How your suppliers can help deliver your sustainability agenda

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More than a third of all annual public spending is with external suppliers. Can you imagine what could be done if this spend could also achieve radical environmental and social impact?

Social value – the acknowledgement that there are social, environmental, and ecological dimensions of value – is not a new concept. Yet it has never been more important to maximise this through the public sector’s external spend[1]; the supply chain is essential to delivering the Government’s policy commitments including those related to the COP26 summit, levelling up, and decarbonisation.

The publication of the Social Value Model[2] marks a fundamental shift away from Corporate Social Responsibility towards delivering tangible outcomes through supplier contracts. Public sector buyers have a vital role to play. In demanding more from their suppliers, they can achieve transformative change and added value that goes far beyond contractual deliverables.

Market Engagement and Procurement Design

The Commercial Case articulates how the preferred option can be acquired.

In defining the optimal route to market, the Commercial Case is the key vehicle for ensuring that sustainability aspirations are realisable through the supply chain. A one-size-fits-all approach will not deliver the intended outcomes and runs counter to Government guidance, which states that sustainability and social value criteria must be linked to the subject matter of the contract[3].

Sustainability considerations are increasingly a priority for the Strategic and Economic Cases and to ensure alignment procurement design needs to be viewed through a social value lens. This means translating departmental spending objectives into specific procurement aims and aligning with five themes of the Social Value Model (Covid-19 recovery, tackling economic inequality, fighting climate change, equal opportunity, wellbeing).

For example, a focus on the theme of tackling economic inequality may consider how local suppliers could participate either as suppliers or through ‘meet the buyer’ events with prime contractors. Alternatively, if wellbeing is the priority, encourage potential suppliers to implement the Voluntary Reporting Framework[4].

Market engagement provides the opportunity to reinforce the procurement aims with the supply market. Crucially, it also indicates whether potential suppliers can deliver the desired social value outcomes. Although it is permissible to reduce the importance of social value in the tender evaluation where there is limited market maturity, consider whether there are alternative routes to achieve sustainability objectives.

Some industries, such as the construction sector, are typically more advanced in assessing and reporting on social value. Look to apply cross-sector best practice, to increase the sustainability capability of the chosen market: if suppliers know that social value is important, they will be more likely to invest to develop the required capabilities over the long term.

Evaluating Social Value Credentials

The Commercial Case sets out a clear evaluation approach and methodology.

The evaluation of social value criteria in the past was inconsistent and often little more than a box-ticking exercise. As a result, suppliers have not always helped to achieve overarching sustainability objectives. In addition, the Social Value Model now mandates a minimum of 10% of the total marks for such criteria and so it warrants proper consideration.

Contracting authorities should set clear expectations and request bespoke responses from bidders which clearly link social value delivery to the contract requirements. Likewise, suppliers recognise that the ability to deliver social value may well be the difference between winning and losing a contract, so they will want to demonstrate their competence.

As with all public procurements, the principles of equal treatment and non-discrimination apply, and so social value criteria should not ‘lock out’ small or voluntary organisations. When designing the evaluation approach, it’s better to seek high-quality rather than high-volume outcomes and assess on a qualitative rather than quantitative basis.

Bids should be checked for vague promises or reiterations of corporate initiatives. Clear response guidance in the tender documentation helps set expectations with bidders. The successful bid will need to be translated into contractual deliverables, so commitments must be clearly defined and capable of ongoing assessment.

Reporting and Delivering Social Value

The Commercial Case considers the performance management and monitoring regime.

Recording impact is probably the most complex aspect of social value and has regularly been cited as an area for improvement[5]. Robust Key Performance Indicators (KPIs) can be used to assess a supplier’s sustainability performance and sufficient weighting balanced against other important metrics such as quality, time, and cost.

Just because social value does not need to be quantified in financial terms, it doesn’t mean it can’t be assessed quantitatively. Link KPIs back to the relevant Social Value themes and include stretch targets over the contract’s duration to promote continuous improvement, recognising that market maturity in delivering social value will grow.

Although input measures are frequently used as they are straightforward to assess, they do not capture social value effectively. Focus instead on some high-level outcomes, supported by input and output measures. For example, consider replacing KPIs on supplier volunteering hours (input measure) to staff satisfaction (an outcome aligned to wellbeing social value theme).

Take a strategic view of sustainability reporting. Reporting should be aggregated to show the total impact of a scheme, project, or programme. This can be challenging, but dashboards and balanced scorecards can be helpful to represent sustainability information from multiple suppliers or contracts. These interactive tools provide impetus to suppliers to improve and shift the focus away from simple measurement towards long-term management of social value.

Want to find out more?

It’s never been more important to include sustainability as a fundamental part of the Commercial Case. The Social Value Model puts the onus on contracting authorities to define, assess, and measure social value throughout the commercial lifecycle.

Capgemini Invent are currently developing Business Cases across the Public Sector and can support in incorporating the social value model in your procurement design. For further information, contact us at fergus.alexander@capgemini.com

[1] Government outsourcing
[2] The Social Value Model
[3] Guide to using the Social Value Model
[4] Voluntary reporting
[5] As referenced in Lord Young’s 2015 review , Chris White MP’s 2017 review , IPPR 2019 review

Author


Commercial Expert

Fergus Alexander
Commercial Expert

Fergus is a Senior Manager in Capgemini’s Public Sector practice. He has defined and implemented commercial strategies and developed and assured business cases across sectors including central government, health, defence, energy and utilities, and higher education.

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