An introduction to understanding social value

In recent years, Social Value has emerged as a significant element within the framework of sustainable development, particularly in the context of public procurement. But whilst some organisations may be confident in their understanding and delivery of Social Value, many organisations – in particular SME’s – are being introduced to the concept for the first time. This blog provides a basic introduction to Social Value to help these organisations understand what Social Value is, why it’s important and, ultimately, where they should start when working with the concept.   

Where does the concept of “Social Value” come from? And what does it mean?

Originating from the UK’s public sector, Social Value seeks to enhance the well-being of communities and generate positive outcomes that extend beyond economic transactions. The origins of Social Value can be traced back to the Social Value Act 2012, a piece of legislation that was introduced across the UK and required public authorities to consider the social, economic, and environmental benefits of their procurement decisions. This Act marked a shift in focus, moving away from just focusing on cost and efficiency, towards a broader perspective that included the impact on society at large.

Although the concept is now more established, there is no single definition of Social Value which can add to complexities in delivering Social Value initiatives and measuring impact. Different definitions exist but typically Social Value encapsulates a wide range of benefits, including job creation, environmental sustainability, community engagement, and the promotion of equality and diversity. It encourages organisations to think beyond traditional financial metrics and consider how their operations and supply chains can contribute to a more equitable and sustainable society. The concept has since gained traction, not just within the public sector but also amongst private sector organisations, as it aligns closely with the growing emphasis on corporate social responsibility (CSR) and environmental, social, and governance (ESG) criteria. For more on this connection, see here.

What’s the Significance of PPN 06/20 and why does Social Value matter?

A key development in the Social Value landscape was the introduction of Procurement Policy Note (PPN) 06/20 by the UK government in September 2020. This policy note mandated that all central government departments, executive agencies, and non-departmental public bodies explicitly evaluate Social Value in their procurement processes. PPN 06/20 requires these entities to include a minimum 10% weighting for Social Value in the assessment criteria of relevant procurements, ensuring that social benefits are systematically considered alongside cost and quality.

In addition to becoming a mandated requirement, many public and private sector organisations also recognise the wider value that can come from delivering Social Value. From a 2022 survey carried out by the Supply Chain Sustainability School, it was identified that organisations delivering Social Value saw improved workforce satisfaction with employees, an enhanced reputation, improved relationships with the local communities where they work, an increased chance to win tenders, and increased interest from investors. Delivering Social Value effectively can also have a positive long-term influence on communities which can lead to meaningful change. 

These benefits can be seen across all types of organisation; Social Value is not confined to any one sector or organisation size. It is a concept that all organisations, regardless of their industry or scale, should integrate into their operations. This is particularly true for organisations working in the Built Environment sector, as construction and infrastructure projects often have a significant impact on local communities making Social Value considerations essential. By being placed in the local community however, both these organisations and the communities where they work can also benefit considerably from Social Value.

How do I embed Social Value into my organisation? How do I deliver Social Value effectively?

For organisations looking to embed and deliver Social Value, the key lies in embedding the concept into your core strategy and operations. This begins with a clear understanding of what social value means to your organisation, in the context of the industry you operate in, the specific activities you want to deliver and the local communities where you work. To begin, consider:

1. Stakeholder Engagement: Engaging with stakeholders including employees, customers, suppliers, and local communities is essential to identify the areas where your organisation can deliver the most significant Social Value. This could involve creating employment opportunities for underrepresented groups, supporting local businesses, or volunteering.
2. Measurement and Reporting: To ensure that Social Value initiatives are effective, it is crucial to establish clear metrics and reporting frameworks. This allows you to track your progress, demonstrate the impact of your efforts, and make data-driven decisions to improve outcomes over time. The use of frameworks like the Social Value Portal or the National TOMs (Themes, Outcomes, Measures) can be helpful in this regard. If you’re not sure which reporting framework or tool would be most relevant see the Social Value Tools Report.
3. Supply Chain Management: Work closely with your suppliers to ensure that Social Value is considered at every stage of the procurement process. This might involve setting Social Value requirements in contracts, encouraging suppliers to adopt sustainable practices, or collaborating with them to deliver community benefits.
4. Leadership and Culture: Finally, fostering a culture of Social Value within your organisation is critical. This requires strong leadership and a commitment to integrating Social Value into everyday decision-making processes. Training and awareness programs can help ensure that employees at all levels understand the importance of Social Value and how they can contribute to it.

Conclusion

Whilst Social Value can seem an intimidating concept to those unfamiliar with it, it represents a powerful tool for organisations seeking to make a positive impact on society and the environment. By prioritising Social Value, organisations can not only meet legislative requirements, but they can also enhance their long-term sustainability and competitiveness. As the expectations of stakeholders continue to evolve, organisations that successfully integrate Social Value into their operations will be well-positioned to thrive in the years to come.

Additionally, delivering Social Value effectively has the potential to completely change communities; it provides communities and people with opportunities, that they may not traditionally have had access to them, leading to long-term positive change that can contribute to wider societal impact.

The importance of Social Value cannot be overstated. At its core, it represents a fundamental shift in how organizations approach procurement and service delivery. Instead of merely seeking to secure the best financial deal, organizations are now encouraged to ask broader questions: How will this contract benefit the local community? What environmental impact will it have? How does it contribute to social equity?

For more information or to explore how Action Sustainability can support your organisation, please contact our team.