The Evolving Procurement Landscape: Prioritising Sustainability and Social Value

There’s a huge change taking place in procurement as companies and local government are understanding the benefits of values-led business along with the collective need to work with their supply chain to reach net zero.

Social Value weightings used to be typically 5-10% of the scoring matrix at best. Now what we’re seeing more and more regularly are social value and sustainability weightings in tenders of 20-30% where clients are asking their supply chain to support their values and help them reach their net zero goals.

The criteria vary depending on the values and goals of the customer. We’ve recently won contracts with vocational colleges where we had to demonstrate our commitment to apprenticeships. ACC Liverpool Group’s FM tender asked suppliers how they would “support the Live Events Industry at a grass roots level” and our partnership with Future Yard CIC, a local grass roots live music venue, is a direct result.

Businesses also need to report their carbon emissions and they want to know their supply chain, who form their scope 3 emissions, can supply the metrics they will need. They also want to know that our business is on a path to net zero too.

Many local authorities now set social value and sustainability targets as mandatory planning conditions. We’ve seen shared apprenticeship placements and local supply chain targets set through Section 106 planning conditions, alongside carbon targets.

The fundamental change, is that the big lenders on many of our large-scale Residential and Student Accommodation projects, which can be upwards of £100m investments in total, now insist as part of their “ethical funding decisions” that the contractors they use train local people, use local labour and suppliers and create a long lasting positive legacy in the area too.

This shift to a values-led business model has huge potential benefits for local suppliers.

It makes it harder for the biggest, national players to swoop in at the lowest price, bring in a supply chain from outside the area on zero-hours contracts and disappear off as quickly as they appeared when their contract is complete.

A focus on ESG levels the playing field and everyone benefits. The local authorities deliver a greater economic boost from development and an upskilled workforce. Contractors from outside the region are more likely to use local supply chain who are more easily able to deliver the KPIs set by the planners.

There’s still lots to do. For every excellent procurement exercise that puts ESG at its core, there’s an unscored tick-box effort that asks suppliers to “make their best endeavours” that isn’t worth the paper it’s written on. We need to press for better.

But, for local businesses, employing and investing in providing good jobs, training our young people and supporting local community schemes, this focus on ESG allows us to have more power and leverage in our own region. We can compete head on with national providers, deliver better value for clients and a positive legacy for the regions we’re working in.

This article was published in Well Connected Magazine, Summer 2024 Edition – the magazine of Liverpool Chamber of Commerce.