For many businesses, procurement is about more than just product and price. Increasingly, organisations are using it as a force for good.
Social procurement – businesses using their buying power to create social or environmental benefits – is on the rise. Australian businesses spent $1.1 billion with social enterprises over the seven years between 2018 and 2024, including a record $257 million in the 2023-24 financial year, says the social enterprise industry body and certifier, Social Traders.
On both sides of the Tasman, government rules mandating social procurement have been a big factor in its rise, says Brian Sherriff, key account manager at Bunzl Australia & New Zealand. But they are not the only element driving organisations to take a more ethical approach.
“Social procurement is gaining traction across many industries, driven by government policies, stakeholder expectations and ESG commitments,” says Sherriff. Organisations are reframing value to include impact, transparency and ethical sourcing. “Procurement leaders
have an opportunity to open doors for smaller social enterprises, and many are taking that opportunity.” Approaching procurement with ethical or sustainable outcomes in mind can have a cascade of benefits on both sides of the transaction.
“You’ve got to look at procurement as more than a transaction. It’s an opportunity to solve problems, to shape relationships, and to set standards. When you treat your suppliers as partners – as a community pulling in the same direction – you can achieve longterm value that extends well beyond price.”
BIG IMPACT
According to Social Traders, Australia has more than 12,000 social enterprises, contributing $21 billion to the economy every year, and
buying from them can have a big impact: that social procurement spend since 2018 has created 10,000 jobs and more than 918,000 training hours for people otherwise shut out of work, as well as delivering $88.1 million in affordable and accessible community services and diverting more than 56,000 tonnes of waste from landfill.
Buying from social enterprises, disability-inclusive suppliers, and Indigenous-owned businesses doesn’t just support those enterprises and their direct work. It can have a broader impact, supporting local economies, boosting inclusivity and jobs, bolstering local resilience, and rewarding local entrepreneurs and innovation.
It also provides several benefits for the business doing the procuring. Social procurement can be a powerful way to improve a brand’s reputation in the minds of consumers, who are increasingly aware of brands’ ethical credentials and want to spend their money on businesses whose ethics align with their own. It can also be an important tool for boosting staff morale and engagement, and retaining employees – particularly young ones – who increasingly want to work for purposeful employers. By engaging with a wider range of people and businesses, buyers may find new opportunities for collaboration arising and unearth new sources of inspiration and innovation. Businesses that engage in social procurement can also boost their supply chain resilience; a diverse range of ethically minded suppliers may prove more resilient to disruption when times get tough.
REDUCING RISK
For large organisations across Australia and New Zealand, one of the strongest cases for social procurement lies in risk management. Governments are tightening global supply chain expectations around modern slavery, carbon emissions and labour standards. By partnering with transparent and values-aligned suppliers, companies gain visibility into their supply chains and reduce exposure to reputational damage, regulatory penalties, or sudden supply shocks.
These partnerships can also create agility. Smaller social enterprises are often closer to their communities and more responsive to shifting conditions. That responsiveness can give businesses access to innovation and flexible service delivery models that may not emerge from conventional procurement relationships. Over time, the effect is amassed: resilient, diverse and values-led supply chains.
MORE THAN A TRANSACTION
Chris Heptinstall, the head of procurement at the social services organisation Uniting, says he regards ESG responsibilities as being just as important as cost and ease of process for staff when it comes to making procurement decisions. “Staff and stakeholders alike expect us to operate with integrity, and that means embedding ESG considerations in all purchasing decisions,” he says.
“Procurement is more than just a transaction. It’s an opportunity to solve problems, to shape relationships, and to set standards. When you treat your suppliers as partners – as a community pulling in the same direction – you can achieve long-term value that extends well beyond
price.” By embedding social and environmental responsibility into supply chains, companies have the power to not just do good but also enhance their reputations and gain the business benefits that come with that. Procurement can create real, lasting change for the businesses doing the buying, as well as for people and the planet.
