Vancouver-based Starworks was established in 2000 with the goal of providing packaging and assembly services to small and medium-sized businesses. A social enterprise, their model offers its 45 on-call employees work opportunities they wouldn’t have otherwise. “Starworks is a unique success story because it’s solving the problem that government is constantly trying to,” says manager Deanne Ziebart, explaining the “multi-barriered” staff typically fits into three or more disadvantaged categories: poor, immigrant, developmentally disabled, etc.
An acclaimed social enterprise, Ziebart is determined that Starworks win accounts on its own merits. “Like any business, we need to pound the pavement; we’re not looking for a direct handout,” she states emphatically, adding that clients choose Starworks because of their high quality service, not the challenges of their staff.
Just ask the University of British Columbia. Over the years, UBC has contracted with Starworks to sort and stack 100 tons of their electronic recycling materials. As for what motivates them? “It’s just good business sense,” purchasing manager, Victoria Wakefield explains. “They offer superior quality for specific tasks at competitive rates.”
Still, Ziebart is frustrated. “We’re the best kept secret,” she exclaims, voicing her wish for greater support for enterprises like hers that generate significant social impact in the communities they serve. The B.C. government, in particular, could support a social mandate like they do an environmental one, she offers, to help justify slight increases in cost and uphold “social” as a value-add.
Social purchasing defined
Tapping into procurement’s “social” sensibilities, social impact purchasing is an emergent field of discussion, and the focus of the upcoming Social Impact Purchasing Summit. It brings together purchasers, suppliers, and market intermediaries to address shared goals, barriers and opportunities in making social considerations integral to everyday buying decisions.
Focusing on multiple social impacts – ethical sourcing, diversity, employment barriers, poverty reduction, social inclusion, local sustainability, community development etc. – the philosophy behind social purchasing is simple: the procurement of goods and services needs to evolve beyond traditional evaluations of best value for the least cost. Buying decisions are not isolated, independent events, after all. Rather, they involve multiple domino effects. “Purchasing is not a cost-only decision,” says David LePage, program manager at Enterprising Non-Profits (enp). These choices directly impact employment, local economies and communities. “Why, for example, are we buying from far away when my neighbour just got laid off?” he asks rhetorically, underpinning one significant social impact motivator.
Catalyzing social procurement
The push for social impact purchasing is slowly gaining momentum worldwide, with the city of Vancouver reaping the benefit of a few catalysts. The Premier’s Council Report, for example, includes a section on procurement. “It gave us an avenue for a discussion we wouldn’t have had necessarily,” offers LePage.
Then there’s the motivator of a once-in-a-lifetime event. The 2010 Winter Olympics inspired the first sustainable and ethical purchasing policy for the city of Vancouver. Consultant Larry Berglund, former head of purchasing for city of Vancouver and UBC and author of a book on sustainable purchasing, was directly involved in drafting and implementing that policy. “It was a political imperative and it made a difference,” he explains of a policy agenda initiated by local councilors.
“I never gave much thought to how things were produced and made their way into our hands, but we really uncovered unacceptable clothing and uniform suppliers, which surprised us,” he explains of his first foray into the world of sustainable purchasing, an introduction that would shape his career ever after. “The results were stunning.”
Once made aware of their challenges, the suppliers in question immediately took action, establishing themselves as respectable business partners and creating renewed value in the market. The move was a win-win, says Berglund, adding that newly implemented processes didn’t cost more, while health and other conditions were vastly improved. “And we were getting local goods meeting international standards,” he adds.
“The Olympics was a catalyst for evolving practice and raising awareness,” echoes sustainable purchasing consultant Coro Strandberg. An advisor to the Games’ sustainability portfolio, Strandberg kicked off the procurement project, aligning it with the Vancouver Organizing Committee’s (VANOC) dedication to sustainability. “It was the first Games to include social in its sustainability commitment,” she says proudly, explaining how her knowledge of social enterprise and VANOC’s commitment to inner city communities were both built into the robust policy.
