August 27, 2015
Toronto is consistently rated as one of the best places to live in the world, yet access to opportunity and good jobs is highly unequal.
In response to these worrying trends, the City of Toronto launched its first, interim poverty reduction strategy in June 2015. When finalized later this year, the plan will serve as the City’s road-map to tackling issues like access to housing, transportation and quality jobs over the next 20 years.
Design and implementation of a “social procurement policy” is potentially also one of the most powerful actions Toronto could take to slow, and reverse, poverty growth.
Buried in the plan’s dozens of recommendations is one that is easy to overlook. However the recommendation for the design and implementation of a “social procurement policy” is potentially also one of the most powerful actions Toronto could take to slow, and reverse, poverty growth.
Social procurement is the strategic use of an organization’s purchasing power to create social value, for example, by contracting only with suppliers that pay a living wage. Introducing sustainability or environmental requirements in supplier contracts and supplier diversity strategies can also be considered social procurement.
Nine pilot projects are currently underway in Toronto to see whether “jobs created through the City’s procurement processes can be accessed by under- and unemployed Toronto residents and that the City diversifies its supply chain by removing barriers to access for small and medium-size enterprises.”
Social procurement strategies have been employed in the private sector for some time. But in recent years, many public sector institutions in North America, the U.K. and Australia have also begun experimenting with progressive procurement practices. In Toronto, the City and Atkinson Foundation have launched a public sector social procurement community of practice that brings together more than a dozen organizations to promote discussion and action on the issue.
This experimentation is driven by a growing awareness that public sector institutions (including municipal governments, but also universities and hospitals) are often the biggest employers and spenders in a region and well-positioned to have significant social impact in their communities. Every year in Ontario, universities and hospitals spend roughly $10 billion on goods and services while the City of Toronto spends $1.5 billion.
Targeting even a small portion of this spending towards communities can go a long way to achieving priority objectives. Diverting 2 per cent of the City’s purchasing to suppliers in economically-depressed neighbourhoods or to business owners belonging to historically disadvantaged groups would amount to a $30 million investment in those communities. This would exceed the $25 million that Toronto has allocated to its poverty reduction strategy.
Implementing social procurement in the public sector raises many questions and challenges – the broader legal context of trade agreements, ramping up small business capacity to meet institutional demand, and the need for considerable organizational cultural change are among the biggest.
Underlying these challenges is the fact that cost considerations are the prime driver of public procurement decisions. However, organizations in the private and public sectors are proving that social procurement doesn’t necessarily cost more, while at the same time, it might also create more value for the organization and the community (see Mowat and Atkinson Foundation’s paper on Anchor Institutions for examples).
Social procurement will require a shift in mindset by leaders and institutions.
Social procurement will require a shift in mindset by leaders and institutions. But fortunately, unlike the investments needed to address lack of affordable housing or gaps in public transit, the money is already there. At a time of rising inequality, growing public debt and increasing demand for services, making better use of our public procurement dollars is a smart step.
The City of Toronto’s ambitious social procurement agenda should be followed closely by other large public sector institutions as they re-imagine procurement as a tool for social good.
More related to this topic
Aug 27, 2015