01 February 2022

Social Procurement in the Construction Industry

What's social procurement? Why does it matter? What's the value of social procurement? Learn how socially, economically, and environmentally sustainable actions in our supply chain can create a better future for all.

What is Social Procurement? And why is it Important?

Delivering successful government, corporate, and community projects since 2014, BY Group acknowledges the impact the construction industry can have on the community and on the environment. We also recognise our privileged position in being able to enact positive change that will benefit both society and the planet for generations to come. As part of our commitment to building a better world, we always strive to meet and exceed our social procurement responsibilities.

But what is social procurement? And why does it matter? Today, we’ll be exploring the value of social procurement, as well as how building socially, economically, and environmentally sustainable systems into our supply chain can help create a brighter future for all.

What is Social Procurement?

Social procurement is the process of purchasing goods and services in a way that accounts for the social, economic, and environmental impact of those purchases. This allows businesses and governments to use their buying power to generate social and environmental value in an economically sustainable way.

Social procurement acknowledges the power businesses have to affect change simply by considering who they choose to do business with. Examples of social procurement in the construction industry include:

• Engaging local Indigenous businesses that are verified by Supply Nation or the NSW Indigenous Chamber of Commerce
• Hiring subcontractors from the communities in which we’re working
• Working with social enterprises. These are enterprises that intentionally trade in order to tackle social problems, improve communities, help the environment, or provide access to training and employment for people who otherwise couldn’t get it
• Working with Australian disability enterprises who seek to offer equal opportunities for people with disabilities
• Purchasing from small to medium-sized local businesses
• Buying recycled and recyclable materials to support circular economy practices
• Prioritising companies who actively strive for carbon neutrality

Why Social Procurement Matters

Social procurement is all about building sustainable systems into your supply chain by making purchasing decisions that drive social and environmental value.

Sustainable practices acknowledge that this world runs on finite resources that must be carefully managed so that companies can continue to do business without sacrificing quality of life for future generations. By establishing fair, equal, and responsible processes into our business practices, and making purchasing decisions with companies that do the same, we’re working to create a better and more productive world today, tomorrow, and for many years to come.

The Three Pillars of Sustainability

Sustainability is often broken down into three separate yet intertwined categories: social, economic, and environmental. Together, these are known as the ‘three pillars of sustainability’, each of which aims to create better outcomes for today while paving the way for a better future.

Social Sustainability

Being socially sustainable involves making decisions that improve quality of life for individuals, while strengthening communities and offering greater opportunities for those who might otherwise experience disadvantage. This pillar is dedicated to supporting fairness and equality, while ensuring that workers can enjoy a comfortable, safe, and healthy work environment. Social sustainability works off the belief that a productive and sustainable society is one that’s well-cared for, healthy, safe, and equal for all.

Examples of socially sustainable procurement practices include supporting Aboriginal-owned businesses and directly hiring Indigenous subcontractors, as well as engaging companies that support disadvantaged individuals.

Environmental Sustainability

In many ways, this pillar feeds into all the rest. That’s because environmentally responsible processes often also generate social and economic benefits for the community and for the business itself. Environmental sustainability is concerned with minimising the impact of business on the environment, as well as on local plants and animals in order to preserve this world for future generations.

Environmental procurement includes such actions as choosing local suppliers to reduce transport requirements, using recycled and recyclable materials to support a circular economy, and purchasing ethically and sustainably sourced resources.

Economic Sustainability

Economic sustainability can be considered the counterweight to socially and environmentally sustainable practices. To continue driving social value, businesses must be able to run in an economically viable way so that they can turn a profit from year to year rather than going out of business. A sustainable economic business model promotes equitable distribution of resources so that businesses can infinitely maintain a certain level of economic output.

Being economically sustainable includes actions that either directly or indirectly support job creation, training and education, profitability, and employee retention. It also focuses on supporting local trades and companies rather than purchasing from large, multi-national enterprises.

Why Indigenous Engagement is an Important Part of a Social Procurement Framework

In many ways, Indigenous procurement can feed into all three pillars of sustainability. For example, by meeting your Indigenous procurement responsibilities, you can help support small and medium-sized local businesses. Shopping local is good for the Aussie economy, and also helps minimise transport requirements to help reduce your carbon footprint.

Offering career opportunities, education, and work experience for Indigenous talent also establishes jobs, strengthens communities, and creates skilled workers who will continue to contribute to the economy throughout their entire working life.

How to Measure Your Social Procurement Success

The goal of social and sustainable procurement is to enact positive change in an economically viable way, so it’s vital that you be able to report on your business activities to measure your social procurement success. How you measure your success will depend on what actions you’ve been taking. Here are some measurements that you may wish to track on projects and business activities.

Social Measurements

• Aboriginal businesses engaged
• Social enterprises and Australian disability enterprises engaged
• Aboriginal, disabled, or disadvantaged subcontractors employed
• The ratio of men to women on the project
• Businesses and subcontractors engaged from the community in which the project was undertaken
• Community engagement in areas of operation

Environmental Measurements

• Recycled water usage and ultimate water consumption
• Recycled and recyclable materials used
• Construction waste produced and how much of that waste was repurposed
• Materials sourced from sustainable and accredited supply chains

Economic Measurements

• Annual profit compared to previous years
• Cost of procurement activities

Social Procurement in NSW

To help drive a socially sustainable future, the NSW Government joined Social Traders in 2020. Social Traders is the national trailblazer of Social Enterprise Procurement, aiming to create a more inclusive, equitable, and sustainable Australia.

The NSW Government also regularly updates their Procurement Policy Framework to help businesses and government bodies make better and more sustainable purchasing decisions that drive social value. The Framework outlines social procurement goals, which include driving innovation, supporting economic participation, developing skills, and creating jobs for NSW citizens. It also covers how governments and businesses can go about achieving these objectives.

How BY Group is Meeting Social Procurement Responsibilities

Appreciating our privileged position in being able to enact positive change in society, as a successful construction company in NSW, BY Group is committed to meeting and exceeding our social procurement responsibilities.

We achieve this through many initiatives, including our Construction Career Development Program. This program aims to help young Indigenous construction talent get their foot in the door of this exciting industry by offering valuable, on-the-job training and mentoring. This program offers generous paid wages that are well above the standard award so that cadets can get the work experience they need without having to hold down a second job to support themselves.

BY Group also actively engages local Indigenous businesses and subcontractors from the communities in which we’re building. This is evident in such projects as the Wunanbiri Pre-School fit-out and refurbishment, which was completed in February 2021. Over the course of this project, 9 out of the 13 trades and services engaged were Aboriginal-owned companies, for an overall Indigenous engagement of 69%. This included the Project Engineer and Foreman who were both Indigenous Australians.