People before profit. This new ambitious Act requires certain public authorities to take into account, the social and environmental value of suppliers in any public services contract they enter into after 8th March 2012. This Act asks public bodies, by law for the first time, to consider the economic, social and environmental issues within the process of procurement before the process has started.
The statue states that:-
“The authority must consider—
(a) how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and
(b) how, in conducting the process of procurement, it might act with a view to securing that improvement.”
What is ‘social, environmental and economic value’? It involves looking beyond the price of the contract to the collective benefit it has to the community. Under this Act an organisation which can demonstrate that it adds social value, may win the contract even though a rival organisation submitted a lower-cost bid.
The phrase ‘value for money’ has been altered. There is a clear shift from the public authority placing weight on pure financial ‘value’ to also including both social and environmental ‘value’. This new Act is just the beginning of developments that will alter the way in which organisations will need to approach their procurement processes for securing contracts with customers.
More and more companies are being held accountable for their lack of investment into social and environmental value and in turn compromising not only their brand image but also their leadership position. This was highlighted when investigations showed that human trafficking was part of the chicken egg supply chain of various large companies such as Mcdonals, Tesco and Happy eggs. Too much focus on happy hens and not enough focus on happy workers damaged the credibility of the companies brand image.
The Social Value Act 2012 gives sustainability a legal stamp within the public market which may, before long, influence the private market too.
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