Applying ethics in supplier selection can be complex in the public sector, but its proving a success for SCC
Sheffield City Council (SCC) knew it would be a challenge to create a city economy that works for all when it embarked upon a programme to introduce ethical procurement policies. So it sought legal advice on how and where it could use its discretion to apply ethical standards throughout its supply chain and use its funds to increase social value for local people and businesses.
Filip Leonard, assistant commercial director at SCC, says: “If we find there’s anything a supplier has done that we think would bring the council, or their own organisation, into disrepute… we may take a decision to exclude them from the procurement process. You can do that in the private sector; it’s a lot harder in the public sector, but we’ve gone as far as we can and we’ve taken a real stand.”
Today, the companies the council contracts must share its desire to create a city economy that works for all by paying their taxes, respecting workers’ rights and equal opportunities, and investing in the talents of their employees through good training and safe working conditions which, in turn, create good local jobs. The council’s Ethical Procurement Policy has led to SCC reaching number 61 on the Stonewall top 100 employers list for 2019, awarded the 2019 CIPS SM award for Ethical Procurement, and earning Real Living Wage (RLW) Accreditation in October 2019.
SCC’s figures show that 80% of its supply chain is now paid Real Living Wage, with its outsourced cleaners most recently being moved to that rate following a procurement exercise – which is reducing sickness absence and staff turnover.
Supplier relationships have improved through the new ‘Pay Plus’ scheme to get cash into suppliers’ bank accounts early, says Leonard, and a portal for evaluation, contract management and social value reporting now has a 15% minimum weighting in all relevant SCC procurements, measured using National Themes Outcomes and Measures.
A unit cost is attached to outcomes such as providing apprenticeships for young unemployed people, and by asking suppliers how many they will recruit. If a company commits to 10 people, and SCC calculates (through government statistics and its portal) that’s worth about £50,000 in public sector benefit, for example, in terms of reduced interventions through police or NHS, the supplier with the most social value in monetary value gets the highest score out of that 15%. “We’re starting to get some really substantial returns on local people employed, and the number of apprenticeships is going up significantly,” says Leonard.
Traffic light toolkit for ethical procurement
The Supply Chain Accounting and Employment Diagnostic Toolkit (SCAEDT), developed by SCC with Sheffield University, is based on work carried out in Brazilian and African factories, establishing links between worker representation, minimum wage and productivity growth, says Leonard. “We’ve worked with the university on the toolkit and Sheffieldised it.”
SCC suppliers can self-assess how they treat employees in their supply chain by answering questions and scoring red, amber, green, and solutions and interventions are suggested.
“It made Arco – a uniform supplier with a Far Eastern supply chain – think about where they were buying from and the checks they had in place on their long supply chains. It’s quite an unusual thing for the public sector to step into the supply chain.”