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What is social procurement and why should businesses embrace it?

Social procurement is when an organization chooses to put social enterprises into their supply chain by purchasing their everyday goods and services from them. It involves sourcing goods and services from suppliers that meet specific social and environmental criteria, with the goal of promoting sustainability and creating positive social impacts. It is a powerful way for businesses to use their purchasing power to drive social and environmental change.

Surprisingly, social procurement is still a very under-utilized process given that so much focus and effort is being driven within corporations to meet various types of impact and sustainability goals including ESG, DEI, SDG, CSR, net zero, carbon neutral, etc. These are efforts that many big companies are investing in separately, often via charitable giving. But we must remember that an organization’s impact doesn’t end at the boundaries of the organization itself - it includes where it spends its own money and who it is sourcing from.

Participating in social procurement is a sure way to maximize the societal and environmental impact of your everyday purchasing spend. Any business these days has significant operating expenses. So, imagine the impact that can be made if a company, rather than setting up a separate fund, simply procures its usual goods and services from an impact making social enterprise! The United States has been a great supporter of supplier diversity initiatives for many years - social procurement is one of several forms of supplier diversity spend and when you purchase from an asset locked social enterprise, you are ensuring that the profit the company made from your purchase it being reinvested in social and environmental missions that impact whole communities and the planet.

When you buy from a social enterprise, you are enabling that social enterprise’s social or environmental mission. When you procure from a social enterprise you are creating a range of interconnected positive social, economic and environmental changes. Some of these changes include:

  • Creating jobs - especially for those most in need / furthest from the labor market

  • Improving neighborhoods that have suffered from systemic inequity

  • Reducing recidivism, homelessness, unemployment, human trafficking, addiction

  • Reducing carbon emissions, negative impacts on the planet and its resources and creating sustainable, positive impacts to help fight climate change

  • Creating gender and racial equity, economic and social inclusion for diverse and underrepresented populations

When your organization chooses to buy local, something great happens - recent research shows that for every $100 you spend in a regular store, around $68 stays in the local community. However, when you purchase with social enterprises, you're actually creating an economic multiplier effect. Your purchase is reducing homelessness, reducing poverty and recidivism, and providing employment for those most in need in your community. So for every $100 spent with a social enterprise, you're creating more than $400 of local impact.

Social procurement as part of an organizational strategy is an opportunity for any business to go beyond CSR or ESG or other sustainability goals and create exponential economic, racial, and social equity as well as environmental impact.

Until two or three years ago, our engagement came more from a corporate social responsibility perspective. We were looking at how we could help accelerate the sector, by building capacity and providing enterprises with access to SAP expertise. But then we saw the incredible innovation happening in the social enterprise space, and the very systemic approach these companies were taking to social and environmental issues. We realised there is a lot to learn from innovation-driven companies” - Alexandra van der Ploeg, Head of Corporate Social Responsibility, at multinational software firm SAP, on successful collaboration with smaller social enterprises.

Learn how your business can start to implement a social procurement strategy - reach out to set up a free initial consultation:


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