What Does Social Value Actually Mean for Australian Businesses?
Social value has become one of those terms that gets used a lot without anyone stopping to clarify what it actually means. It appears in tender documents, ESG strategies, sustainability reports and government policy frameworks. But if you asked ten people in your organisation to define it, you’d likely get ten different answers.
This matters because social value is no longer optional for many Australian businesses. Whether you’re responding to government procurement requirements, building an ESG strategy or trying to do something genuine with your supply chain, at some point you need to move from the general idea to the specific: what does social value look like in our business, and how do we create it?
This guide is a practical starting point. It covers what social value means in the Australian business context, where it sits in your operations, what good and bad practice looks like, and how to start building a strategy that holds up to scrutiny.
What social value means in the Australian context
At its simplest, social value is the positive impact on people and communities that a business creates through its operations, purchasing decisions and partnerships. When a business buys catering from a social enterprise that employs refugees, the catering is the commercial transaction. The employment pathway for people who would otherwise be locked out of work is the social value.
In Australia, the concept has been shaped primarily by the growth of social procurement. The idea is straightforward: organisations can use their existing purchasing power to generate social outcomes without additional expenditure. You’re spending the money anyway. Social procurement asks whether that spend could also deliver something meaningful for communities.
Victoria has led the way. The Victorian Government’s Social Procurement Framework, introduced in 2018, requires departments and agencies to consider social and environmental impact when making purchasing decisions. It set a 3% social procurement spend target across the $30 billion Big Build infrastructure pipeline and has driven significant growth in the social enterprise market. According to Social Traders, Victoria now accounts for 54% of all social enterprise procurement activity in Australia.
But social value extends beyond government policy. Social Traders reports that the main reason businesses are now joining their network is alignment with ESG and sustainability goals, not government compliance. Customers, employees and investors increasingly expect businesses to demonstrate social impact alongside financial performance. This is a market shift as much as a policy one.
Where social value sits in your business
One of the most common mistakes is treating social value as a single initiative or a standalone project. In practice, there are multiple entry points across a business, and the strongest social value strategies connect several of them.
Supply chain and procurement
This is where most businesses start, and for good reason. Procurement is the most direct lever. By switching even a portion of your existing spend to social benefit suppliers, including certified social enterprises, Aboriginal businesses and Australian Disability Enterprises, you create social value through the transactions you’re already making.
The key shift is from thinking about procurement as purely a cost and quality equation to understanding it as a strategic tool. This doesn’t mean compromising on quality or necessarily paying more. It means looking at your spend categories with fresh eyes: where are there social enterprise suppliers who can deliver what you need? Cleaning, catering, landscaping, IT, waste, printing, consulting, couriers, workwear and office supplies are all categories where certified social enterprises operate.
There are also practical ways to make procurement more accessible to social enterprises. Unbundling large contracts into smaller components, by location, service type or project stage, can open up opportunities for social enterprises to deliver a portion of the work. Subcontracting requirements, where Tier 1 suppliers are required or encouraged to partner with social enterprises further down the supply chain, are increasingly common in major infrastructure projects. Some organisations create social enterprise-specific supplier panels for categories like catering or office supplies. Others use expressions of interest to test the market and understand what social enterprises can offer before locking in tender specifications.
In large organisations, procurement is often layered across multiple tiers. A social enterprise might not be delivering a $200 million project directly, but it could be a Tier 2 or Tier 3 supplier providing cleaning, printing or grounds maintenance to the lead contractor on that same project. Understanding where social enterprises can fit across the full supply chain is where the real opportunities often sit.
Employment and workforce development
Social value also comes from how you employ people. Inclusive employment programs that create pathways for people facing disadvantage, whether that’s people with disability, young people disengaged from education, women in male-dominated industries or people from refugee backgrounds, generate measurable social outcomes.
In the transport and infrastructure sector, for example, the Victorian Government’s Women in Transport Strategy set a target of 50% female representation, including in senior roles. Programs like mentoring, leadership scholarships and structured networking created entry points and career pathways in one of Australia’s most male-dominated industries. This kind of structured approach generates real workforce change.
Supplier development
Beyond buying from social enterprises, some businesses go further by actively investing in the capability of social benefit suppliers in their supply chain. This might mean providing mentoring, business development support or helping a smaller supplier become tender-ready for larger contracts. Supporting suppliers to grow and deliver builds long-term capacity in the social enterprise sector and creates more sustainable partnerships over time.
