Speakers at the CIPS Annual Conference and Exhibition in London stressed that procurement coupled with legislation are two instruments that can be used to make a difference by ensuring money spent on goods and services also delivers some social value.
The audience was urged to ‘raise its game’ and speak up for the social benefits procurement can bring by, for example, inserting social value clauses into contracts and working with social enterprise suppliers who seek to do something for the public or greater good.
Hugh Chamberlain, EMEA CSR procurement head for health, pharmaceutical and FMCG company Johnson & Johnson said his company understands: “For every £1 we spend can we do on something that will better society. Not only will we procure what we need but that £1 we will also make a lot more impact on the communities in which we live.”
The Public Services (Social Value) Act 2012 requires all relevant organisations in England and Wales to consider how the services they commission and procure might improve the economic, social and environmental well-being of an area on deals worth more than £200,000. “The Social Value Act is going to make a big impact and we all need to think about how we’re going to respond,” said Chamberlain.
Private sector companies, like Johnson & Johnson, are not covered by this legislation, although they could be required to consider it in their capacity as a supplier to the public sector.
Chamberlain says Johnson & Johnson thinks about what social good it can achieve through its spending because it fits its company credo of backing supplier diversity, improves its reputation and it could even lead to increased revenue over time.
Current social enterprise suppliers to Johnson & Johnson include software and website testing organisation Autism Works and landscaping supplier Blue Sky, which supports ex-offenders. Another is Haven Products, which employs disabled people and provides contract packing, quality inspection, secure storage, printing and mailing. “These are three fantastic organisations that we’re really proud to work with.”
Chamberlain said senior leadership has been very supportive of the approach, and getting this support is a must-have before setting out on such an initiative. “Identify opportunities, get internal support and give some structure to your ideas,” he advised.
Professor Olinga Ta’eed, director of the Centre for Citizenship, Enterprise and Governance based at the University of Northampton introduced delegates to the social to earning ratio devised by Seratio that seeks to measure in hard numbers the efficiency of an organisation’s social spend, in much the same way the standard price to earnings ratio measures the earnings of a company against costs. “We measure the fluffy stuff,” he said. “We use big data to convert sentiment in the market about a company into a financial figure.”
He said this isn’t about small numbers. He’s worked with some massive companies and on some huge areas of spend and the figures are significant. In certain countries, India for example, the law requires all companies doing business there, with at least $1 million in profits, to allocate 2 per cent of the average net profit over three years against key social and environmental programmes.
“These figures aren’t small – these are amounts you would kill your mother over,” he said. “This is a serious subject and you should look at it seriously,” he urged.