The majority of organisations deliver most of what they do through their supply chains. This is true of public bodies and businesses alike. For decades responsible organisations have sought to use their buying power to deliver more than the usual cost, time and quality objectives. So how do we procure for the greater good?
The Holy Grail of responsible procurement is social value. I have been honoured to work with British Land in their 12 month pilot scheme which tried to get behind the rhetoric and understand some of the facts and real barriers to success.
The Construction Industry Training Board (CITB) figures show that there were 9,000 apprentices in the industry last year. Given this is an industry that employs 3 million people and has an ageing workforce, this does not come close to replacing the skills we are losing, and does nothing to upskill a sector desperate for modernisation.
Across the sector, attempts to encourage more apprenticeships through procurement have met with mixed success. We found that setting a target percentage of apprentices for construction sites – a common approach – might not be working. If you measure the number of people inducted into a site, and then divide the number of apprentices into this, you can get a very impressive number. However, the apprentice only needs to spend a day on site to be part of the ‘head count’. The same apprentice could visit five sites in a week, do his or her induction and become five apprentices. Magic!
I know of examples (not at British Land) where this kind of target has resulted in firms hiring apprentices for a specific contract to tick the box, only to then lay them off at the end of the contract (and before they have finished their apprenticeship) because they had no other work for them.
What is the result of this? A box ticked, no improvement in the nation’s skills and a disenfranchised group of young people who will never work in the industry again. Oh, and tell their mates what a rotten sector it is. Is this responsible procurement? I don’t think so.
Informed by the findings from our pilot study, British Land decided to move to a position where they will ask their key suppliers to have 3% of their total workforce to be apprentices by 2020, so that each apprentice is only counted once. These apprentices do not have to be on British Land sites, they just have to be employed in the workforce in the UK. By working in this way, they build a supply chain with the skills they need for a sustainable future and help to ensure that apprentices are engaged in a rewarding experience that gives them the skills they desire.
During my time as Chair of the Commission for a Sustainable London 2012, the definition of ‘local’ was the subject of much debate.
We want to avoid the kind of situation where ‘local’ goods might be manufactured in China, shipped to Southampton, driven to a national distribution centre and transported onward to a ‘local’ stockist who delivers them; where a ‘local’ employee can be a migrant worker living in a hostel in another part of the country, picked up in a minibus and driven to site to do their shift, the invoice coming from a ‘local’ agent who collects a percentage of the fees. How much social value would these examples add?
We also want to avoid promoting local procurement to the extent that it reduces competition, which will lead to higher prices. This may well boost the local economy, but is it sustainable economic thinking? Probably not.
British Land really thought about this and consulted with their stakeholders, defining:
These definitions are not perfect, but a good and fair start.
The pilot has shown it is important to understand and define exactly what you are trying to achieve. Are you trying to grow local jobs? Do you want these jobs to be sustainable? Do you just want to give money to local businesses to earn short term recognition or tick boxes? Or do you want to invest in a healthy local economy?
I am really pleased to see that British Land plans to set targets for genuine local employment in the areas where it operates. They require managing agents to implement plans of helping local businesses to build capacity in a way that ensures a lean and competitive local supply chain in the longer term.
Why not download British Land‘s Charter and other relevant policies?
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