Ethical procurement for social good

Harnessing market forces for social good is not a new idea; impact investing and social enterprise are well-established paths. But there are further options worth exploring, including ethical procurement.

Ethical procurement occurs when you broaden the parameters of ‘who benefits?’ in a given transaction from the usual suspects: provider and receiver, to include society more broadly in the equation.

What could this achieve? Mitigation of injustices against Indigenous communities and the environment, addressing gender imbalances, driving a more inclusive workforce, and more – according to a range of speakers who delivered lighting talks at an Ethical Procurement event hosted by the Centre for Social Justice and Inclusion.

Patrick Woods, UTS Deputy Vice-Chancellor of Resources, kicked off our event by framing business transactions as power dynamics. Power that can be used for good, but can and often is misused, creating and entrenching inequity, and lack of inclusion.

Woods called for private and public spending to be leveraged to foster greater inclusion. He emphasised universities have a responsibility to understand opportunities in policy creation as well as the necessary attitudinal and cultural shifts in society that establish ethical business as the norm.

So could the day when social responsibility really is a competitive feature of business be just around the corner?

Paul Brown, CEO of social enterprise Jigsaw, believes so. Delving into the role that social procurement can play in broadening the limited pathways available to people with disabilities, Brown highlighted that 70% of individuals with disabilities lose their jobs after entering the workforce, even after having received training in their field. Jigsaw seeks to change this by upskilling people in the soft skills needed to gain and maintain employment, offering a training program covering 29 such skills to help bridge the employment gap for people with disabilities.

Jigsaw employs 80 people with disabilities, and promotes an environment where social and commercial outcomes are complementary. With a hope to create 500 jobs over the next five years, and six work hubs across the country, Brown feels that “social procurement and a business environment are both absolutely key.”

But as Ben Price of Supply Nation highlighted, “policy drives behaviour.”

Supply Nation supports Indigenous businesses in supply chains with a verified database, events, external training and tools to track spend with Indigenous businesses. They also host a trade show where 185 Indigenous businesses present each year.

Dr Dean Jarrett from the UTS Business School agreed with Price in highlighting the crucial role Australia’s procurement framework must play in educating the corporate and government sector to better understand the Indigenous business landscape and improve relationships. Having researched corporate and government buyers of Indigenous businesses in Australia compared with the US, he feels that Australia still has some way to go in establishing the necessary frameworks.

An example of where policy is making change through ethical procurement was provided by Jennifer Burn, Professor and Director of Anti-Slavery Australia. Her organisation has been instrumental in introducing the Modern Slavery Act into Australian legislation, and it has been operative since 1 January 2019. Under the Act, some entities in Australia are required to submit a modern slavery statement to report on the risks of modern slavery in their operations and supply chains and actions to address those risks.

“UTS has a wonderful opportunity to do something innovative and exciting when dealing with procurement and modern slavery reporting. There is a need for a collaborative cross-university framework for human rights diligence,” Jennifer Burn, Anti-Slavery Australia.

Sarah Kaine, Associate Professor of Management Discipline Group and UTS Business School also highlighted procurements importance in addressing modern slavery within domestic labour and supply chains. Her research revealed the need to influence and change the behaviour of those in power to provide employees with correct wages and better working conditions.

The Cleaning Accountability Framework (CAF) is a scheme that aims to tackle wage exploitation and poor conditions in the cleaning industry by establishing a set of conditions, with best practice procurement tools and guidance notes for cleaning companies, property managers and property owners tendering cleaning contracts. CAF’s key procurement tool is the Pricing Schedule, which provides transparency of wages and overheads, hours worked and productivity rates to enable a fair and consistent assessment of tenders. CAF audits are a crucial part of the scheme, with a collaborative effort from self-selecting better players in the market to improve conditions for workers.

“In collaboration with a UTS Startup, a real time communication app for cleaners has also been developed. This tool is also transferable to other industries, for example security,” Kaine noted.

Behaviour change was a recurring theme in all talks. But was especially pertinent for Nick Glover, Director of Risk in the UTS Office of the DVC (Resources). Glover shared how the overall procurement plan for UTS relies on behavioural change, driven by engagement both internally and externally. He emphasised the university's role in driving the incentive of recognition of good behaviour and procurements need to provide value for money. The challenge of the day in achieving this include promoting inclusivity without diluting the message.

The final topic covered by Nick Florin, Research Director at the Institute for Sustainable Futures, looked at strategies and interventions to achieve more efficient and sustainable resource use. Florin emphasised the opportunity to mitigate the threats of resource scarcity and adverse environmental impacts, with “procurement acting as an important lever to support this transition to a circular economy.”

Following the talks a workshop facilitated by Richard Boele, Global Leader in Business and Human Rights Services, KPMG Australia, allowed attendees to offer their opinions on the lightning talks and procurement as a whole. KPMG recently released a Human Rights Policy, becoming the first firm worldwide to ask clients about their human rights impact.

During the workshops the conversation circled back to policy. "Policies are ineffective without resources to action them. Universities as leaders in the education sector have a unique opportunity to champion best practice for ethical sourcing and social procurement” said Boele.

Recurring focus on policy shows that if business is to be an effective lever to serve a social justice agenda, it must be ethical at a structural level. Practice, responsibility, accountability and regulation must come together to work towards a common goal. This requires behaviour change at the culture shift level to function effectively.

It’s a tall order for business, but with the leadership and vision that was present at the event, it looks achievable.