How construction can build COMMUNITY CAPITAL

Achieving the UN's Sustainable Development Goals through Integration of Social Procurement in Construction Projects

By David LePage and Tim Coldwell

Every purchase has an economic, environmental, cultural, and social impact. Social procurement is the intentional effort to leverage social value outcomes from existing purchasing. With social procurement, price is no longer the only consideration; rather it is weighed against other factors.

When we use social procurement to purchase goods, services, or to choose a construction contractor, we are deliberately balancing the environmental impact, the social value outcomes, the product or service requirements, and the price.

1 https://www.tpsgc-pwgsc.gc.ca/app-acq/ma-bb/posacfi-asgicfieng.html

Over the past decade we have witnessed the emergence of social procurement policies and initiatives across numerous corporate and political entities, as they adjust their historic purchasing criteria from lowest price to best value. Leveraging a social value from their existing buying offers an opportunity to solve persistent and complex social and environmental issues, which achieve the UN Sustainability Goals.

The Role of Government

Recognizing their purchasing power, governments have become the prime movers in the social procurement initiatives. “As the largest public buyer of goods and services, the Government of Canada can use its purchasing power for the greater good. We are using our purchasing power to contribute to socio-economic benefits for Canadians, increase competition in our procurements and foster innovation in Canada.”1

The size and breadth of governments’ purchasing power includes billions of dollars of spending every year on construction projects and infrastructure investments. From school building repairs, building a new firehall, a road replacement, or a new bridge, they all require hiring labour and purchasing a myriad of goods and services.

Across all levels of government in several countries, including Canada, USA, Sweden, UK, and Australia, policy is being designed and implemented to leverage existing purchasing or to use community development agreements to achieve social objectives that build healthy communities. Healthy communities are built when procurement becomes not simply an economic transaction, but a transformative tool for healthy communities. With social procurement embedded into the process, construction is more than the structure. Construction projects then build community.

Social Value Market Place Demand & Supply

The purpose of social procurement and community benefit models is to leverage the demand side of the construction industry market to achieve added social value. The more demand there is for a social value supplier, the more social value is created.

This global shift toward social procurement and community benefits in construction is a clear path to achieving multiple Sustainable Development Goals, SDGs. From ending poverty to impacting climate change, the construction industry holds a set of important keys to influence these outcomes.

Buy Social Canada is a social enterprise that advocates and supports the design and implementation of social procurement policy and programs. In its work across multiple projects Buy Social Canada has identified four key potential social value outcomes that can be achieved when social procurement is integrated into construction projects: jobs, training and apprenticeships, social value supply chain, and community development.

Social Value Suppliers: Mike’s Story

(Although fictional, this narrative is emblematic of the challenges faced by many people wishing to establish, or reestablish, a career path in construction.)

Mike, with seven years of experience as a Red Seal Carpenter, was injured on the job. The injury recovery required pain medication. The prescription led to a drug dependency which led to addiction, which led to Mike losing his health, his job, and benefits, and required a tough three-year struggle through recovery. Now Mike faced a new battle, with resume in hand, but a three-year gap in work. Those who doubted his potential to re-enter the labour market kept him unemployed. He faced self-doubt.

A friend recommended he go to check out Embers, since they hire day labour staff for the construction industry. Mike, with work boots, hard hat and tools from the EMBERS library, was on a job site the next day. Once on the job he was able to demonstrate his skills, and commitment to work a full day, every day. Within three months the General Contractor on the project, seeing Mike’s skills and commitment, offered him a full-time permanent job.

Mike’s journey is not that uncommon. This result happened because the General Contractor was meeting the requirements of a social procurement agreement on the work site. To meet social value targets to support hiring persons facing barriers to employment the GC had contracted EMBERS to provide day labour.

EMBERS is a social enterprise operated by a charitable organization based in the infamous Downtown Eastside in Vancouver, one of Canada’s poorest postal codes and home to thousands of struggling residents. On any given day, EMBERS’ Staffing Solutions will have over 400 people who face barriers to employment working as temporary labourers In local construction projects. Over 50% of these workers will move on to working full time in the construction sector, earning a living wage, and becoming a healthy member of the community. Each of these work opportunities means a chance to exit poverty, build a skill, find friendship, feed their family, and more.

