An Introduction to Social Procurement in Scotland

Why Scotland is recognised as a leading hub of social enterprise activity

Did you know that Scotland is often referred to as a leading country where social enterprises are thriving? According to the 2019 Census, over six thousand businesses currently operate across the country with a social or environmental purpose at their core, and much has been achieved to ensure they play a significant role in Scotland’s economy and communities.

The Scottish Government worked with the social enterprise community to co-produce Scotland's Social Enterprise Strategy (2016-2026), which sets out its aims for the sector, including stimulating entrepreneurship, strengthening organisations, and realising market opportunities. Scotland also benefits from a large ecosystem of support for social enterprises with free business advice, leadership and training programmes as well as affordable social finance delivered by a range of third sector organisations.

While huge strides have been made to strengthen and amplify the impact of the social enterprise sector in Scotland, there is still a wealth of untapped opportunity when it comes to social procurement – that is, incorporating social enterprises into public sector procurement and corporate supply chains.

Understanding the drivers and obstacles of social procurement

In order to help social enterprises better contribute to supply chains in Scotland, it’s important to understand the opportunities, benefits and drivers of social procurement, whilst also acknowledging the challenges that still exist. In other words, when and where can social enterprises step in, and what are the incentives and obstacles for public and private buyers looking to engage them? Broadly speaking, procurement buyers are influenced by both internal and external drivers. For instance, policy decisions made in Holyrood directly shape public procurement and, therefore, private supply chains, at both a national and local level.

Various policies and legislative structures exist in order to allow social enterprises to thrive and to make a greater impact within communities across Scotland including for instance, priorities included in the Social Enterprise Action Plan, the Community Wealth Building agenda and in particular, the Procurement Reform Act (PRA) of 2014. The latter sets out expectations for public sector procurement practices, obliging them to consider how the procurement process can improve the economic, social, and environmental wellbeing of the authority's area.

How policy drivers incentivize the corporate sector to work with social enterprises

Public policies such as these can have a positive knock-on effect, where private sector businesses are incentivized to also take into account the economic, social, and environmental impacts at the local level in order to be more competitive when they bid for government contracts. In that respect, there has been a growing interest from the corporate sector in working with social enterprises, who are often able to satisfy a number of the priorities set out in the Procurement Reform Act.

By already having a social or environmental mission at the core of their activities, and reinvesting most or all of their profits into communities wellbeing, social enterprises and supported businesses are well-placed to help corporate partners articulate how they can have a positive impact for people and the planet. In this way, government policy has expanded the commercial advantages of working with social enterprises right across the supply chain.

The growing role of consumer interest into ethical and sustainable business practices

But policy is just one driving force behind the private sector’s engagement with more socially and environmentally responsible suppliers. In recent years, a range of research studies have highlighted how consumer demands are increasingly centred on the value and appeal of goods and services which take social and environmental impact into account, and are produced in an ethical and sustainable way.

A Futerra survey, quoted in Forbes, reports that 88% of consumers would like brands to help them be more ethical and environmentally friendly in their daily lives. The need for sustainable lifestyles has become an increasing concern for consumers. From switching to plant milk, car-sharing, or turning to plastic-free products, consumer behaviour is encouraging business practices to be more ethical and transparent as companies compete to stay relevant and desirable in a changing landscape.

Social media has played a key role in making ethical consumerism an openly discussed topic online and has enabled small and local brands to connect and communicate directly with their followers to share their values, turning them into loyal customers and most importantly, advocates.

The impact of the pandemic has only contributed to accelerate this trend, with consumers paying close attention to brands who treated their staff fairly during the pandemic and who sought to play a positive role in challenging times.

Companies are focusing more on their social and environmental responsibility

Changing consumer behaviour and increased scrutiny into their business practices are a strong incentive for companies to be more thoughtful about their supply chains, and to better assess what their local social and environmental impact is, as well as to target areas for improvement.

Businesses that take on greater levels of responsibility have an unprecedented opportunity to highlight their achievements, stand out from their competitors and increase their market share. Working with social enterprises can be an easy way to place ethical consumerism and community wealth-building at the heart of their strategy and make a positive impact.

Beyond the impact on their sales, research shows that this values-led approach is becoming increasingly important when it comes to employee recruitment and retention. Companies that can show they are making a positive difference through their partnerships and practices are more attractive employers to Millenials and Gen Z workers. In this respect as well, companies looking to increase staff engagement and satisfaction can look to partner with social enterprises for anything from training to away-day activities or wellbeing.

How can we enhance the use of social enterprises in supply chains?

There are, of course, still obstacles in being able to expand the presence and positive impact of the social enterprise sector through Scotland’s supply chains. First of all, we must do more to address the knowledge gap which manifests as a lack of understanding of what the social enterprise model means and how it works; about which social enterprises are available, where to find them, how to work with them, and how they can offer additional value, beyond the social benefits.

Key initiatives in Scotland, such as Buy Social Scotland and the recently launched Corporate Challenge, are helping to bridge this gap, with companies including Crieff Hydro, Glasgow Caledonian University, Gleneagles, Morrison Construction, PwC, and Robertson Construction leading the way and joining the scheme to develop partnerships with social enterprise suppliers.

It's also critical to support social enterprise suppliers in developing their operations and capabilities to better work with the corporate, public and third sector. Quality assurance, reliability and volume are all important factors to procurement buyers who often need high-quality goods and services to be delivered with short lead-times and/or at scale.

Helping social enterprises to remain competitive in corporate supply chain contexts can be resolved through increased government support, better access to training and business development resources within the social enterprise sector and crucially as well, through leadership and collaborative initiatives from private sector organisations looking to meaningfully collaborate with social enterprise.

Final words

We all have a role to play and much to gain by supporting increased partnerships between business and social enterprise. The benefits that social enterprise organisations can deliver to both communities and companies are undeniable, and it's heartening to see that a positive procurement movement is gaining momentum across Scotland and the UK.

Ask yourself: Is your company measuring its social and environmental impact? Could you be more strategic in addressing changing consumer and employee demands? Would there be an opportunity for you to partner with a Scottish social enterprise?

Social procurement is a growing and exciting space to be in right now. Take the opportunity to lead the way, find social enterprise suppliers in our B2B directory, or get in touch at buysocial@socialenterprise.scot to tell us about your ambitions and needs and we'll be happy to help.