Community investment and partnerships
Social value can also be created through how a business engages with the communities where it operates. This includes partnering with local social enterprises on community projects, sponsoring entrepreneurship programs for underrepresented groups or using your facilities and expertise to support local capacity building.
The distinction from traditional CSR is intent and integration. Social value is most effective when it’s connected to what your business actually does, woven into operations rather than bolted on as a separate activity.
What social value looks like in practice
Talking about social value in the abstract only gets you so far. Here are some concrete examples of what it looks like when it’s done well.
A major infrastructure program in Victoria achieved over $580 million in cumulative social procurement spend during the period I was involved, and the figure has continued to grow since. It required dedicated specialist support working across multiple delivery partners to shift the conversation from compliance reporting to genuine strategic commitment, surface the data needed to identify where spend was and wasn’t reaching social benefit suppliers, and build a coordinated approach across a decentralised delivery model.
An energy company invested in the capability of an Aboriginal business in its supply chain, providing hands-on business development support to help the business refine its operations and grow. The social value was the long-term capacity that was built in the supplier, creating a more sustainable and competitive Aboriginal business.
A local council mapped the social enterprise landscape across its municipality, identified gaps and opportunities, and used that analysis to inform a social procurement strategy. Financial modelling showed the potential to increase social procurement spend significantly, with corresponding employment outcomes for people experiencing disadvantage. The groundwork was analytical, and that’s what made the strategy credible.
In each of these examples, the social value was specific, measurable and connected to the organisation’s actual operations.
Common traps: when social value goes wrong
Not all social value claims hold up to scrutiny. Here are some of the patterns I see most often.
Setting targets without aligning the organisation behind them. A 5% social procurement target sounds great in a strategy document. But if no one has mapped your spend categories against available social enterprise suppliers, identified who is responsible for delivery, or built relationships with the sector, the target is just a number. Worse, it often sits alongside procurement policies that still default to selecting the cheapest bidder, which directly undermines the target. Social procurement targets only work when the surrounding policies, processes and incentives are aligned to support them. That means reviewing evaluation criteria, updating procurement guidance and making sure the people making purchasing decisions have a reason to prioritise social value, through positive incentives and clear expectations.
Treating it as a compliance exercise. When social value is driven purely by policy requirements, there’s a risk it becomes a reporting exercise. The organisations that get the most value from social procurement are the ones that move beyond “what do we have to report” to “what outcomes do we want to create.”
Social washing. This is the social value equivalent of greenwashing: making claims about social impact that aren’t backed by substance. One common example is naming social enterprises or Aboriginal businesses in a bid submission to win a contract, then never actually engaging those suppliers once the work is awarded. Another is claiming spend with suppliers that aren’t genuinely certified, either through Social Traders for social enterprises, or through recognised bodies like Supply Nation or Kinaway for Aboriginal businesses. As social procurement matures in Australia, buyers and stakeholders are getting better at spotting these practices. Certification exists for a reason, and genuine commitment matters.
Expecting social enterprises to compete on price alone. Social enterprises are real businesses delivering quality goods and services. But their business models carry additional costs, because they’re employing people who face barriers to work, or reinvesting profit into community outcomes. A procurement process that evaluates purely on lowest cost will systematically exclude the suppliers that create the most social value. Value-for-money needs to account for the “value” part, which means weighting social impact in your evaluation criteria, and requiring robust evidence to prove it.
Counting dollars but not outcomes. Tracking spend with social enterprises is a start, but it’s an output measure. What employment outcomes were created? What communities benefited? What changed as a result of the spend? The most useful social value measurement frameworks capture outcomes: the actual difference that was made. This is harder, but it’s where the real story is.
Getting started: building a social value strategy
If your organisation is early in this work, here are practical steps to build a social value strategy that’s grounded in reality.
1. Understand your starting point.
Before you set targets, understand where you are now. On the procurement side, what are you currently spending with social benefit suppliers? Which spend categories have the most potential for switching? Who in your organisation already has relationships with the social enterprise sector?
On the workforce side, look at your employee data through a diversity lens: representation across job levels, pay equity, retention and progression rates for different cohorts, and where the gaps are between your workforce profile and the communities you operate in.
