Is Social Procurement Mandatory

Is Social Procurement Mandatory in Australia?

Short answer: sometimes - but expectations are growing everywhere.

Social procurement is not universally mandatory across Australia, but it is increasingly embedded in public sector frameworks and widely adopted across private organisations through ESG, sustainability and supplier diversity commitments.

For many organisations, the more relevant question is no longer “Do we have to do this?” but rather:

“How do we demonstrate that we are doing this responsibly?”

What “mandatory” actually means in practice

In Australia, social procurement requirements vary by:

  • sector
  • level of government
  • funding source
  • contract size
  • organisational policy

Rather than a single national mandate, social procurement operates through policy frameworks, guidelines and expectations that influence how organisations buy goods and services.

This means:

  • some organisations are required to consider social outcomes
  • others are strongly encouraged to do so
  • many adopt social procurement voluntarily to meet broader obligations

Understanding where your organisation sits on this spectrum is critical.

Social procurement in the public sector

Social procurement is most firmly embedded in the public sector, particularly within:

  • federal, state and local government
  • councils
  • government-funded projects
  • publicly funded institutions

Many government procurement frameworks include:

  • social value objectives
  • Indigenous procurement targets
  • supplier diversity requirements
  • reporting obligations tied to social outcomes

While not every purchase requires social procurement, expectations increase as:

  • contract values grow
  • public funding is involved
  • projects impact communities

In these environments, organisations are often expected to demonstrate how social value has been considered, even if it is not the sole deciding factor.

Local councils and infrastructure projects

Local governments and infrastructure projects frequently use social procurement to:

  • create local employment
  • support inclusive economic participation
  • deliver community benefit alongside infrastructure

Tender documents often include:

  • social value criteria
  • weighted evaluation questions
  • requirements to outline social outcomes

In these cases, social procurement may not be labelled “mandatory”, but failing to address it can significantly reduce competitiveness.

Universities, TAFEs and publicly funded institutions

Many universities and education providers incorporate social procurement through:

  • supplier diversity policies
  • sustainability frameworks
  • ethical sourcing commitments

These organisations often look for suppliers that can:

  • demonstrate social impact
  • align with institutional values
  • support reporting and disclosures

Again, social procurement may not be mandatory for every purchase, but it is increasingly part of how suppliers are evaluated.

Social procurement in the private sector

In the private sector, social procurement is typically not legally mandated. However, it is increasingly driven by:

  • ESG commitments
  • sustainability reporting
  • investor expectations
  • client requirements
  • reputational risk management

Many private organisations adopt social procurement as a way to:

  • strengthen ESG credentials
  • meet supplier diversity goals
  • demonstrate responsible business practices
  • align procurement with stated values

In some cases, clients or partners may require evidence of social procurement as part of doing business together.

The role of ESG and reporting obligations

One of the strongest drivers of social procurement adoption is ESG reporting.

As organisations become more accountable for:

  • social outcomes
  • supply chain practices
  • workforce inclusion

procurement decisions come under closer scrutiny.

Even where social procurement is not mandated, organisations are often expected to:

  • explain how supplier choices align with ESG goals
  • demonstrate that social impact claims are credible
  • provide data to support reporting

This makes working with verified social suppliers increasingly important.

What happens if social procurement isn’t mandatory?

When social procurement is not mandatory, organisations still face important considerations:

  • How do we manage reputational risk?
  • How do we meet ESG expectations?
  • How do we respond to stakeholder scrutiny?

In many cases, organisations choose to adopt social procurement proactively, rather than reactively, to:

  • build internal capability
  • trial low-risk categories
  • establish reporting processes early

This approach often proves more effective than waiting for formal requirements.

Common misconceptions about “mandatory” social procurement

“If it’s not mandatory, we don’t need to worry about it.”
In reality, expectations often exist even without formal mandates.

“Social procurement only applies to large contracts.”
Many organisations start with everyday purchasing categories where impact is easier to deliver and measure.

“We’ll deal with it when required.”
By the time it is required, organisations without experience often struggle to respond quickly or credibly.

So, is social procurement mandatory in Australia?

The most accurate answer is:

  • Sometimes required
  • Often expected
  • Increasingly scrutinised

For public sector and publicly funded organisations, social procurement is frequently embedded in procurement frameworks.

For private organisations, social procurement is commonly driven by ESG, client expectations and reputational considerations - and adoption is accelerating.

Why this matters for organisations today

Whether mandatory or not, social procurement is becoming a standard part of responsible procurement practice.

Organisations that engage early are better positioned to:

  • respond to changing requirements
  • demonstrate leadership
  • reduce risk
  • embed impact into everyday purchasing

Social procurement is no longer a niche concept - it is increasingly part of how organisations define value.

Related topics

Written by Viki Govic, Founder - Better Merch
Last updated: Dec, 2025