Using this strategy, the company may set a target amount or percentage of overall spend that they will direct toward social enterprises throughout their supply chain. Or, as in the example above, they may outline specific partnerships and the amount this contract will cost them.

CREATING SOCIAL VALUE

The other strategy is to embed formal training and job creation initiatives within your own organisation’s activities, as part of your bid. This approach has already been successfully used in a number of large scale projects.

Generally the construction company will partner with a vocational education provider to up-skill a group of recruits to fulfill specific positions on their work site. Depending on the target cohort of the program, it is likely additional supports will be required to achieve sustainable outcomes. In the case of supporting highly marginalised young people, new migrants or ex-offenders for example, it is best to partner with skilled NGO who has experience in supporting people with additional needs through training and into sustained employment .

COMPETING ON SOCIAL VALUE

Currently, these types of approaches are being submitted with training and employment outcome targets, which may suffice for now. However, as the market matures and competition increases, an approach like the ASVB will be able to make a real difference.

By simply taking the amount of money you intend to invest towards your social impact initiative, and estimating the number of jobs you will create, the ASVB will allow you to forecast the social value that could be created if yours were the successful bid.

This is a cost-effective strategy that can really strengthen your proposal, by including the dollar value of the social impact that would be delivered by this component of your tender.

From the government perspective, or whoever may be procuring high value services, the ASVB will allow you to compare different social impact strategies to help inform your decision making knowing which bid offers the greatest likely creation of social value.

Of course once successful in winning the tender, the ASVB is the obvious choice to report back on the actual social value created from your social impact initiative.

We believe that the ASVB can make a real difference in this context by helping to encourage money being allocated towards projects that create more social value. In response, we are now starting to offer one-off impact valuation statements that can be used to support your tender. If you’d like to discuss this opportunity, please get in touch at info@asvb.com.au.

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