Procuring social value: getting big business in on the act

Health care multinational Johnson & Johnson is aiming to spend £15m on social enterprise suppliers by 2020 in an effort to make its global business more socially and environmentally responsible. 

The company, which was set up by three brothers in 1886, already works with a number of social enterprises including Autism Works, Haven and Wildhearts in the different strands of its business but wants to do more.

At the 2015 Wildhearts GEL Summit Sophie Dutilloy, vice president for Johnson & Johnson’s global surgery business, said: “Sometimes people think that Johnson & Johnson and other big corporations like this can be intimidating. The message I would like to send across to all those working in social enterprise is that we really have a desire to work with you.”

As well as manufacturing baby products internationally Johnson & Johnson also produces a number of other products including surgical equipment to hospitals. It is the world’s sixth largest consumer health company, the fifth largest pharmaceuticals company and the most comprehensive medical devices business. 

At the Wildhearts GEL Summit Dutilloy and a panel of other business leaders including founder of Beyond Food Simon Boyle and CEO of Wates Living Space Andy Hobart explored some of the challenges that prevent big businesses working with more social enterprises. Among those challenges highlighted was the feeling of intimidation felt by smaller social businesses when deciding to approach much bigger companies, the difficulty corporates have in finding social enterprises to work with and the internal culture of corporations. Dutilloy explained that often senior managers will procure from bigger companies simply because they are more familiar with them and this is how it has always been done. 

When asked whether the answer to making supply chains more sustainable was a technical one or one about leadership, Boyle answered a resounding “both”. The panel agreed that mission statements in procedural documents, ensuring that managers are well educated in the impact supply chains have on people and the environment and job swapping schemes – which give corporate professionals experience working in social enterprises and vice versa – were all key. 

Dutilloy explained that at Johnson & Johnson “internal awareness” programmes have been launched to “make sure that internally every employee understands what social enterprise is and supports this decision”. 

With a turnover of £1.2bn and 2,500 staff Wates is one of the UK’s largest construction companies and has traded with more than 60 social enterprises on over 50% of its projects. Hobart told the summit that the family-owned company has spent £6m with the social enterprise sector to date and aims to spend £20m by 2020. He was also very clear that this made business sense as the enterprises performed better than competitors during the tender process. 

As a company contracted by the public sector – for example by local authorities to build schools and also by housing associations – Wates has welcomed the introduction of the Social Value Act. The Act was introduced to ensure that social and environmental impact is taken into account during government procurement decisions, although has received much criticism for not going far enough

Wates conducted the largest piece of research on the Social Value Act, which found that 52% of survey respondents said social value delivers savings, 70% that it delivers innovation but despite this 33% reported that they are not currently considering social value when procuring across all their services. 

Chairing the panel discussion at the summit was CEO of Social Enterprise UK Peter Holbrook. He said: “The Social Value Act gives us one small glimpse of how a government that is committed to free market economics recognises that when it spends money, it has to do so in a way that reinforces its social and environmental objectives too. 

“Lord Young, who held the review of the Social Value Act just before the election, has made a recommendation to the Prime Minister – one that I expect he will fulfill – and that is to review the Social Value Act. It currently covers services only. In Scotland it applies to goods, works and services under the Procurement Reform Act and we expect that shift to take place here.”

Holbrook concluded by describing the many positives that socially responsible procurement processes create for the public and the private sector. These include improved staff engagement, being able to attract the best talent and providing the opportunity to tell stakeholders of the positive impact the company is having. With incentives like that, buying from social enterprises seems too good an opportunity to pass up.

 

Photo credit: Ikhlasul Amal