Corporate Social Responsibility

Corporate Social Responsibility ( CSR) in public procurement (including sustainable procurement) is essentially about how, as part of overall value for money and affordability considerations, contracting authorities take account of the economic, social, environmental and equality impacts of their purchasing activity, maximising the positive outcomes and minimising the negative.

It is essential that when contracting authorities buy goods, services and works they spend public funds in a way that achieves value for money. Contracting authorities and end-users can make a significant contribution towards meeting wider CSR objectives by including, wherever it is sensible and legitimate to do so, such objectives within the overall assessment of value for money and affordability. Generally CSR issues can be taken into account only where they are directly related to the subject matter of the particular contract in question. It is generally not permissible to take into account aspects such an organisation's overall company policy on Corporate Social Responsibilities or the environment, where such policies are not directly relevant to the performance of a particular contract.

The key messages are that it is possible and very often desirable to incorporate economic, social and environmental issues in public procurement, provided that doing so offers a value for money outcome, complies with legislative requirements and is directly related to the subject matter of the contract. The greatest impact will be gained by considering such issues at the outset and building them in at the beginning of the procurement process.

RoS Sustainable Procurement Policy

Sustainable Procurement “A process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis and generates benefits not only to the organisation, but also to society, the economy and the environment”.

RoS is committed to supporting the Scottish Government’s purpose of ‘increasing sustainable economic growth’. Procurement is an essential element in delivering the Scottish Government’s priorities and plays a key role in attaining the social, economic and environmental benefits that sustainable economic growth delivers.

We are conscious that our activities affect the environment in which we exist and we are acting to minimise negative environmental and social impacts associated with the products and services we purchase. We acknowledge our responsibilities in delivering this policy and recognise the importance of engaging our suppliers and (internal) customers in its implementation.

In addition to supporting RoS’s Environmental Management System, contributing to our Carbon Accounting targets and complying with RoS’s broader Environmental Policy, we will embrace the following principles:

An organisational wide commitment to making more sustainable choices when undertaking procurement. This means identifying more sustainable ways of meeting requirements and designing sustainable procurement specifications accordingly. The approach will address the social, economic and environmental implications of product and service choices. When relevant it will embrace whole-life costing and address how aspects such as design, manufacturing materials, operating costs, energy consumption, waste and recycling options support a more sustainable approach; and
To work in partnership with our suppliers and contractors to minimise the environmental and social impacts of our supply chain.

Procurement Policy Statement

We will incorporate corporate social responsibility and sustainability into our everyday procurement activity to benefit society, the economy and the environment.

We will purchase goods and services in a way that minimises the impact on the environment where it is practical and economically viable. In line with the Scottish Government’s purpose of increasing sustainable economic growth and UK ‘green’ procurement legislation, we will initiate savings in materials, energy, reduce waste, and promote a sustainable approach to the way we conduct our business.

Working with colleagues and suppliers we will ensure whole-life costs are considered and that, where practical and economically viable, purchases have been manufactured and are delivered, used and disposed of in an environmentally responsible manner. Appropriate environmental and social requirements will be integrated into all procurement activities, e.g. specification and evaluation stage.

All procurements over £50,000 will be evaluated to take into account the environmental and/or social impacts of a particular product or service over its whole-life cycle, and appropriate supplier sustainability performance assessment criteria and weightings will be used. We will comply with the specific duties relating to sustainability contained within the Procurement Reform (Scotland) Act 2014.

This policy will be supported by a delivery plan covering the 10 Steps to Sustainable Procurement, together with specific objectives and targets. Our main target is to maintain Level 4 status on the Scottish Government Flexible Framework (the Flexible Framework was produced by the UK Sustainable Procurement Task Force and is a useful and easy means of self-assessing an organisation’s performance on sustainable procurement). Ongoing annual reviews will be undertaken to ensure maintenance of Level 4.

