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Supply Chain Outlook > Expert Eye > Beyond ESG : Embedding Social Value  
01Expert EyeSupply Chain InsightsSustainability


BEYOND ESG : EMBEDDING SOCIAL VALUE  

Guy Battle Last updated: 17 April 2024
Share



Integrating social value throughout the supply chain should be standard practice
for any responsible organisation. Guy Battle, CEO of Social Value Portal and
co-Chair of the Sustainable Procurement Pledge, describes the evolution of
social value and what a successful environmental social governance strategy
looks like.

Contents

EMBEDDING SOCIAL VALUEUNLOCKING SUPPLY CHAIN VALUESETTING CONTRACTUAL
EXPECTATIONSMEASURING, TRACKING, AND REPORTING


EMBEDDING SOCIAL VALUE

Corporate social responsibility (CSR) is under closer scrutiny than ever before,
so it makes sense to ensure that organisations, and the businesses they procure
from, are managing risks as well as thinking about moving beyond environmental,
social, and governance (ESG) to social value creation. 

Social value is the term used to describe the value an organisation creates for
individuals, communities, and society as a whole and has become standard
practice for the majority of businesses in the UK. 

Examples of social value initiatives include designating staff time for
volunteering, committing to sustainable procurement practices, offering
apprenticeships and training programmes, buying and employing locally, and
reducing carbon emissions. 

On a global level, the UN’s Sustainable Development Goals (SDGs) provide a good
proxy for social value. 

In practice, the meaning of social value is likely to change from one job or
project to the next, as different communities will have different needs. For
example, seeking suppliers that can provide training for local people makes
sense in areas where unemployment is high. 


UNLOCKING SUPPLY CHAIN VALUE

From the Public Services (Social Value) Act in 2012 to the new Procurement Act
2023, organisations across the public and private sectors have been gaining a
wider understanding of the many and far-reaching benefits to be had from
generating social value throughout the supply chain. 

This is having a ripple effect on both a global and local level.
Internationally, we are already starting to see countries such as the Republic
of Ireland, Canada, and Australia moving towards embedding social value into
procurement legislation. 

The key to success lies in understanding the needs of a given community and
developing a framework that caters for those needs. This will ensure that,
together with suppliers, organisations can make a targeted and meaningful
contribution. 

Therefore, companies with extensive supply chains should be thinking about how
they can unlock social value through their supplier relationships by channelling
the spirit of the Social Value Act. 

Of course, private sector organisations are not bound by the act (unless they
are working directly with the public sector), but even so, they should consider
how to embed value creation in their own procurement and supply chain management
solutions. 

There is a good business rationale for doing this, such as bettering customer
relations, attracting and retaining high-quality people, increasing brand
awareness, and reinforcing brand reputation. 

The bottom line is that everyone stands to benefit from a company’s contribution
to building a flourishing community. For example, the local workforce becomes
more resilient, which in turn leads to a booming local economy that feeds back
into the supply chain, thus forming a virtuous circle.




SETTING CONTRACTUAL EXPECTATIONS

Broadly speaking, the bigger the company, the more scrutiny it comes under. Yet
RepRisk, a due diligence database on ESG and business conduct risks, recently
found that nearly one in three public companies linked to greenwashing are also
associated with social washing. 

Buyers have an integral role to play in guaranteeing that their organisation
will be beyond reproach, simply by ensuring that suppliers are contractually
bound to deliver on their social value commitments when bidding for the work. 

By putting in place a system that ensures social value delivery, it will
naturally become business as usual – and this stands to benefit every
stakeholder on many levels. 


MEASURING, TRACKING, AND REPORTING

The most effective way to capture and report social value performance is by
using a robust measurement framework such as the Themes, Outcomes, and Measures
(TOM) System™.  

In the UK, it is endorsed by the Local Government Association that ensures
procurement spend goes as far as possible, enabling buyers to track and measure
social value from commitment to delivery. It is fully compatible with the UN
SDGs and is already the UK’s most established and widely adopted method for
recording and reporting social value in the supply chain. 

Where profit is measured in standard accounting terms, social value is measured
by actions, with a financial merit attributed to it. For instance, providing a
job for someone who has been in long-term unemployment saves money for the UK
government in benefit payments and provides income to the newly employed
individual that will be spent in the local economy. 

Furthermore, as a result of having an income, they are likely to be healthier
for longer and therefore not become a burden for the NHS. Thus, all of these
benefits can be valued. 

The TOM System™ is fully transparent and the data is validated by a third party,
which adds another layer of protection against accusations of greenwashing and
social washing. 

Demand for third party data validation and reporting is naturally expected to
increase, with both suppliers and buyers relying more heavily on measurement
frameworks to report on social value performance. After all, reporting inflated
results has the potential to do significant harm to an organisation’s
reputation. 

Social Value Portal has created a resource for buyers that sets out what best
practice looks like when embedding social value into procurement.

Join in the conversation on LinkedIn


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TAGGED:launch
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By Guy Battle
With a career spanning more than 30 years, Guy Battle has been leading and
prioritising sustainable change, aiming to tackle large-scale issues such as
sustainable design, climate change, and social impact. Battle set up an online
measurement, evaluation, and reporting platform, known as Social Value Portal,
in 2014 and currently works cross-industry on developing social value solutions
that deliver real and tangible impacts.

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