Procuring with Purpose; the evolving role of social enterprise and social value

In a recent interview with a procurement magazine, I discussed the importance of ‘Procuring with Purpose’.

Buying from social enterprises enables procurement professionals to create social value across the supply chain.  In this article, I explain how this can create a positive impact in society, as well as your bottom line – and why those who embrace it will thrive.

Why I joined WildHearts

I joined WildHearts in 2014 due to my fundamental belief in the vision that business can be a force for good.

Global poverty and inequality demand that business strategies are built with inclusive growth in mind. No longer can we overlook the power of business to deliver significant and lasting social impact through sustainable business practices.

Over 5 years on, it’s clear to me this is a conviction that we share with global business leaders, international brands and wider society. WildHearts enables businesses to address some of the world’s most pressing problems through purchasing our products and services.

We empower our customers to empower people around the world.

To date, we have transformed over 1 million lives globally.

 

What is Social Value and what is a Social Enterprise?

Social enterprises are businesses created to further a social purpose in a financially sustainable way. They make their money from selling goods and services in the open market, but profits are reinvested back into the business or community in pursuit of their social mission.

Social value serves as an umbrella term where businesses are becoming more conscious of the wider economic, social and environmental effects of their actions. Being more mindful of these issues in everyday business activities can allow organisations to create/add social value to wider society. One of the key areas businesses are looking to create social value, is in the supply chain.

As a result, a growing number of organisations are looking to bring social enterprises into their supply chain. As the sector continues to evolve, procurement personnel require an effective means of evaluating the credentials of social enterprises that are competing for their business. These should include Social Enterprises who:

– Have a clear social and/or environmental mission set out in their governing documents

– Generate the majority of their income through trade

– Reinvest the majority of their profits

– Are autonomous of the state

– Are majority controlled in the interests of the social mission

– Are accountable and transparent

Further guidance on procurement due diligence on social enterprises can be accessed here.

 

How prevalent are Social Enterprises in the UK and what sort of growth are we seeing?

There are over 100,000 social enterprises in the UK, employing over 2 million people. This represents 3% of UK GDP, three times the size of the agriculture industry, and 5% of UK employment – as many jobs as the creative industries sector.

25% of social enterprises are less than 3 years old, three times the proportion of start-ups compared to SME’s (8%). 58% of social enterprises are anticipating an increase in turnover in the next 12 months, compared to only 40% of their SME equivalents.

However, it’s not just growth where social enterprises are setting an example. In terms of diversity, we are also leading the way, with:

– 89% of social enterprise leadership teams having a female director and 41% of leaders being women, significantly ahead of both mainstream SMEs (20%) and big business (7% of FTSE 100).

– 34% of social enterprises also have Black Asian Minority Ethnic representation and the proportion of social enterprises led by a member of a Black and Minority Ethnic community is 12%, much higher than SMEs more widely (5%).

– 36% of social enterprises have a director with a disability. More than two-thirds are supporting individuals from disadvantaged groups, and more than four in ten employ them.

 

Tell us a bit more about WildHearts?

WildHearts Group is a portfolio of companies that, through their activities and profits, create global social change. Our products and services are tailored to the demands of today’s business world, helping organisations from multiple sectors operate efficiently and responsibly.

WildHearts Office is the UK’s leading B2B social business. With a catalogue of more than 35,000 products, from office stationery to workwear, we deliver next day from our extensive UK and Ireland warehouse infrastructure.

WildHearts Horizon is the only provider that manages documents from creation to destruction in-house, delivering much needed cost efficiencies and innovation to the document management sector. Our unique combination of social impact and offsite/onsite services enables us to provide organisations with a competitive document management solution that fulfils both regulatory and responsible business commitments.

Crucially, all of our customers have one thing in common – the profits from their spend fund the work of the WildHearts Foundation (Registered Charity SC037072) to change lives locally and globally. We allow our customer to transform essential indirect procurement overheads into social investments.

Our social initiatives are diverse; from addressing social mobility in the UK by equipping young people with key development and employability skills, to addressing gender inequality in the developing world through our StartHer Strategy.

 

Does being good mean paying more?

Most of the time, absolutely not.

A fundamental part of our offering is to enable procurement professionals to achieve commercial and social objectives simultaneously – they are not mutually exclusive. At WildHearts we have deliberately selected markets where we can be more commercially compelling than our competitors. As a result, no customer has ever paid more by working with WildHearts.

Whilst many of my social enterprise peers would share this view, I appreciate some operate in markets or have organisational structures that require a premium to be placed on the social value they create. Although I don’t think that’s necessarily something we should shy away from, there are many reasons why our communities rely on social enterprises to deliver social outcomes that can’t be provided elsewhere.

Enlightened organisations know that business for good, is good for business.

A recent study showed 85% of corporates reported that buying from social enterprises had a positive effect on how they were perceived, 86% said that buying from social enterprises contributed to new business growth.

Many of our customers are years ahead of their competitors by using diverse supply chains for market advantage – including tier 1 suppliers to the Government. It is imperative that all businesses start to look towards embedding social enterprises into their supply chains in order to simply remain competitive in future marketplaces.

Our attitudes towards business are changing, the organisations that thrive will be the ones that embrace the changing landscape.

 

What’s the uptake been like in private sector vs public sector?

Perhaps unsurprisingly, the vast majority of WildHearts customers sit within the private sector. I think this is quite typical of the private sector’s ability to move quickly and identify opportunity in a changing procurement landscape.

This is highlighted by the SEUK Buy Social Corporate challenge, who have brokered relationships between 15 corporate partners with over 250 social enterprises – resulting in a combined spend of £65million.

Generally speaking, public sector procurement processes are wider in scope and longer in timescales, although that shouldn’t put you off.

The introduction of the Public Services (Social Value) Act saw multiple examples of good work within local/central government. However, the consensus across the social enterprise community is that it is a work in progress. As it stands, the act only applies to services, not goods, despite recent commitment for its extension by the Cabinet Office.

There are numerous local authorities implementing ‘buy social procurement policies’ that are transforming communities across the country, many of whom do a lot more than the Social Value act prescribes.

The Government is aiming for all public sector procurement to be influenced by social value, instead of the modest 9% currently estimated. However, we shouldn’t have to wait for legislation to make us think differently about public sector procurement. Particularly when you consider 28% of social enterprises are working directly in the most deprived UK communities, reaching areas of the UK that traditional CSR policies cannot.

With the right leadership and resources, there is no reason we can’t move quicker, think bigger and act differently. The opportunity for society is too great to be ignored.