This policy and delivery plan will be reviewed annually as part of our corporate planning cycle. This will align it to our business objectives and ensure it is appropriate to the nature and scale of our operations.

This policy was agreed by RoS Management Board on 30 August 2005. It was subsequently reviewed and updated in July 2006, January 2010, January 2011 and November 2017.

Sustainable Procurement Strategy

Background

In his Review of Public Procurement in Scotland, John F McClelland CBE identified Corporate Social Responsibility as important for the public sector and responding to this requires that sustainable procurement is placed at the heart of the reform agenda, hand in hand with the drive to raise standards and practices in public procurement.

One of the major challenges facing Scotland is how to incorporate sustainability into our every day activity to benefit society, the economy and the environment. Total spending in the public sector amounts to around £8bn a year in Scotland and this spending power gives us an opportunity to achieve sustainable growth objectives through making sustainable choices and encouraging sustainable products and services.

Summary of the Sustainable Procurement Policy

RoS’s Sustainable Procurement Policy:

applies to all parts of the organization
covers Registration operations and support services such as Estates, Procurement, Communication and Marketing and IT: and
is consistent with the Scottish Government’s commitment to sustainable economic growth.

Through improved procurement practices RoS will aim to minimize the adverse impact of their own activities and those of their suppliers on the environment. They will work with colleagues and suppliers to ensure that, where practical and economically viable, the goods and services purchased are manufactured, delivered, used and disposed of in an environmentally responsible manner.

The Procurement section will offer education / support and encourage staff to work in an environmentally responsible manner and to play a full part in developing new ideas and initiatives to support sustainable development. We will communicate openly with staff and partners / suppliers about environmental policies and procedures and strive to implement best practice.

RoS published its initial Sustainable Procurement Policy 30 August 2005 and this has been revised to its current version in 2017. This strategy supports the implementation of that policy.

Development Principles

An organisation's approach to sustainable procurement should be based on underlying sustainable development principles. There are many and varied statements of these. RoS has used the following in its policy statement:

A whole organisation commitment to making more sustainable choices is required to deliver sustainable procurement. This means identifying more sustainable ways of meeting requirements and designing sustainable procurement specifications accordingly. The approach should address the social, economic and environmental implications of product and service choices. It should embrace whole life costing and address how aspects such as design, manufacturing materials, operating costs, energy consumption, waste and recycling options support a more sustainable approach.
Work in partnership with our suppliers and contractors to minimise the environmental and social impacts of our supply chain.

Implementing policy

Environmental and social procurement strategies need to be focused upon the areas of purchasing and supply that generate greatest risk.

We want to deliver outcomes that are appraised against:

People – key procurement staff fully trained in the principles of sustainable procurement
Policy, Strategy and Communication – agreed and communicated overarching sustainability objectives and strategy
Procurement Process – key sustainability impacts identified
Engaging Suppliers – targeted supplier engagement programme in place
Measurement and Results – sustainability linked to individual procurers and linked to development objectives/outcomes

It should lead to:

Contributing to Scottish Ministers’ Purpose of ‘’increasing sustainable economic growth’’
Improved management of the environmental risks arising from the products and services we buy. In this context environmental risk means risk of non-compliance with the organisation’s wider environmental policy.
The embedding of environmental, sustainability and social considerations into routine procurement decisions
Consistent with considerations of cost-effectiveness, affordability and value for money

RoS’s sustainable procurement strategy will follow Scottish Government’s Sustainable Procurement Action Plan and the 10 Steps to Sustainable Procurement. We will use a Delivery Plan to plan and track progress against these 10 steps.

10 steps to Sustainable Procurement

Commitment within the organisation
Making the commitment public
Organisational buy-in
Benchmarking and progression
Prioritising
Specifying sustainably
Sustainability in the procurement process
Working with suppliers
Measuring performance
Publicising your successes

Adoption of the Action Plan and fulfilling its 10 steps will contribute to successful progress against not only Best Value obligations, but also both the Procurement Capability Assessment (PCA) and the Best Practice Indicators (BPI). Improved sustainability in procurement activity will also make a significant contribution to Climate Change targets.

