Latest research shows social procurement spending is on the rise

“The majority of people recognise that social procurement is becoming the normal way of doing business.”

The combined social procurement spend from businesses across Australia and New Zealand has totalled $96 billion, according to new research. 

The State of Social Procurement in Australia and New Zealand research, commissioned by social enterprise IPA, was conducted by the Centre for Social Impact and presented at the recent Social Traders’ Social Procurement Summit. 

The report, due to be made public on 14 June, is based on interviews with almost 200 people from 16 different industries across Australia and New Zealand.  

Rhianna Dean from Social Traders said the evidence that social procurement is happening was the real headline of this research. 

“We can see that 74 per cent of the people interviewed are actively engaging in social procurement, and spending is happening across all categories identified in the research,” she said. 

“This is mostly in construction, cleaning and facilities followed by accommodation and food services and professional services. It’s a really nice split.” 

Most of the social procurement spend in Australia and New Zealand is through larger organisations, those with a turnover of over $250 million, but smaller scale organisations are becoming more interested.

“Businesses with turnover of under $10 million are also engaging in social procurement,” Dean said.

 “It’s becoming [more common] as social procurement continues to be more of an accepted practice.”

The importance of internal support

The research also showed that a high majority of the organisations surveyed had received the backing of their senior leadership team, which Dean said was integral to the success of a social procurement strategy. 

“What was really exciting with the research is that almost 60 per cent of organisations engaging in social procurement spending had sponsorship of their activity from within their senior leadership team,” Dean said.

 “That’s really significant because we know that when you have that level of engagement in an organisation that’s what really [continues to] drive activity and embed social procurement through an organisation.” 

Having a social procurement strategy, spending time goal-setting and implementing a way to track those goals also played a major role in the way businesses engage with social procurement. 

However, the research found that setting targets isn’t common practice – with just a third of businesses having targets in place.

Dean said this was significant as those that had set targets met or exceeded them.

“Which supports other research showing that when targets are in place it increases social procurement outcomes. Conversely, when targets aren’t in place the social procurement outcomes are weaker,” she said.

Research backed up by Social Traders impact report 

During the recent summit, Social Traders also presented an early look at its three-year impact report.

It showed an increase over a three-year period of 250 new social enterprises being certified, 85 new buyer members to the Social Traders platform and an increase in spend of over $150 million.

Social Traders head of marketing and communications Tara Anderson said the evidence from both sets of research points to the fact that social procurement isn’t going anywhere.

“The majority of people recognise that social procurement is becoming the normal way of doing business,” she said. 

“They also recognise that by engaging with it they are contributing to their [positive] reputation, which then gives them a competitive advantage in the market.”