Yesterday, Wates, one of the UK’s largest construction firms, pledged to spend £5m with the social enterprise sector by 2015. Peter Holbrook looks at the emerging trend of private companies wanting to do business with social enterprises.
Over the past twelve months the team at Social Enterprise UK has noticed a marked increase in the number of private companies wanting to do business with social enterprises. Growing pressure on big business to prove their value to society beyond the bottom line is causing a shift in the thinking behind how corporate social responsibility (CSR) objectives are met.
Procuring differently and tightening up a company’s supply chain is becoming a more and more popular choice. Meeting social objectives through core business activities rather than carrying out expensive CSR programmes, to many companies, just makes sense – and is catching on. For social enterprises, this opportunity can be incredibly lucrative. And while accessing big business can be challenging, particularly for those smaller organisations with fewer business contacts and in-roads, inventive ways of engaging with social enterprises are being devised across the private sector.
Yesterday, one of the UK’s largest construction firms, Wates, launched the industry’s first social enterprise brokerage scheme. The aim is to get every one of its construction sites in the UK trading with social enterprises, and to spend £5m with the sector by 2015. With the help of Social Enterprise UK (SEUK), a ‘one stop shop’ of social enterprises has been created for the company’s teams of construction workers to source services from, and Wates has already begun trading with the sector.
The prospect of social enterprises interweaving themselves across the work of billion pound businesses is incredibly exciting. In Wates’ case, they’re looking for long-term trading; meaning a social enterprise that makes it into its supply chain may remain there for many years to come. If every private company in the UK followed suit, the social enterprise sector would thrive like never before. Taking Wates as an example; to date, the company has traded around £4m with the social enterprises sector, contributing to the increased average annual turnover of social enterprises from £175,000 in 2009 to £240,000 in 2012.
Others have cottoned on, too. Deloitte have been buying from a number of their social innovation pioneers and are looking to take social enterprise Wildhearts In Action into universities as part of their graduate recruitment programme. O2 have also begun to put pressure on their top supply chain to buy from social enterprises, as have RBS, PwC and Legal & General.
At SEUK, it’s important for us to look at what’s driving this change in how businesses engage with our sector. Gaining insight into this can help us prepare our members for the business opportunities that lie ahead.
Social Value Act
One thing we’ve noted is private companies’ interest in the Social Value Act and how it can be incorporated in to their work. Many deliver contracts on behalf of local and national government – Wates alone does 70 per cent of its business with the public sector. What’s more, there is a commonly shared acknowledgement that social enterprises have a strong track record of delivering social value, tackling issues like unemployment and strengthening local economies.
In fact, SEUK’s findings from the recent State of Social Enterprise Survey 2013 shows almost half of social enterprises now trade with the private sector, while 52 per cent of social enterprises actively employ people who are disadvantaged in the labour market, and 57 per cent draw 100 per cent of their workforce from the local areas in which they operate. The benefits of trading with social enterprises are clear, and with legislation encouraging firms to think harder about their social footprint, there is much more business to be done.
In the long run, the breaking into and remaining in supply chains will come down to social enterprise themselves. Being easy to find, clear in your business proposal and social impact, and competitive on quality and price is key to successfully winning business.
