In this insightful article, Social Traders’ CEO Tara Anderson explores why social procurement makes good business sense.
Social enterprises are reshaping Australian business by turning everyday procurement into a force for good. Procurement leaders have more power than ever to drive meaningful social and environmental change – simply by switching to social enterprise suppliers.
Social enterprises are organisations like any other, but with a purpose beyond profit: they exist to solve social and environmental challenges, to create jobs for people shut out of work, to deliver community services in underserved markets and provide environmental solutions.
Operating across industries – from cleaning and waste management to IT services and office supplies – there are 12,000 social enterprises contributing over $21 billion to the Australian economy each year.
Our latest Report on Identified Social Enterprises (RISE) revealed they are a resilient business model, with 86 percent of social enterprise revenue drawn from trade, and 68 percent reporting a net profit (more than SMEs and charities).
Importantly, 27 percent of their revenue is spent on generating impact and 43 percent of jobs created are filled by people facing the greatest barriers to employment. They truly contribute to an inclusive and equitable Australia.
By integrating social enterprises into procurement strategies, businesses can unlock new value, strengthen ESG commitments and deliver measurable social impact – all while sourcing the same high-quality goods and services they already need. Yet many organisations overlook them in their procurement process.
Using your business spend to do good
Social procurement is when business and government choose to buy from social enterprises, using their purchasing power to generate social value beyond the value of goods and services.
The World Economic Forum State of Procurement 2025 Report found two-thirds of a company’s potential for positive or negative impact comes from its supply chain.
FTSE 100 companies typically allocate an average of $12 million to their corporate social responsibility (CSR) budgets, but their procurement spending averages $5 billion, which holds tremendous potential for positive impact through social procurement.
In Australia, over 60 percent of our business members are growing their spend with diverse suppliers year on year. Businesses are not only increasing total spend, they are working with a wider range of social enterprises across a wider range of procurement categories. We’ve also seen a shift in recent years in the motivation for engaging in social procurement – now driven by company values and ESG goals, more so than tender/mandatory requirements.
The beauty of social procurement is that it’s simply a business doing what it would anyway – buying goods and services but using different suppliers. By adding social enterprises into a supply chain, a business gets the same quality goods and services but also gets social and environmental value in the same transaction.
As the national certifier of social enterprises, we connect businesses with 700+ genuine social enterprises, de-risk their supplier base and avoid social washing.
Reporting on your ESG commitments
Social procurement is one of the most powerful ways a company can deliver measurable social outcomes. By working with social enterprises, companies can support employment opportunities for marginalised groups and reinvest in local economies.
However, social procurement isn’t just about doing good – it is also a strategic move that strengthens supply chains, boosts brand reputation and aligns with evolving stakeholder expectations.
Investors, customers and regulators are placing increasing scrutiny on ESG performance. Businesses have an opportunity to use ESG to gain a competitive advantage and get ahead of reporting requirements.
Social procurement is an excellent way to activate and deliver on your ESG goals – it’s straightforward (every business knows how to procure things) and it’s trackable (when businesses report their social procurement spend with certified social enterprises, we can report back on the specific community and environmental outcomes created.)
While environmental reporting has come a long way, the measurement of social impact continues to lag behind. A report by KPMG found that while 84 percent of firms in the ASX100 included the ‘social’ element of ESG in their annual financial report, almost all provided only a narrative description, with just one percent providing a quantification of the potential impact.
In other words, corporate Australia is not measuring the social impact it is making in the communities in which it operates.
At Social Traders, we’ve been helping over 300 organisations track, measure and report on the social impact of their procurement spend with certified social enterprises since 2017. By collecting over 200 data points of certified social enterprises, Social Traders can identify a range of impact measures such as hours of employment supported, training delivered for people facing barriers to work or tonnes of waste diverted from landfill.
Property giant Mirvac is one of our business members, actively looking to get ahead of the pack and proactively showcase the positive impact it has on communities by sharing public targets about their social goals and reporting on these in their Annual Report.
We want this to move from being best practice to standard practice across corporate Australia.
For procurement leaders, the opportunity is clear: by integrating social enterprises into supply chains, businesses can drive measurable impact for both their business and the communities in which they operate. The question is not “why?” but “why not?”