This emergent field still has a long way to go. But, talking about policy, many look to change in that arena to lead the path. Perhaps inspired by Vancouver’s initiatives, the 2015 Pan Am Games in Toronto, for example, will be implementing social purchasing directives, including ensuring a 10% valuation of social impact on all procurement activities. Australia is working on a social procurement policy and, this past January, so did Scotland, with a focus on local community benefits.
Talking about Scotland, one model on the demand side gaining respect and momentum in Glasgow and across the globe is the Community Benefit Agreement (CBA), which places a social or “community” scoring value along with price, quality and environment into all purchasing decisions. “There is no loss of quality, and no increased cost, just added social value,” enp explains on its website.
enp and LOCO BC have also advanced the Community Benefit Clause Policy (CBCP), adding a social component to the existing procurement evaluation process. Expanding upon the Ethical Purchasing Policy and Supplier Code of Conduct, “the CBCP provides a framework, guidelines and templates for including and evaluating a “social benefit” analysis to all purchasing and procurement of goods and services and development projects,” states a discussion paper on the topic. The point is to move the discussion from “avoiding damage to creating opportunities and added value,” says LePage, “from protecting reputations to creating reputations.”
Others are taking steps too, though challenges abound. CCEDNet-Manitoba, for instance, joined the Council of Canadians and the Social Planning Council of Winnipeg at a meeting with their Minister of Entrepreneurship, Training and Trade to discuss their concerns over the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. The fear was that CETA would prevent the province from pursuing purchasing policies that promote local food, businesses, social enterprise and create opportunities for marginalized groups living in the province. The minister made some assurances, but time will tell how it plays out.
As for other barriers limiting progress in Canada, social purchasing advocates find issue with the lack of set-asides, mandated exceptions to procurement decisions. While the US negotiated exemptions in NAFTA, allowing them to enact set-asides, the only one Canada has implemented so far is for Aboriginal people, which Ziebart explains, doesn’t go far enough.
There’s also the absence of unbundling opportunities. Here’s the issue: if your organization puts out a bid for office supply products, by default big box companies will win out thanks to their pricing advantage over smaller private chains or social enterprises. If purchasing organizations unbundled their huge contracts, social purchasing gains a greater advantage. Instead of asking for bids to supply 100% of the products required, they could ask for two separate bids, one to supply 75% of goods and a second for the outstanding amount.
Another barrier to success is not having a Corporate Social Responsibility (CSR) policy in place. “Social purchasing usually flows from a pre-existing commitment,” explains Strandberg. “Folks in the procurement shop then ask, ‘how does that apply to us?’” Without this pre-existing enabler, it’s very hard to expect social impact purchasing commitments.
Lack of awareness is problematic too. If buyers haven’t been trained on social sourcing they won’t likely initiate non-traditional decisions. Limited knowledge of “social” suppliers and how to qualify the ones you do know about, certainly doesn’t help either, says Strandberg.
Walk the talk
Though the discussion of social impact purchasing is focused mostly on business to business relationships, there’s no question consumer demand can have an impact too. “You have companies doing what they can to be environmentally responsible, for example, and then you have consumers that drive miles to get goods,” Berglund explains. Sure we’re in a difficult economic situation but you can’t have it both ways. “Consumers say they want more [responsibility] but aren’t acting like it.”
Indeed, there’s still a long way to go for the field to take hold in a big, impactful way. “In Canada we have more of a social consciousness but it’ll be five to 10 years before anything really happens,” predicts Berglund, adding the public sector in Vancouver wouldn’t have come as far as it had were it not for the Olympics. But, he adds, keep in mind it was difficult to implement quality management 30 years ago too. And once upon a time no companies wanted to offer health benefits. “But now you can hardly find any that don’t,” he says. “These things take a sea change.”
For more info on social impact purchasing check out:
Social Enterprise Purchasing Toolkit
Elisa Birnbaum is the co-founder of SEE Change Magazine, and works as a freelance journalist, producer and communications consultant. She is also the president of Elle Communications.