Help Centre News Social Value in Procurement

Social Value in Procurement: Principles of Success and Measuring Impact

Innovate UK Blog Post Series

Published: 24/07/2023

As our ambitious Innovate UK research project in partnership with NHS SBS and the Behavioural Insights Team is underway, we enter our first phase, ‘Discovery’ an in-depth research phase which encapsulates user experience research, a data landscape review, extensive literature review and social impact measurement workstreams which ran simultaneously.

This particular post will shine a spotlight on our team's approach to considering the hypothesis around how this project will improve social outcomes for users and our approach to measuring social impact.

Social Value

There’s global consensus amongst governments, the private sector, not for profit sector and wider financial institutions that capital markets currently have gaps when considering a firm's long term sustainability, how social issues are tackled and wider governance factors. Encapsulated within the debate, is the traditional nature of reporting to a single stakeholder, shareholders and recognition of an organisation's impact on wider stakeholders such as the environment or communities in which they operate.

To support entities in tackling these issues directly, a number of frameworks, reporting requirements and methodologies have emerged across sectors to support in the education and assessment of these wider stakeholders/issues and subsequently the data collection, measurement and reporting on a set of wider non-financial indicators, often referred to as socio-economic indicators.

In January 2021, The UK Government Social Value Model (SVM) was launched which set out the Government’s social value priorities for procurement. It became mandatory for all central Government procurement contracts to evaluate social value. The model itself also set a mandatory minimum weighting of 10% for social value at tender evaluation stage. The SVM is centred around five themes and eight policy outcomes which from these themes, as follows:

ESG Reporting

In the private sector, just as organisations are required to produce reports on financial performance, they are now increasingly required by law to disclose their impact and performance across environment, social and governance (ESG). Whilst the world of financial reporting is mature with clear frameworks. The ESG reporting landscape is still relatively fragmented and complicated to navigate with an ever increasing range of frameworks and different approaches across Americas, Europe and Asia. In 2021, an assessment of the regulatory landscape identified 614 sustainability reporting requirements from over 80 countries.

However, the pace and trajectory of change in this field is significant given the response to global and community interest. 96% of the world's largest 250 companies now prepare sustainability reports. In November 2021 during COP26, the International Financial Reporting Standards (IFRS) announced the establishment of the International Sustainability Standards Board (ISSB) which brought together a number of existing organisations and standards.

Principles for Success

Taking into account the current landscape, it is clear that the field of social value is continuing to evolve and reporting requirements for companies and associated frameworks will continue to mature. In addition, there is a recognition that there will be an educational and awareness gap for users therefore the project team developed key principles for data collection, analysis and social value reporting within this project that can be adopted to remain relevant and support the longevity of solutions/products developed from this project. In addition a number of suppliers and buyers will increasingly be familiar with, measure and report on a wide gamut of ESG frameworks (which also align to the UK SVM).

By aligning the project terminology and outputs closely to ESG terminology, this will ensure familiarity, promote adoption and ensure a level of interoperability and improved social outcome when using the Cimple platform. Wyndham Plumptre, CEO of Cimple

Measuring Impact

To measure success of the solutions developed within this project, an impact measurement methodology must be selected. A number of frameworks exist across sectors with no universally adopted ‘one size fits all’ solution. There are however, a number of leading frameworks including 5 Dimensions of Impact, Shared Value and Theory of Change. Given the exploratory nature of this project, the Theory of Change framework has been selected to measure the impact on stakeholders and in society to improve social outcomes.

The Theory of Change Statement developed is:

The project will facilitate improved human decision making in public sector procurement in relation to social value. Whether directly or indirectly, social value metrics across environment, social and governance (ESG) will form a material aspect of the decision making process on the scope of procurements (buyer), the evaluation of tenders (buyer) and the quality of tender submissions (supplier).

The expected outcomes from this project are aligned to the UK Social Value Model and will include:

Fighting Climate Change

Tackling economic inequality

Equal Opportunity