Building back better through procurement

With government spending skyrocketing, procurement teams have an unprecedented opportunity to drive positive impact through their purchasing decisions, writes Anna Crabb, head of strategy and partnerships at B Lab Australia and New Zealand.

The health and economic fallout from COVID-19 means the Australian government is providing economic support to the tune of $289 billion in 2019-20. While much of this spending is income support payments, governments at the federal, state and territory, and local levels will all be investing in economic recovery projects for the foreseeable future. The companies that governments select to deliver these projects will have a crucial impact on the economy – and have the potential to make a vital difference to community and environmental outcomes.

Over the last few years social procurement has been gaining traction at all levels of government. Procurement has shifted from a strict price focus, to a focus on achieving value created through procurement: the price of the goods and services plus the social and/or environmental value that is created by the suppliers’ ownership (e.g. Aboriginal and/or Torres Strait Islander owned) or business model (e.g. social enterprises with employees that have barriers to employment). As the value from procuring in this way has become evident, governments have incorporated new types of supplier organisations into procurement decision-making, seeking out organisations that promise positive community outcomes and are backed by independent verification.

Across the Tasman in Aotearoa, the New Zealand (NZ) government has been at the forefront in adopting a holistic national outcomes framework tied to procurement, alongside jurisdictions such as Scotland and Wales. NZ’s Living Standards Framework and its aligned Government Procurement Rules for Sustainable and Inclusive Procurement are foundational pieces for a COVID-19 economic recovery that is beneficial for the community and the environment.

We also see the inclusion of certified B Corporations (B Corps) in government procurement policies around the world. B Corps are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. Their performance is verified, and the results are detailed on a public directory. The assessment details the way in which each B Corp has a positive impact through its operations and business model, and B Corps are legally required to consider the impact of their activities on a range of stakeholders. 

Here are some examples of how governments are choosing to maximise the benefits of their public expenditure by encouraging purchasing from B Corps:

• The Korean government recognises B Corp certification as a key indicator when assessing companies for their social values and impact on society. The Korea International Cooperation Agency gives preference to B Corps in its Creative Technology Solution Program.
• The Swiss government’s Public Procurement Act sets obligatory sustainability criteria for all of its 27 states. The states can choose how they implement these criteria. In two states, the positive environmental impacts of B Corps are recognised with a score boost in tender scoring.
• Mendoza was the first Argentinian city to implement public procurement for triple impact. B Corps are provided a premium of up to 2 per cent in price and local businesses a premium of up to 5 per cent in its tendering processes.

Building back better means purchasing from companies that can deliver high-quality products and services that governments need, and that share governments’ objectives of working towards reduced inequality, lower levels of poverty, a healthier environment, stronger communities and the creation of high-quality jobs with dignity and purpose. This is what each and every certified B Corporation commits to when joining the global community of people using business as a force for good.