A baseline assessment across both procurement and employment gives you the evidence to set targets that are grounded in reality and to design interventions where they'll have the most effect.
2. Map the landscape.
Find out what social enterprise suppliers exist in your categories and your geography. Social Traders' directory of certified social enterprises is the most comprehensive starting point. But also look at the broader landscape: what inclusive employment programs operate in your sector or region? Which community organisations align with your social value priorities? Are there established partnerships you could join rather than building from scratch? Understanding what already exists saves you from reinventing the wheel.
3. Start where you can demonstrate early results.
You don't need to overhaul everything at once. On the procurement side, start with spend categories where social enterprises are well established and switching costs are low: cleaning, catering, office supplies and printing are common starting points. If you already have social enterprises in your supply chain, consider where targeted support, like mentoring or help getting tender-ready for larger contracts, could deepen the relationship and grow their capacity to deliver.
On the employment side, look at where small changes can open up access, like reviewing job ads and selection criteria for unintentional barriers, or partnering with a specialist employment provider to pilot a supported placement in one team. Early wins build internal confidence and create momentum for bigger commitments.
4. Build internal capability and review your processes.
Social value only works when leadership understands and actively supports it. Without senior sponsorship, it stays in the corner of one person's desk. That support needs to flow into the people making day-to-day decisions in procurement, HR and operations, so they understand what social value means and have the mandate to act on it.
On procurement, look critically at your tender and evaluation documentation. I've seen plenty of procurement processes that are unintentionally designed to favour large corporates with big marketing budgets and dedicated bid writing teams, while making it almost impossible for a social enterprise to demonstrate its value. If your evaluation criteria don't explicitly weight social impact, require robust evidence to substantiate claims, and create space for smaller suppliers to show what they can do, you'll keep getting the same suppliers regardless of your social procurement ambitions.
On employment, review your recruitment processes for barriers that might exclude the cohorts you're trying to reach, and make sure hiring managers understand how inclusive employment fits within broader team and business objectives.
5. Set meaningful targets and track progress.
Once you have a baseline and a plan, set targets that are specific, time-bound and connected to outcomes, across procurement, employment and any other social value commitments you've made. Report on them regularly. And be honest when things aren't working. The organisations that make real progress are the ones that share what they've learned, including the failures. That honesty builds credibility, both internally and across the sector, and helps others avoid the same mistakes.
6. Build relationships.
On the procurement side, the best social procurement outcomes come from genuine partnerships between buyers and social enterprise suppliers. This means engaging well before tenders are released, being transparent about your requirements and timelines, and investing in the relationship over time. For some organisations, this extends to actively investing in supplier capability, helping social enterprises build the systems, processes or certifications they need to take on bigger work. Social enterprises deliver their best work when they understand your business and feel like a valued partner.
On the employment side, inclusive employment can be built internally through your own recruitment, mentoring and workforce development practices, or through partnerships with specialist providers. Either way, it works best when it's designed with input from the communities you're trying to reach, integrated into how your teams actually operate, and supported with proper onboarding and management capability.
7. Connect your social value strategy to the communities where you operate.
Look at where your business has a physical presence or a significant footprint and ask what social value you could create locally. This might mean partnering with social enterprises on community projects, supporting local entrepreneurship programs, or contributing expertise to organisations working on issues your business is connected to. The strongest community investment strategies are grounded in genuine local need, developed in partnership with the community, and aligned with what your business actually does well.
Social value is a long game
Creating genuine social value isn’t something you do once and tick off a list. It’s a strategic commitment that develops over time as your organisation builds capability, deepens relationships with the social enterprise sector and gets better at measuring what matters.
The Australian social enterprise sector is growing, the policy environment is increasingly supportive, and there is well-established infrastructure to help you get started. But doing it well requires strategy, implementation support and honest assessment of where you are and where you want to be.
If that’s the work you’re facing, I can help.
I work with businesses across Australia on social procurement strategy, supplier diversity, impact measurement and social value implementation. Whether you’re starting from scratch or looking to strengthen what you’ve already built, I offer practical, hands-on support grounded in real experience across corporate, government and social enterprise sectors.
Book a free consultation: impactpractice.au/contact
Learn more about my services for business: impactpractice.au/social-procurement-social-impact-consulting-business
Olivia Cozzolino
Founder and Principal, Impact Practice
Social Traders certified social enterprise