Social Value Explained

Social value encompasses a broad range of factors, reflecting an organisation’s commitment to making a positive impact on society and the environment while also achieving economic goals. Here’s a breakdown of the components of Social Value:


  1. Environmental Value: This involves initiatives aimed at reducing environmental impact, promoting sustainability, and preserving natural resources. It includes efforts such as minimising carbon emissions, reducing waste generation, adopting renewable energy sources, and implementing eco-friendly practices throughout the supply chain. Also, contributing to environmental benefits through partnerships by supporting educational and grassroots initiatives to improve the local ecosystem, cleaner environment and wildlife conservation are ways to make an impact.


  1. Social Value: Social value initiatives focus on improving the well-being and quality of life of individuals and communities. This can include community engagement programs, charitable donations, volunteer initiatives, support for social causes (such as education, healthcare, and poverty alleviation), and efforts to promote diversity, equity, and inclusion within the organisation. This involves building relationships, understanding community needs and priorities, and collaborating with community members to address shared challenges and opportunities. Community engagement can take many forms, including partnerships with local organisations, participation in community events, and consultation processes for decision-making.


  1. Economic Value: Economic value refers to the financial benefits generated by the organisation’s activities. While the primary focus of Social Value is on non-financial outcomes, economic value is still important for sustaining operations and enabling growth. This can include job creation, fair wages and benefits for employees, economic development in local communities, and responsible financial practices. Partnerships with charities, social enterprises and community groups to enhance knowledge sharing, providing mentoring, training and supporting people to become ‘employment ready’ through holistic support programmes play an important role in lifting local economies and alleviating poverty.


  1. Sustainable Supply Chain Management: Ensuring that the organisation’s supply chain operates in a socially and environmentally responsible manner is essential for Social Value. This includes sourcing materials and products ethically, supporting fair labor practices, minimising environmental impact throughout the supply chain, and promoting transparency and accountability among suppliers. Encouraging and enabling charities, social enterprises, SMEs and start-ups to become part of the supply chain, will boost the local economy and create add-on-value.


By incorporating these components into their operations and strategies, organisations can demonstrate their commitment to Social Value and contribute to building a more sustainable and equitable society. This not only benefits society and the environment but also enhances the organisation’s reputation, attracts and retains talented employees, and fosters long-term business growth.

The Procurement Policy Note PPN 06/20 emphasises the importance of social value in winning public contracts and is an enhancement for Social Value Act 2012. The new Procurement Act, coming to an effect Autumn 2024, is enhancing the role of Social Value in Public Sector procurement even more. Here’s a breakdown of the key points for any Public Sector contractor to consider is social value planning and delivery:


  1. Mandatory Requirement: Social Value is now a mandatory requirement for all companies bidding for public contracts, regardless of size or industry. This means that all businesses need to consider and demonstrate their social, economic, and environmental impacts when bidding for contracts. These factors need to be contract specific, add-on-value and locally relevant – and engagement with the contract related community/industry is key.
  2. Weight in Selection Process: Social value now holds significant weight in the selection process, comprising a new score of 10-30% in the evaluation criteria for tender bids. This indicates that companies must prioritise and articulate the social benefits they can bring to the table when competing for contracts.
  3. Evidence-Based Approach: It’s no longer sufficient for companies to simply have a corporate policy on social responsibility. They must now provide clear evidence of the social, economic, and environmental benefits that their proposed contract will deliver throughout its entire life cycle.
  4. Risk of Losing Contracts: Companies that fail to demonstrate the impact of their work on social value may not only lose out on winning tenders but also risk losing contracts they have already secured. This underscores the importance of integrating social value considerations into all stages of contract delivery.
  5. Increased Competition: With the emphasis on social value, competition for public contracts has intensified. In this competitive landscape, it’s crucial for companies to differentiate themselves by showcasing their ability to deliver high-quality contracts that generate meaningful social impact.
  6. Advantage for SMEs and Social Enterprises: Small and Medium Enterprises (SMEs) and Social Enterprises have a distinct advantage in this new procurement environment. Rather than focusing solely on offering the lowest bid, these companies can stand out by demonstrating their capacity to deliver contracts that not only meet requirements but also create significant Social Value. However, Social Value is still required to be contract specific, locally relevant and tangible.
Overall, the emphasis on social value in public procurement highlights a shift towards more holistic and sustainable approaches to contracting. Companies that can effectively integrate social impact considerations into their business strategies will have a competitive edge in securing and delivering public contracts.



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