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’.