It is important to note that sustainable procurement does not relate solely to environmental issues but also includes social issues, for example equalities, diversity and fair and ethical trading and economic issues, for example opportunities for small and medium sized enterprises and Third Sector organisations to successfully compete for public contracts.

Having undertaken an extensive data gathering exercise in relation to this subject, the scope for sustainable procurement is vast. The key message appears to be to start simple, keep it practical, train and support staff, achieve some quick wins and enhance over time. Experts stress that prior to implementing any Sustainable Procurement Policy, a degree of preparation/training requires to be undertaken by Procurement.

A proactive approach to environmental procurement requires continuous review and enhancement. It should also be stressed that a successful policy requires the buy in and commitment of the organisation. Budget holders, senior management, internal customers and stakeholders are but a few. In addition we will need to secure the buy and commitment from our suppliers.

The way forward

Using Scottish Government (SPD) Sustainable Procurement Action Plan as our approach to delivering sustainable procurement, undertake the following:

Draw up a Delivery Plan for the 10 Steps to Sustainable Procurement
Undertake a self-assessment against the Flexible Framework.
Develop an action plan to attain Practice Level 3 status on the framework.
Undertake self assessment against Practice Level 3 criteria.
Ongoing improvement plans and self assessments.

Delivery Plan

This is the key document for taking forward our strategy. It will provide detail on specific targets and how we intend to deliver sustainable procurement to defined timescales, how we will address risk, process integration, marketing, supplier engagement, communication, measurement and review processes.

Sustainable Procurement - Guidance on Sourcing

Environmental Sourcing

At an early stage the following options for reducing environmental impact should be considered:
•   Compliance with environmental legislation such as import restrictions, restrictions on the use of certain materials, labelling requirements on Services;
•   Specific environmental objectives and targets such as energy efficiency of new buildings and equipment;
•   Ensuring that the technical capability to meet environmental impact minimisation aspects within projects is demonstrated;
•   Examining the whole procurement chain to ensure that environmental legislation is observed throughout and that environmental issues are not being “exported” to other countries;
•   Ensuring that Services are procured or manufactured from renewable resources or from recycled materials;
•   Ensuring that Services with reduced packaging, lower use of consumables during their operating life or reduced ‘end of life’ disposal problems are procured.

For guidance and help with specific questions, such as the evaluation of potential impacts please refer to here.

As with social issues, however, there is a balance between these options and the overall need for the Institution to achieve value for money in procurement. If in doubt, the Procurement Officer must seek the advice of the Head of Procurement.

The scope to take account of environmental and sustainability issues is restricted to a strict set of circumstances in line with UK policy and the UK Procurement Regulations Under the UK Procurement Regulations the inclusion of such issues must demonstrate they are :
•      Relevant to the subject matter of the Contract or Framework Agreement;
•      Non-discriminatory and transparent;
•      Consistent with the criteria allowed at each stage of the process (this means that environmental or sustainable procurement objectives should be taken into account as early as possible in the procurement process). This criteria needs to make clear to tenderers in the Contract Notice (for above OJEU threshold procurements), any advert, and any Pre Qualification (PQQ) and Invitation to Tender (/ITT) stages.
•      Tested critically as part of establishing the Most Economically Advantageous Tender (when this method of tender evaluation is used).

It also needs to be considered whether procurement is the right solution compared to other courses of action that affect sustainability and environmental issues. In some circumstances, for example, grants or training programmes might be a more appropriate way of taking a sustainable development issue forward. This is particularly important because in some instances the pursuit of sustainable procurement can work against the interests of SMEs, minority-owned and voluntary organisations by adding an additional burden of bureaucracy to the procurement process.

