Photo- The LOTE Agency
While globally ESG – Environmental, Social, Governance – may be gathering attention for the wrong reasons, in Australia, investors, customers, suppliers and regulators still firmly expect organisations to be doing good.
Numerous regulations are coming into effect, making sustainability a larger, not smaller, compliance issue. Climate reporting is now mandated for larger organisations and we expect social value and impact reporting to be next.
This presents an opportunity for organisations to step up and stand out from the crowd by demonstrating and measuring real and tangible impact.
In 2025, sustainability shifts from an aspirational goal to a regulatory necessity. Australian businesses must now comply with mandatory ESG reporting, requiring disclosure of climate risks and sustainability practices. By 2026, these requirements will expand to include a broader range of companies, aligning Australian regulations with international standards such as the EU's Corporate Sustainability Reporting Directive (CSRD).
While environmental reporting has come along way, the measurement of social impact continues to lag behind.
A report by KPMG found that while 84% of firms in the ASX100 included the ‘social’ element of ESG in their annual financial report, almost all provided only a narrative description, with only one per cent providing a quantification of the potential impact.
In other words, corporate Australia is not measuring the social impact it is making in the communities in which it operates.
Property giant Mirvac is one corporate who is actively looking to get ahead of the pack and proactively showcase the positive impact it has on communities by sharing public targets about their social goals and reporting on these in their Annual Report.
Katrina Brooks, Mirvac’s Social Sustainability Manager, said it can be challenging but there are increasing expectations on corporates to be held to account.
“The ‘S’ is how we impact communities, people and societies and measuring that is not as easy,” Ms Brooks said. How do you put a price on changing people’s lives? It doesn’t boil down to one number. And data tells one aspect but we love when we can bring human stories to the fore. Corporates are made up of people and they want to hear stories of other people.”
Businesses can go beyond financial outcomes and deliver social value at the same time. They can drive social performance by making ethical decisions, understanding and managing the treatment of its employees, suppliers, contractors, customers and the broader community – contributing to positive social outcomes. The “S” in ESG.
Social procurement is one of the most powerful ways companies can deliver measurable social outcomes and drive social performance. By working with social enterprises, companies can support employment opportunities for marginalised groups and reinvest in local economies.
The World Economic Forum State of Procurement 2025 Report found two-thirds of a company's potential for positive or negative impact comes from its supply chain. FTSE 100 companies typically allocate an average of $12 million to their corporate social responsibility (CSR) budgets. But their procurement spending averages $5 billion, which holds tremendous potential for positive impact through social procurement.
Aaron Reid, Group Manager Social Sustainability for ASX-listed infrastructure services provider, Ventia, says it is encouraging to see more organisations using the power of procurement to deliver better outcomes for communities
“The supply chain is critical in delivering social sustainability outcomes,” Mr Reid said. “How and who we choose to spend money with is the biggest opportunity we have to deliver local employment and even more local re-spend when we choose to spend with local businesses.”
Investors and consumers are increasingly scrutinising companies’ ESG performance, including their social impact. A PwC report found that 70% of Australian CEOs believe ESG adoption is critical to long-term growth and competitiveness.
Companies that can effectively quantify and report on their social impact will have an advantage in securing investment, attracting staff and maintaining stakeholder trust.
Measuring this true impact of social procurement has long been a challenge for organisations. Until now.
Social Traders, the leading industry body in the social enterprise and social performance, has looked to fill this gap with its Social Spend Report.
The report helps organisations track, measure and report on the social impact of their procurement spend with certified social enterprises:
By collecting over 200 data points of certified social enterprises, Social Traders can identify a range of impact measures such as hours of employment supported, training delivered for people facing barriers to work, or tonnes of waste diverted from landfill.
Over the next 12 months, 76% of leaders expect their company’s investment in social impact initiatives to rise according to the 2025 Executive CSR Report.
For Australian businesses, this shift is accelerating. We’re seeing a growth in social procurement spend year on year among our business members with certified social enterprises.
Social enterprises are businesses that exist to create positive social and environmental outcomes. By incorporating them into supply chains, companies can directly contribute to job creation for disadvantaged communities, environmental sustainability, and economic inclusion. Social enterprises are great partners to deliver on ESG goals and deliver on social performance.
While climate-related disclosures are already mandated, social impact reporting is emerging as the next frontier in ESG compliance.
The message is clear: don’t wait for regulation to dictate action. Companies that can turn regulation into opportunity to drive real business value will no doubt stand out and take a leading position.
Now is the time to embrace social impact measurement for a competitive edge, enhance corporate reputation, and create meaningful change in the communities we serve.