SAP: How the public sector is incorporating sustainability into its purchasing process
The UK Government’s new social value model is making the most urgent challenges of our time, including the climate crisis, a top priority for itself and its suppliers
The Government is quietly undergoing profound changes in how it chooses its providers for products and services. It has recognised the demand and need for ethical environment, social and governance (ESG) practices in the public sector and turned ESG into a core criterion of its purchasing process through its new ‘social value’ model. Here’s what that means.
Adapting to more ethical expectations
Today expectations of ethical practices within the private sector are high. Research shows organisations with good ratings on ESG issues often outperform those with poor ratings and most consumers want brands to help them be more environmentally friendly and ethical in their daily life. 77% of consumers are also more willing to purchase from a company with a CSR pledge and 73% of investors agree.
Increasingly, that expectation extends to the Government – and in recognition of this, it is working to better incorporate ESG-like measures into its own activities – and the procurement process is a key lever of influence. For example, the Cabinet Office recently declared firms must commit to net-zero by 2050 before they can bid for major government contracts. This builds on the groundwork already established by Procurement Policy Note (PPN) 06/20 (published in January 2021).
The PPN implements a new approach to procurement that drives taxpayer money to sustainable and socially valuable initiatives. Given that last year the UK Government spent £280bn on contracts for public services, the potential is vast.
While social value has been a factor in the UK’s public sector decisions since 2015, the PPN ensures that it is ‘explicitly evaluated’. Under the new model, at least 10% of every procurement decision is based on the scoring of a social value proposal attached to a procurement bid – often enough to separate a winning and losing bid.
What is social value?
The PPN identifies four specific areas that are considered in the Government's procurement process:
- Fighting climate change. Social value can include activities that show firms leading effective stewardship of the environment. Examples include net-zero carbon emission targets or reducing plastic waste.
- COVID-19 recovery. These activities help local communities manage and recover from the impact of COVID-19.
- Tackling economic inequality. This covers activities that support the creation of new businesses, jobs, and new skills, or increase supply chain resilience and capacity.
- Equal opportunity. Activities that reduce the disability employment gap and tackle workforce inequality are also considered.
Social value programmes can be a major step forward
The PPN is already having a positive influence: one recent successful proposal involved reducing the carbon impact of the UK Government’s IT estate by transferring capabilities to data centres that use 100% renewable energy.
New social value measures have the potential to make a tremendously positive impact on society. Forward-thinking private companies are on-board with the new measures and are eager to comply.
The enforced importance of ESG-like measures in the public and private sector is building the base of a more sustainable and equitable world – fighting the climate crisis one contract at a time.
This article was written by David Dinsdale, Industry Value Advisor, SAP.
He is also trustee of the Whitehall and Industry Group that helps to create a better society by sharing knowledge across sectors.
David shares a deep understanding of technology and how it can be used to bring benefit to people and organisations.
Prior to SAP, David spent eight years as Chief Digital Officer - Public Sector and Health for Atos and six years as Programme Director of Business.Gov, a cross UK government initiative designed to make Britain a better place to do business. This included delivering the businesslink.gov.uk online service.
David has started and grown several digital technology companies including anaqua.com (innovation and intellectual property).
David’s key skills are focused on digital; improving the way that organisations interact with customers and staff; creating new services and bringing them to market; and ensuring we are safe in a world where cyber threats are invisible and ever present. Read more...
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