Social and Environmental Requirements
Description and History
Progressive procurement can be used as a tool to emphasize social and environmental value, ensuring that purchasing decisions made by institutions prioritize broader community benefits. Social and environmental requirements are frameworks used by organizations—especially anchor institutions like hospitals, universities, and local governments—to measure and maximize the positive impact of their procurement practices. By embedding these values into procurement policies, institutions can promote fair wages, equitable hiring, environmental sustainability, and support enterprises in local, underserved communities.
Institutions can implement various policies to achieve these goals, such as:
Contract Weighting: Giving greater preference to bids from enterprises that meet specific environmental qualifications, like using renewable energy, minimizing waste, or adhering to carbon-neutral standards.
Living Wage Requirements: Mandating that contractors and suppliers pay their employees a living wage as a condition of doing business.
Supplier Diversity Targets: Setting minimum percentages of procurement spend directed toward minority-owned, women-owned, or local businesses.
Sustainable Sourcing Mandates: Requiring contractors to use materials certified as sustainably sourced or low-impact, such as FSC-certified wood or recycled content.
For more examples and best practices, organizations can reference resources like the Sustainable Purchasing Leadership Council, which provides guidance on implementing socially and environmentally responsible procurement strategies.
Social and environmental value frameworks aim to address systemic issues—such as inequality, unemployment, and environmental degradation—by shaping procurement decisions. This approach has seen growing interest globally and is especially relevant as more institutions aim to align their purchasing with sustainable development goals. In the U.S., this trend is demonstrated by institutions like Kaiser Permanente, which has adopted socially responsible procurement policies for local and sustainably sourced goods.
Social Value Procurement and the Community Wealth Building Wedge
When implemented effectively, social and environmental value requirements in procurement can serve as a powerful driver of equity and sustainability. By directing purchasing power toward these goals, institutions not only support local businesses and protect the environment but also contribute to a more resilient, democratic economy that benefits all members of society.
Examples of Social and Environmental Value Frameworks in the U.S.
City of Chicago’s Environmental and Social Procurement: Chicago has adopted procurement policies that emphasize diversity and sustainability, requiring suppliers to meet certain social impact standards, including equitable hiring and environmentally friendly practices. These standards are designed to support local businesses while contributing to environmental goals, such as waste reduction and reduced energy use.
Los Angeles Unified School District (LAUSD) Food Services Program: LAUSD prioritizes local and sustainable food sourcing in its procurement, supporting regional farmers and reducing transportation emissions. By working with local, small-scale suppliers who commit to eco-friendly practices, LAUSD ensures that its procurement practices benefit both students and the environment.
Challenges and Limitations
Cost Implications: Procuring from suppliers who adhere to rigorous social and environmental standards may be more costly. Institutions may struggle to balance budgetary constraints with their commitment to sustainability and equity, especially if their mandates are not explicitly funded. However, investing in these practices upstream can reduce downstream costs by mitigating the long-term social and environmental externalities, such as poor community health outcomes or environmental degradation.
Supplier Capacity and Compliance: Local businesses, especially small and minority-owned enterprises, may find it challenging to meet stringent social and environmental standards without support. Institutions may need to invest in capacity-building initiatives to help suppliers align with procurement requirements, creating a more inclusive supply chain.
Complexity in Measurement and Accountability: Quantifying social and environmental impact can be difficult, particularly when measuring long-term outcomes like community resilience or environmental sustainability. Clear metrics and reporting frameworks are necessary to ensure that procurement practices truly contribute to social and environmental goals.
Policy Conflicts: Institutions may encounter regulatory or policy constraints that limit their ability to enforce certain social or environmental standards. For example, government agencies must navigate existing procurement laws that may not always align with progressive purchasing goals.
Taking It Forward
Develop Clear, Transparent, and Measurable Standards: Establishing specific, measurable criteria for social and environmental impact helps institutions track their procurement goals and outcomes. Metrics might include the percentage of procurement spent on local or diverse businesses, CO₂ emissions reductions, or waste minimized through sustainable practices.
Build Supplier Capacity: Anchor institutions can support suppliers (or work with agencies that support suppliers), especially small or minority-owned businesses, by offering training programs or technical assistance. Helping suppliers meet social and environmental standards enables broader participation in procurement opportunities, creating a more inclusive supply chain.
Collaborate for Greater Impact: Anchor institutions can partner with community organizations, government agencies, and other stakeholders to amplify their impact. By working together, they can share best practices, pool resources, and increase the scale of positive outcomes for the community.
Embed Accountability Mechanisms: Establishing regular reporting and independent oversight helps ensure that procurement practices align with stated social and environmental goals. Transparent reporting on progress and challenges fosters accountability and builds trust with the community.
Resources
Sustainable Purchasing Leadership Council: Provides guidance and tools for institutions to implement sustainable procurement practices.
Social Value International: Offers guidance on measuring social impact and integrating social value into procurement practices.
American Sustainable Business Network: A coalition promoting inclusive and sustainable business practices, including social and environmental standards in procurement.
Green America: An advocacy organization that supports sustainable business practices and offers resources on environmentally responsible procurement.