Social value and net zero has quickly become a priority for many organisations in the UK – particularly in the construction industry – Guy Battle, CEO of Social Value Portal explains to PBC Today
Though it was first outlined in legislation over a decade ago, social value – an umbrella term to describe the value an organisation creates for individuals and society as a whole – has become a greater concern for organisations following Public Procurement Note PPN06/20, which required all government departments to prioritise social value in their procurement decision making.
In the Public Services Social Value Act 2012, social value is defined as a triple bottom line issue including environmental, social and economic benefits and translated into construction terminology means “the wider social contribution that a development creates for society through how it is constructed and managed. This includes the economic returns to the local economy, the well-being of individuals and communities, and the benefits to help regenerate the environment”.
For the construction industry, the importance of social value was reinforced by the publication of The Construction Playbook in 2020, which outlined commercial best practices as well as the government’s expectations of how contracting authorities and suppliers should be working, and made social value an explicit requirement for all new construction works.
This new focus on social value comes at a time when organisations across the country, in construction and beyond, are also expected to prioritise eliminating carbon emissions to create a net zero economy by 2050. With recent CCC forecasts showing that the UK is currently on track to miss its next two emissions targets, it’s more important than ever before that organisations dedicate time, resources, and effort to reducing their emissions.
Although these two areas might appear to be separate priorities, they actually go hand in hand. The environment, and what organisations are doing to ensure decarbonisation and a healthier world (i.e. climate justice), is one of the five main pillars of social value, alongside job creation, responsible business growth, social improvements, and innovation.
With PPN06/20 requiring all government departments to consider social value as part of procurement decisions and tenders, firms must make social value – including sustainability and net zero – a priority, to ensure they can continue to work competitively.
Why must the construction industry take the lead in reducing carbon emissions?
The construction sector is the largest industry in the UK, employing 3.1 million people and contributing £110bn each year to the UK economy. The size of the industry, however, means it is also one of the largest contributors to carbon emissions. The built environment, of which the construction sector is a huge part, is thought to contribute 40% of the UK’s carbon emissions, with the construction sector alone contributing up to 11% of emissions globally.
To meet their responsibilities under both social value legislation and environmental reforms, organisations in the construction sector must act quickly to reduce emissions by:
- Reducing the carbon intensity of building materials in the procurement process
- Implementing climate-smart, low, and clean energy consumption in the use phase
- Designing and using more recyclable materials and closed material flows in refurbishment and demolition
Ultimately, it’s a fact that companies in the construction sector will need to make social value a priority if they wish to remain competitive. Government contracts worth more than £5m can now only be awarded to construction companies with a social value policy in place, and many local councils already require a Social Value Statement (e.g. London Borough of Islinton or Salford City Council) as part of planning submissions.
Social value is also becoming a popular way to illustrate the benefits new developments will bring to the private sector, and industry leaders such as Balfour Beatty, Wates, and BAM Construct have already made significant moves to make social value a priority. Many smaller companies are already doing the same, and, regardless of size, it’s a clear must for construction companies looking to keep their development pipelines active.
As one of the biggest contributors to carbon emissions, and a big employer, the construction industry has the capacity to significantly strengthen our communities and society in general through social value generation, and has a duty to lead the way by creating a positive ripple effect.
What role does procurement play in improving sustainability and reaching net zero?
For any real progress to be made, the construction sector must look at the impact of development before ground is broken. Organisations must examine their processes from start to finish to ensure each aspect is creating as much social value as possible, including procurement.
Suppliers and project managers have to work together to stay in sync and make sure that goals are aligned, from the language used in bids to ongoing performance management.
The Social Value Portal is an online solution designed from the ground up to make it easy for organisations to measure and manage the contribution they and their supply chain make to society.
The Portal allows buying organisations to embed social value and carbon reductions into their procurement decision making processes, rewarding those organisations that go above and beyond and making it easier to select suppliers that meet both climate and social targets.
The Portal also allows buyers to monitor progress, ensure delivery against contractual obligations and to report both non-financial and financial data – including environmental information – effectively rewarding organisations for positive action. Using the established National TOMs framework, it measures environmental, social and economic activities and helps to identify and measure additional social and environmental value delivered through a project in meaningful terms.
The National TOMs Framework was launched in 2017, supported by the National Social Value Taskforce and Local Government Association. It provides a minimum reporting standard for measuring social and environmental value, and ensures organisations can procure, measure, manage and maximise it easily.
How can construction leaders communicate social value to stakeholders effectively?
To make effective, long-term changes, construction leaders must get stakeholders on board for the journey including their supply chain. We all know that measures must be taken to prevent climate collapse, however, it can be easy to get bogged down in the detail, so communication must be effective.
Leading from the front will include setting clear and achievable targets but also providing the support (especially to your supply chain) to meet your goals. No organisation can reinvent itself or effect real change unless those at the top are involved. Board members and company leadership need to show willing and active participation.
Accountability is another crucial factor. A single person must be in charge, with direct board accountability and equipped with the team, budget, and resources they need to drive change and create social value. Too many cooks spoil the broth, as the saying goes. By putting a single person in charge of a team with a portfolio for social value and board accountability, progress will be made quicker and more effectively.
Thirdly, transparency must play a fundamental role in any social value strategy. With annual targets and clear reporting via Social Value Statements, you can clearly communicate action taken, future plans, and secure buy-in from all of your stakeholders.
Ultimately, the strongest argument for committing to social value generation might be financial: we all want a better world and a better future, but in the short term it is crucial to communicate to stakeholders the ways that social value can be beneficial to the business. If your organisation is not equipped with a social value policy or does not show a willingness to make the changes needed, you’re likely to lose out on work and market share.
Utilise the Social Value Portal
Organisations can use the tools and resources such as the Social Value Maturity Index available on the Social Value Portal to measure, track, and improve their social value strategy and use the National TOMs framework to monitor your progress and ensure consistency across all of your projects
The construction sector has an incredible opportunity to make changes and play a crucial role in achieving net zero by 2050 – but only if we all play our part.
For more information on Social Value Portal, get in touch.
Guy Battle
CEO
Social Value Portal
