December 1, 2016
Since launching in November 2015, Social Traders’ (ST) Connect has grown quickly. As Australia’s first and only service to link corporate and government buyers to social enterprises, ST Connect has found a market for delivering high social impact through procurement. In the first 12 months of operation, Social Traders’ Connect has generated unique learnings about the challenges of creating a market-place for social enterprise procurement in Australia.
Currently, there are 16 corporate buyer members of Social Traders’ Connect that in the past 6 months alone, have enabled over $3 million in social enterprise deals. The deals have included Australia Post engaging social enterprise to provide legal services, re-purposing large letter trays and catering provision; Lendlease engaging social enterprises to run their community engagement cafes in Yarrabilba and Springfield Lakes; Level Crossing Removal projects in Victoria utilising social enterprise nurseries, printers, catering, labour hire, fit-out, toilet paper and cleaning; Mirvac partnering with a social enterprise to deliver ‘no interest loans, as well as many other examples of social enterprises winning work with corporate and government buyers.
ST Connects’ experience over the last 12 months has highlighted the importance of working intensively with buyers and assisting them to become social procurement ready. Social procurement is a significant shift for most organisations. Getting an organisation procurement ready is a large part of what ST Connect does.
ST Connect provides a service that includes: developing tools and resources to assist procurement staff; delivering training courses; working with the organisation to develop a framework or strategy for social procurement; identifying suitable procurement opportunities; sourcing and certifying social enterprises operating in relevant categories; capturing information on capability to assist in determining the opportunity and the best procurement approach; and directly introducing buyers to social enterprise suppliers.
Buyer members have joined Social Traders’ Connect because they want an overview of the supply market and a range of supports – they are generally not seeking direct approaches from social enterprises.
As part of this new and unique service that positions Social Traders as the link between social enterprise and corporate and government contracts, we have observed five key learnings for social enterprises keen to work with large corporate buyers:
1. Opportunities are diverse
The opportunities are diverse, ranging from commercial cleaning, vegetation supply, legal services, construction and labour hire to catering, maintenance, solar panel installation, printing, assembly and much more. Deals have occurred in urban and regional Victoria, NSW and Queensland but there are opportunities emerging in other states too.
2. All social enterprises are being put forward
At this stage there are 15 – 20 social enterprises that have obtained work as a result of being certified with ST Connect. They have all won work outside of standard procurement processes. There are another 10 – 20 that have had discussions with buyers that may lead to work.
Of the 170 social enterprises that are currently certified by ST Connect, all of them have been put forward to buyers
3. Buying from social enterprise isn’t always easy
Buying from social enterprise sounds so easy, but it often isn’t. The corporate buyers of ST Connect represent some of the biggest buyers in Australia and they have very robust and rigid procurement processes (for good reason). Most of the procurement staff in these organisations are incentivised to save the organisation money.
Social enterprise procurement is not part of their procurement system when they join ST Connect, so it takes a while for the idea to ripple through procurement and contract managers, it takes longer still for systems to change, and then for the right contracts to emerge. The good news is, that when these organisations are social procurement ready they will be long term social enterprise buyers.
4. The future looks good
In one year of operation ST Connect has signed 16 corporate and government buyer members and there are many more that are in discussion. It is now fairly and squarely on the agenda of Chief Procurement Officers across Australia. As well as organic growth from corporates who want to drive social value through procurement, social procurement is starting to come on to the government policy agenda as a strategic tool for social impact.
For example, the Victorian Government is spending $25 billion on infrastructure projects in the next decade. Any bidder for these projects is required to complete a Social Procurement Strategy which is a weighted element of the tender evaluation. Social procurement can be delivered by engaging social enterprise in their supply chain and/or direct employment of a marginalised workforce in their business or supply chain. Similar processes are emerging in infrastructure projects across Australia and many of the leading infrastructure firms are starting to engage social enterprises in their supply chains.
5. The sky is the limit
The great challenge for social enterprise is in responding to demand. ST Connect has certified 170 social enterprises nationally.
If just 1% of the Victorian Government’s infrastructure spend goes to social enterprise this will equate to $250 million over 8-10 years (~$30 million per annum). Victoria is one state and only represents 35% of our existing buyers. By 2025 Social Traders’ goal is to have 150 buyer members spending $150 million per annum with 500 certified social enterprises.
The prospects for social enterprises are strong. There are immediate opportunities for new or existing businesses in areas like labour hire, traffic control and in industries related to infrastructure, particularly in Melbourne and Sydney. Increasingly, we are seeing opportunities arise in regional areas too. For most of our buyers there is scope for any social enterprise that sells to businesses or government to win work.
What is clear, is that social procurement through social enterprise is just beginning, and all indicators point toward it potentially becoming the greatest untapped tool for positive social impact in Australia.
Mark Daniels, Head of Sector and Market Development
How to get involved?
To find out more about Social Traders’ Connect please visit: https://www.socialtraders.com.auoverview/
To explore social enterprise certification please visit: https://www.socialtraders.com.au/sellers/