Social value is a growing concept in procurement, especially within the public sector. It refers to the long-term, meaningful benefits that emerge from procurement activities, extending beyond cost and function. These benefits have a far-reaching impact on communities, society, and the environment.
In the context of procurement, social value refers to the wider social, economic, and environmental effects of a contract or project, such as creating local employment, supporting small businesses, and reducing environmental damage. The importance of social value in procurement has gained considerable traction over the past few years, primarily due to the growing emphasis on sustainability, community development and ethical business practices.
Increasingly, social value has become a critical factor in procurement decisions, particularly in the public sector, where organisations must demonstrate that their procurements align with broader societal goals. Social value not only helps organisations meet regulatory requirements but also enhances reputation, builds trust and demonstrates a commitment to positive societal impact.
Today, social value plays a pivotal role in the decision-making processes for procurement, influencing how organisations manage compliance and risk while encouraging an environment that drives economic growth and sustainability.
What Is Social Value?
Social value refers to the additional benefits generated by a project, policy, or procurement initiative. These benefits can contribute positively to societal well-being, stimulate local economic growth and promote environmental sustainability. Social value can be divided into three core areas:
1. Social
This involves promoting inclusivity, safety and opportunities for social connection. It focuses on creating equitable and supportive environments, whether through access to public services, employment opportunities for disadvantaged groups, or initiatives that improve community well-being.
2. Economic
Economic social value supports local economies, creates fair employment opportunities, and fosters skills development. It involves generating economic benefits, such as local job creation, the support of small businesses and boosting the skills of local workers through training and apprenticeships.
3. Environmental
Environmental social value is aimed at reducing environmental impacts through sustainable practices and innovation. It involves adopting eco-friendly solutions, such as reducing waste, conserving energy, promoting recycling and lowering carbon emissions to mitigate climate change.
In procurement, social value ensures that every activity undertaken — whether sourcing goods, services, or construction — creates tangible, lasting benefits for all stakeholders, including the community, economy, and environment.
Legislative Background: The Social Value Act And The Procurement Act
The Social Value Act 2013 marked a key milestone in integrating social value into public procurement. The act required public sector buyers to consider how their contracts could deliver additional social, economic and environmental benefits. The main aim was to ensure that procurement decisions did not solely focus on cost and functionality but also considered the broader impact on society.
For example, a local council might prioritise suppliers who employ local workers, invest in the local community and adopt green building practices. This shift towards considering social value was a significant step in making public sector procurement more responsible and accountable for its impact.
The Procurement Act 2023 further reinforced social value by establishing a clear framework for public procurement. This new legislation aims to ensure consistent, transparent application of social value principles across all procurement processes. It underscores the importance of integrating social value into procurement practices, requiring organisations to demonstrate their commitment to sustainability, inclusivity and environmental stewardship. This legislative framework solidifies social value as a foundational principle for all public sector procurement activities.
The Growing Importance of Social Value
Social value has seen a remarkable rise, growing by over 650% since 2020. This growth has been driven by a combination of regulatory mandates, heightened public awareness and the increasing push for sustainable development. Sectors such as construction, real estate and infrastructure have been at the forefront of integrating social value into their projects. For instance, by focusing on local job creation, sustainable building practices and reducing carbon footprints, these industries have demonstrated how business activities can positively impact both the economy and the environment.
One of the primary drivers of this growth is the increasing demand from both the public and private sectors for businesses to take responsibility for their social and environmental impact. As the world grapples with issues like climate change, inequality and social cohesion, there is growing recognition that businesses must play a central role in shaping a better future.
Why Social Value Is Essential For Business Success
There are several reasons why social value is now considered a vital element for business success, including the following:
1. Building Trust And Reputation
Organisations that prioritise social value are more likely to earn trust from key stakeholders such as customers, employees, suppliers and the wider community. By aligning business practices with social and environmental values, businesses demonstrate that they care about more than just profits. This commitment to social value helps to build long-term relationships and encourages customer loyalty, as consumers and clients are increasingly drawn to businesses that contribute to societal good.
2. Enhancing Competitiveness
The increasing importance of social value in procurement decisions is evident from recent statistics. Between 2021 and 2023, public sector bidders who excelled in social value aspects won contracts 56% of the time, compared to just 28% for those that did not prioritise social value. This stark difference highlights how crucial social value is becoming in securing public sector contracts and demonstrates how businesses can gain a competitive edge by integrating social value into their procurement strategies.
Embedding social value into a business’s strategy can serve as a key differentiator, helping companies stand out from their competitors and secure more opportunities.
3. Long-Term Impact
Aligning business practices with social value not only helps improve the immediate reputation of a business but also contributes to long-term positive impacts. By addressing broader social issues such as unemployment, inequality and climate change, businesses contribute to the achievement of the United Nations Sustainable Development Goals (SDGs). These goals aim to create a better world by 2030, and businesses that support these efforts can play a pivotal role in shaping a more sustainable and inclusive future.
