Social Procurement in Australia

Social Procurement in Australia

A Practical Guide for Organisations

What is social procurement?

Social procurement is the practice of using an organisation’s purchasing power to achieve positive social, economic and environmental outcomes, alongside traditional procurement considerations such as price, quality, capability and risk.

At its core, social procurement asks a simple but powerful question:

Who benefits from the money we already spend?

Rather than treating procurement as a purely transactional function, social procurement recognises that purchasing decisions shape:

  • who gets access to employment
  • which businesses grow and survive
  • how communities participate in the economy
  • how value is distributed across society

In Australia, social procurement most commonly involves directing spend toward suppliers that:

  • create employment for people facing barriers to work
  • operate as certified social enterprises
  • support Indigenous economic participation
  • reinvest profits into social or community outcomes
  • can demonstrate verified, measurable impact

Importantly, social procurement is not philanthropy. It does not replace donations, grants or sponsorships. Instead, it embeds impact directly into everyday business purchasing - the goods and services organisations already need to buy.

Why social procurement exists

Traditional procurement models were designed to optimise for efficiency, consistency and risk minimisation. These models are effective at controlling costs and ensuring compliance, but they often fail to account for broader social consequences.

Over time, it became clear that:

  • significant public and private spending was not translating into inclusive economic participation
  • people facing barriers to work remained excluded despite economic growth
  • procurement decisions unintentionally reinforced inequality

Social procurement emerged as a response to these gaps.

Across Australia, governments, councils, universities and large organisations began to recognise that procurement could be used not only to purchase goods and services, but also to:

  • reduce long-term unemployment
  • support people with disability or neurodivergent conditions
  • strengthen local and regional economies
  • increase participation from Indigenous-owned businesses
  • align organisational spend with ESG and sustainability commitments

Rather than viewing social outcomes as a “nice to have”, social procurement reframes them as part of value for money.

How social procurement is applied in Australia

There is no single model for social procurement in Australia. Its application depends on:

  • the size of the organisation
  • the sector it operates in
  • regulatory obligations
  • maturity of procurement processes

However, social procurement is most commonly embedded through:

  • government procurement policies
  • local council tender frameworks
  • infrastructure and construction contracts
  • university and TAFE supplier panels
  • corporate supplier diversity programs

Some organisations formalise social procurement through policies and targets. Others embed it more informally through supplier evaluation criteria, preferred supplier lists or ESG strategies.

Crucially, social procurement does not require a complete transformation of procurement systems. Most organisations begin by:

  • identifying low-risk, repeat purchase categories
  • trialling social suppliers alongside existing vendors
  • expanding spend over time as confidence grows

Is social procurement mandatory in Australia?

Social procurement is not universally mandatory, but it is increasingly expected.

In the public sector, many procurement frameworks include:

  • social value objectives
  • Indigenous procurement commitments
  • supplier diversity requirements
  • reporting obligations linked to social outcomes

Local governments and state agencies often incorporate social procurement expectations into tender documentation, even where minimum thresholds are not mandated.

In the private sector, social procurement is most commonly driven by:

  • ESG strategies
  • sustainability reporting requirements
  • client expectations
  • investor scrutiny
  • reputational risk management

As ESG reporting matures, organisations are increasingly asked not just what they spend, but who they spend it with.

What counts as social procurement spend?

Social procurement spend refers to purchasing from suppliers that can demonstrate genuine social impact, not simply make claims about it.

This typically includes spend with:

  • certified social enterprises
  • Indigenous-owned businesses
  • disability enterprises
  • suppliers creating supported employment pathways

A common misconception is that social procurement only applies to large infrastructure or specialist contracts. In reality, many of the most effective opportunities sit within everyday operational categories, such as:

  • branded merchandise and promotional products
  • uniforms and workwear
  • catering and event services
  • logistics and fulfilment
  • marketing, print and communications

These categories are particularly powerful because they involve:

  • recurring spend
  • scalable volume
  • lower procurement risk
  • easier impact measurement

How social procurement works in practice

While approaches vary, most organisations follow a similar progression:

  1. Commitment
    An organisation establishes a social procurement goal, policy or ESG commitment.
  2. Identification
    Procurement or sustainability teams identify suitable categories and suppliers.
  3. Verification
    Suppliers are assessed for capability, reliability and evidence of impact.
  4. Integration
    Social suppliers are included in panels, tenders or purchasing systems.
  5. Measurement
    Spend and outcomes are tracked and reported.

The defining feature of effective social procurement is intentionality. It is not accidental or ad hoc - it is planned, measurable and aligned with organisational objectives.

The role of social enterprises in social procurement

Social enterprises play a central role in delivering social procurement outcomes.

A social enterprise is a business that exists primarily to achieve a social purpose, reinvesting profits to create impact rather than distributing them to shareholders.

Certified social enterprises offer procurement teams:

  • independent verification of impact
  • reduced compliance and reputational risk
  • transparency around governance and reinvestment
  • clearer reporting pathways

Certification matters because it distinguishes genuine impact-driven businesses from organisations making unverified claims.

How organisations assess social procurement suppliers

When evaluating social procurement suppliers, organisations typically consider:

  • operational capability and reliability
  • product or service quality
  • pricing and overall value
  • ability to scale
  • governance and transparency
  • evidence of social impact

From a procurement perspective, verification is critical. Increasingly, buyers look for:

  • third-party certification
  • structured impact reporting
  • clear accountability mechanisms

This ensures social procurement decisions withstand internal scrutiny, audits and public reporting.

How organisations report on social procurement

Social procurement outcomes are commonly reported through:

  • ESG and sustainability reports
  • annual reports
  • social value statements
  • internal dashboards and board reporting

Metrics vary by organisation, but often include:

  • total spend with social enterprises
  • number of people employed
  • employment hours created
  • demographic or inclusion indicators
  • community outcomes delivered

Effective reporting relies on suppliers who can track and communicate impact clearly, rather than relying on anecdotal evidence.

Common misconceptions about social procurement

“Social procurement costs more.”
Cost comparisons should consider quality, longevity, risk reduction and social value - not price alone.

“It’s only relevant for government.”
Private organisations increasingly adopt social procurement as part of ESG and supplier diversity strategies.

“Impact is hard to measure.”
With verified suppliers and clear metrics, impact can be tracked and audited.

Why social procurement matters

Every organisation spends money. Social procurement simply asks who benefits from that spend.

When implemented well, social procurement:

  • creates meaningful employment opportunities
  • increases economic participation
  • strengthens communities
  • supports inclusive growth
  • aligns purchasing decisions with organisational values

It turns procurement from a back-office function into a strategic driver of positive change.

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