Small Medium Enterprises (SMEs)

Wherever possible, and consistent with the need always to secure VFM, suitably qualified SMEs (business with fewer than 250 employees) should have the opportunity to bid for the Institution’s business. It is recognised that SMEs can offer benefits in a contractual relationship by providing lower costs and lower overheads, flexibility, innovation, specialises/niche services, increased service (since the Contract or Framework Agreement will often represent a high proportion of overall turnover to the SME, they may value that business more than a large organisation might do). The UK Procurement Regulations do not permit favourable treatment to be given to suppliers from particular countries, local business, SMEs, third sector organisations etc in the evaluation and award of business, but measures to remove barriers to their participation, and improving access to tendering opportunities and information can be used.

Summary of the key points to consider are:

Consider scope and packaging of requirements to reduce the barriers to SME participation e.g. use of lots in a frameworks, sub-contracting opportunities etc
Consider flexible payment terms
Consider alternative payment methods e.g. payment cards etc
Advertise widely - use of the Public Contracts Scotland Portal demonstrates this commitment
Use documentation written in plain English
Set a realistic tendering timeframe (when not subject to the UK mandatory tendering timescales)
Assess SMEs’ risks so they are not automatically ruled out of the process (especially relevant for new or business start ups when audited accounts and a track record don’t exist). Further details are available in the template PQQ documents.
Offer debriefing to enable potentially positive learning outcomes to be obtained.

Supported Businesses

Social Economy Businesses

Comprises voluntary and community organisations that use a business approach to delivering Services.

Social Enterprise Businesses

Social enterprises are dynamic businesses with a social purpose. They have social aims, trade in competitive markets and reinvest their profits for community benefit.

The sector is diverse and includes cooperatives, credit unions, housing associations, community development trusts, social firms and community businesses. Social enterprises also operate across a wide range of industries including growth sectors such as recycling, renewable energy and social care. There is no single legal form used by social enterprises. Some incorporate as companies and may or may not also take charitable status, while others form as Industrial and Provident Societies. In 2005 a new legal form came in to being – the first for more than 100 years. The Community Interest Company is a bespoke company form designed for social enterprises with a built-in asset lock.

Reserved Contracts

It is Government policy to, as far as possible, give people who are recognised as disabled within the meaning of the Disability Discrimination Act 1995 the opportunity to enter the labour market.

One route is by restricting participation in a tendering exercise to supported factories and businesses (companies with more than 50% of their workers being disabled persons who by reason of the nature or severity of their disability are unable to take up work in the open labour market). This Reserved Contracts process is expressly permitted under regulation 7 of the Public Contracts (Scotland) Regulations 2012 and Regulation 10 of the Utilities Contracts (Scotland) Regulations 2012. The use of supported factories and businesses contributes towards meeting public bodies’ Corporate Social Responsibility objectives.

By indicating in the Contract Notice that a particular contract is “reserved for sheltered workshops under Article 19 of the Directive” only organisations with more than 50% disabled employees (not just within the UK) can bid for that Contract or Framework Agreement.

Institutions seeking to award a Contract or Framework Agreement which has an anticipated value below the relevant threshold at which the Regulations apply should still consider whether the requirement is one where participation in the competition could be restricted to supported factories and businesses.

In circumstances where it is deemed appropriate to do so, Contracting Authorities are encouraged to “reserve” participation to supported factories and businesses only. As with requirement above the OJEU threshold, the advertisement for the requirement should clearly identify it as being “reserved”. The requirement has to be advertised adequately and appropriately and competed in accordance with usual procurement rules. It cannot be limited to particular supported businesses and factories or to those who are locally based.

Fair Trade and Ethical Trading

Fairtrade schemes aim to improve the conditions faced by small producers and workers in developing countries, and the term “fair trade” covers a range of activities aimed at helping these individuals. An important objective is to help excluded and disadvantaged producers, including independent small farmers, to access international markets and receive a fair price for their products.

Other objectives are to encourage traders to buy as directly as possible from producer groups and to develop long-term relationships, ensure transparency of supply chains, and the empowerment of producer groups and workers.