CHAS Compliance And Social Value Delivery
CHAS offers certifications that can help businesses meet regulatory standards while also contributing to social value objectives. CHAS certifications such as ISO 45001 (Occupational Health and Safety) and ISO 14001 (Environmental Management) provide businesses with a comprehensive framework for demonstrating their commitment to compliance, sustainability and social responsibility.
1. Enhance Workplace Safety
One of the key benefits of CHAS certification is the ability to demonstrate a commitment to employee safety and well-being. By prioritising workplace safety, businesses can reduce the operational and financial impacts of workplace incidents, improving productivity and creating a more positive work environment.
2. Promote Environmental Sustainability
Organisations with CHAS certification are also well-placed to promote environmental sustainability. Through practices that minimise waste, conserve energy and reduce carbon footprints, these businesses can reduce their environmental impact. This helps to meet regulatory requirements and enhances the company’s reputation as a socially responsible organisation.
3. Achieve Social Value Outcomes
By meeting CHAS’s rigorous standards, businesses can achieve significant social value outcomes. These may include:
- Job Creation: Partnering with local training providers to upskill unemployed individuals.
- Community Investment: Collaborating with local suppliers and investing in community projects.
- Environmental Protection: Using innovative technologies to optimise resource use and reduce environmental impacts.
These initiatives align with both regulatory requirements and social value goals, helping businesses contribute to broader societal objectives.
Beyond Compliance: The Broader Benefits Of CHAS Certifications
CHAS certifications provide businesses with far more than just a way to comply with health, safety and environmental regulations. These certifications also offer several key benefits, including:
1. Operational Efficiency
CHAS-certified businesses can identify areas for improvement in their operations, leading to reduced costs and increased productivity. By adhering to internationally recognised standards, companies can streamline processes and achieve greater efficiency, leading to better profitability.
2. Stakeholder Trust
Being CHAS-certified enhances stakeholder trust by demonstrating a proactive commitment to quality, safety, and sustainability. This commitment resonates with customers, employees and investors, who are increasingly looking for businesses that align with their values.
By aligning compliance with social value goals, CHAS-certified organisations can position themselves as leaders in delivering meaningful, measurable impacts that benefit not only their bottom line but also their communities and the environment.
Streamlining Compliance And Supporting Social Value Delivery
CHAS offers a suite of tools that help businesses streamline their compliance processes and efficiently achieve social value outcomes. These tools include:
1. Centralised Compliance Management
CHAS provides a single platform for tracking and managing compliance, reducing administrative overhead. This centralised approach helps businesses stay on top of regulatory requirements, ensuring they meet their obligations without unnecessary complexity.
2. Risk Assessment Tools
CHAS’s real-time data and analytics help businesses assess contractors’ compliance and mitigate risks. This feature is particularly valuable in ensuring that all stakeholders are adhering to the relevant standards and working towards shared social value objectives.
3. Automated Pre-Qualification
CHAS enables businesses to pre-qualify contractors for multiple opportunities, ensuring that they meet updated compliance credentials. This streamlines the procurement process, saving time and reducing risk.
4. Guidance On Standards
CHAS offers resources to help businesses meet ISO certifications and other accreditations, aligning compliance efforts with social and environmental objectives. This support ensures that businesses are not only compliant but also contributing positively to their communities.
By leveraging these tools, businesses can ensure that their compliance processes are streamlined and that their efforts to achieve social value are maximised.
Integrating Social Value In Procurement
Organisations that aim to maximise their social value impact should focus on the following key steps:
1. Set Clear Objectives
Define the social, economic and environmental outcomes that the organisation aims to achieve. For example, a construction project could prioritise local employment, apprenticeships and the use of eco-friendly building materials.
2. Embed Social Value In Contracts
Incorporate social value criteria in tender documents to ensure that contractors understand the expectations and requirements related to social value. For example, the Social Value Model used in public sector procurement helps guide these considerations.
3. Measure And Report Impact
Use data-driven tools to track and report progress transparently. CHAS offers platforms that allow businesses to measure the effectiveness of their social value initiatives and ensure that they are aligned with the set goals.
4. Engage Stakeholders
Involve employees, suppliers and community members to ensure that initiatives address real needs and encourage collaboration. This engagement ensures that the outcomes of social value initiatives are relevant and beneficial to all stakeholders.
Related Reading: Ensuring Social Sustainability: Key Questions for Your Supply Chain
The Future Of Social Value
As social value continues to evolve, it will become even more integrated into business operations and procurement practices. Technological advancements, such as AI and data analytics, will enable businesses to measure and report social value more effectively, while new policy developments will further solidify social value as a core element of procurement. For businesses, the key challenge will be to stay ahead of these changes and continue improving their social value practices to drive positive impact in society and the environment.
As more organisations recognise the long-term benefits of incorporating social value, the role it plays in procurement decisions will only continue to grow. By embracing social value, businesses not only contribute to their communities but also enhance their competitiveness, improve stakeholder trust and help create a more sustainable future.
Ready to maximise your social value impact? Join CHAS today and access powerful tools to embed social, economic and environmental benefits into your procurement processes.