Construction companies can choose from many temporary labour services, but only EMBERS, a competitor in this market area, offers a full employee program of supports, including training, insurance, good wages, and encouragement for workers to move on to fulltime permanent employment through collaborative programs with their business clients.

In addition to EMBERS, BUILD, a social enterprise in Winnipeg, trains and employs youth at risk in the building trades. Building UP in Toronto works with persons facing barriers to enter the labour market through jobs in the construction industry. Impact Construction in St. John’s, has built their business model to support youth to gain skills and a successful future.

Mike’s story contributed to the fact that every day, EMBERS’ collective activities achieve at least a dozen of the UN SDG’s. Imagine this story amplified across the globe!

Social enterprises provide other services to the construction industry supply chain as well, including trailer cleaning, junk removal, printing and signage, catering and food trucks, security, couriers, etc.2

Providing jobs, creating training and apprenticeships, and using social value suppliers is not just the role of the primary contractor, but as most sites have multiple sub-contractors and trades on the job, there are many other opportunities available.

When looking for a social value outcome, if a social enterprise isn’t available then use a concentric circle approach, and look for an Indigenous, Black, or Women-owned business, or a co-operative, a B Corps, or a local business depending on your goals.

Delivering Value for the Construction Sector

There is a growing labour shortage internationally in the skilled trades. And with over 40% of current employees scheduled to retire in the next 15 years, this is an Impending catastrophe. The sector has a labour need, and the community has an employment gap for youth, immigrants, and members of historically marginalized communities.

Chandos Construction, an employee owned, B Corp Certified, General Contractor is a leading example of how the contractor's role as both supplier and purchaser can be leveraged to lead the construction industry in implementation of social procurement and achievement of SDGs. As a social purpose and net zero focused business, Chandos increases its competitive edge with owners and government buyers looking to meet their social procurement and community agreement goals, as well as their environmental objectives. In its supply chain Chandos uses its purchasing decisions to enhance the diversity of Its employment profile, and meet its own commitment to direct 5% of its controllable spending to social enterprises and diverse businesses.

Social Enterprise Diagram

As an example, EMBERS is Chandos' preferred labour source when working in Vancouver. This policy increases contracting opportunities, creates more engaged employees, improves the financial bottom line, and results in measurable community impact toward multiple SDGs.

Can Social Procurement help to Address this Gap?

Governments at all levels and in multiple countries see their opportunity, and the need, to leverage social value outcomes to meet their goals of greater equity and inclusion, poverty reduction, climate change mitigationamong others, which all align with the SDGs. The initiatives to create social value from existing construction projects is being driven by policy changes imposed by governments.

Some see these policies as an unwarranted wealth distribution tax, a distraction or simply an increase in the cost of doing business. The evidence of best value through procurement is still a nascent movement, with a need to address pre-existing perceptions through research and case study evidence. In this regard, It could be compared to the green building movement 20 years ago.

By interviewing key actors in the Swedish construction sector and reviewing policy-in-practice literature, Dr. Daniela Troje concludes that while social procurement policies can mitigate issues related to social exclusion, unemployment and segregation, and the construction sector has great potential for implementation of social procurement practices, there is currently a misalignment between social procurement policies.3

What may begin as resistance, or strictly a matter of compliance, can often lead to a change in relationships between market segments. This is currently where we are at with social procurement and community benefit agreements across the construction sector; transitioning from fear and myth building to engagement, pilot projects and early successes.

Eventually, when meeting the social value requirements now being built into RfX and contract deliverables is recognized as a market advantage the industry will adapt - just as It has done for green buildings. Social value outcomes are on a similar trajectory, moving from compliance to early adopters, to market requirement, to market advantage.

Moving forward, this increasing momentum will mean greater integration of social value suppliers and related outcomes in every construction and infrastructure project.

The Future

As the anecdote of Mike's story grows into a multitude of similarly positive outcomes, backed by a wealth of empirical evidence, we will meet the Sustainable Development Goals with each new job created, with every apprenticeship offered to a person facing barriers to employment, and with every contract that includes a social enterprise in the supply chain.