Social Procurement Community of Practice for the Construction Industry

A guide to social procurement

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• What is social value in procurement?

  In simple terms, ‘social value’ is the net economic, social and environmental benefit a purchase of goods or services can bring to a community beyond the delivery of efficient goods and services and the function of the asset procured, considering counterfactuals such as:

  • Deadweight – what would have happened anyway; 
  • Attribution - what else could have contributed to the change; 
  • Displacement - what other benefits does the intervention displace/push aside; 
  • Substitution - losses for others who might have lost out;
  • Drop-off - reducing benefit over time;
  • Culture - cultural differences in perceptions of value.

• Creating social value

  Social value can be created in many ways by the organisations that you purchase from:

  • Providing employment opportunities for groups who may be disadvantaged in the labour market such as people with a disability, Indigenous peoples, refugees, migrants, homeless, youth at risk, ex-offenders and women in highly masculinised industries etc.
  • Providing business opportunities for minority and social benefit suppliers such as social enterprises, B Corps etc.
  • Community involvement (corporate volunteering, supporting local charities , donations to good causes etc)
  • Fair business practices (responsible sourcing and supply chain management, respect for commercial and labour, fair pay, fair business relationships etc)
  • Human rights (promoting equality and diversity, respecting local cultural rights, freedom of association and expression, modern slavery etc)
  • Labour practices (providing employment, safe and healthy workplace, good working conditions and wages, opportunities for human resource development/training, work-life balance etc)
  • Environmental (reduce pollution, emissions and waste etc)
  • Consumer issues (privacy and data protection, safe and healthy products etc)
  • Good governance  (accountability, transparency, accurate reporting, respect for law, involvement of staff and stakeholders in decision making etc.)
  • Responsible supply chain and purchasing activities (their own social procurement)

• Why focus on the construction industry?

  In most countries, governments are the biggest single purchaser of goods and services and are taking the lead in reviving social procurement. 

  However, many socially conscious private organisations are also using social procurement as a powerful way to leverage their supply chains to help achieve their corporate social responsibility goals.

  The construction industry's strategic role

  While governments procure from all industries, the construction industry’s relatively large size and multiplier affect on the wider economy make it an especially powerful lever for governments to use social procurement to address their social policy objectives. 

  It is estimated that every $1m spent on the construction industry in Australia creates $3.7 m in the wider economy. This means about 9 jobs in construction and 37 jobs elsewhere.

  Untapped Social Value and Infrastructure Spending

  It has also been estimated that there is about 30% of untapped social value which can be generated from spending. A total of $255 billion in general government expenditure has been allocated to infrastructure over the four years to FY2025-26.

  This means that there is an extra $76.5 billion of social value which could be created in our communities from this infrastructure spending alone, let alone all the other spending on construction across the economy.

  Not surprisingly therefore, governments around the world are increasingly requiring their construction supply chains to create social value as a condition of public contract award. 

  This is reflected in the international proliferation of social procurement policies and the publishing of international standards and guidelines like ISO 20400:2017 - Sustainable procurement — Guidance and ISO 10845-1:2020 Construction Procurement which includes provisions for ‘targeted procurement’.