Another vital goal is to ensure decent working conditions and fair wages for workers on plantations and in factories.

The Fairtrade Foundation awards a consumer label – the Fairtrade Mark. This mark demonstrates that internationally recognised standards of fair trade have been met. Items covered by the Mark include coffee, tea, chocolate, bananas and honey products.

Specifications cannot be framed in terms of fair or ethically traded requirements; as such `“social” labels do not define the end product in terms of characteristics or performance as required by the UK Procurement regulations. However, advertisements and invitation to tender documents can make it clear that Fairtrade options can be included in the products provided to meet requirements.

ITTs can make it clear that, where the winning tenderer is able to provide Fairtrade options, such products should be made available, as required, for internal meetings, conferences and hospitality purposes

In referring to the possible inclusion of Fairtrade options, specific marks or trade names should be avoided. It can however, be pointed out that, where tenderers do offer Fairtrade options, the Fairtrade Mark or equivalent is a helpful way of demonstrating that Fairtrade standards are being met. There is scope within the UK Procurement Regulations to encourage, in non-discriminatory advertisements and specifications, the inclusion of fair trade options in tenders where applicable. However, specifications cannot be framed in terms of Regulations.

Exceptionally, and except where expressly stated in the Contract Notice for above the OJEU threshold procurements that the award will be on the basis of lowest Price, Contracts and Framework Agreements must be awarded on the basis of the Most Economically Advantageous Tender (MEAT) for the whole requirement, regardless of whether Fairtrade options have been included. Quality aspects, as well as price, will be relevant. A tender cannot be rejected or considered non-compliant simply because it does not include any desired Fairtrade options.

In all cases, the Institution needs to be clear that it is meeting its End Users’ needs (as described in the tender) in a way which makes efficient and effective use of public expenditure and which delivers VFM for the Institution.

Community Benefit Clauses

“Community Benefit” clauses are contractual requirements which deliver wider social benefit in addition to the core purpose of the contract, in particular, requirements in relation to targeting training and employment outcomes.

Public procurement projects can impact on training, employment and investment in a local community and its longer-term regeneration. The importance of regeneration spend to opportunities for disadvantaged communities is clearly stated here.

The Institution requires that all procurements must always be carried out on the basis of achieving Value for Money. Therefore, Community Benefit clauses need to be carefully considered to ensure that they meet the requirements of the UK Procurement Regulations. In particular, care should be taken to ensure that clauses do not cause either direct or indirect discrimination - if in doubt please refer to Head of Procurement.

The following considerations should be borne in mind with relation to use of Community Benefits clauses in contracts:

Check legal and subsequently policy justifications;
All procurement of Services should achieve Value for Money, having due regard to propriety and regularity (the cost of incorporating community benefit clauses will vary with the requirements);
Contract suitability and capacity need to be addressed on a case-by-case basis;
Key components which together indicate the appropriate targeted recruitment and training (TR&T) clauses which can be used in a particular case must be linked. Such components include employment planning, industry capacity, funding, as well as possible routeways for employment support and training providers to facilitate achievement of targeted recruitment and training (TR&T) clauses;
Responsibility for the whole process, including implementation and monitoring, needs to be clearly set in advance;
Community benefit clauses must be mentioned in any Contract Notice by a Contracting Authority and throughout the procurement process;
Community Benefit clauses need to have a direct link to the core purpose of the Contract, in order that they can be included in the technical assessment of potential suppliers and in award of the Contract
To avoid any form of discrimination, including indirect discrimination, the wording of Community Benefit clauses needs to emphasise ‘social inclusion characteristics’ and cannot be aimed specifically at employing people from a certain locality, of a certain age or sex, etc. Targeted training is permissible;
Indirect discrimination, to the disadvantage of non-local contractors, must be avoided;
Monitoring of contracted deliverables and outcomes to ensure compliance.