Stakeholders involved: Local authorities, private companies, social enterprises and NGOs, local communities.
Thematic area where this IFS has been used: Social inclusion, entrepreneurship, social programmes
Applicable areas/purpose: Social Impact, Environmental Impact, Economic Impact
Example: BRIDGE - Building the Right Investments for Delivering a Growing Economy
What is it?
Innovative procurement schemes use purchasing power to drive social and environmental benefits. These schemes encourage municipalities and businesses to integrate social or environmental impact requirements into procurement contracts, ensuring investments generate measurable value. By leveraging purchasing decisions, innovative procurement fosters inclusive economic growth, sustainability, and strategic urban development.
Step-by-Step
Step 1: Define Procurement Goals & Impact Criteria
Identify key social and environmental challenges and integrate measurable impact requirements into procurement contracts. These may include commitments to hire marginalised groups, use sustainable materials, or invest in local communities.
Step 2: Engage Stakeholders & Establish Partnerships
Collaboration with businesses, social enterprises, and community organisations ensures clarity and alignment. Procurement officers and bidders must understand the expectations, benefits, and available support mechanisms for meeting social or environmental criteria.
Step 3: Integrate Social & Environmental Criteria into Procurement Contracts
Tender documents must explicitly outline the social and environmental requirements, evaluation metrics, and compliance mechanisms. Companies that meet or exceed these criteria can receive higher scores or competitive advantages in the selection process.
Step 4: Monitor Compliance & Measure Impact
Once contracts are awarded, continuous monitoring ensures businesses fulfil their commitments. Impact assessment frameworks and digital tracking tools help measure progress and maintain transparency.
Step 5: Scale & Adapt the Scheme
Lessons learned from initial procurement cycles should inform future refinements. Expanding the scheme to different sectors or neighbourhoods enhances its effectiveness and sustainability, making impact procurement a standard practice.
Foreseen costs
Key costs include capacity-building for procurement officers, developing digital tracking systems and human resource costs associated with stakeholder engagement, ongoing monitoring, enforcement and evaluation. Long-term benefits often outweigh the initial set-up and ongoing monitoring costs.
Advantages of using the IFS
Maximises public investment impact by ensuring procurement delivers measurable social, economic and environmental benefits in the local area.
Encourages business accountability by driving ethical, sustainable corporate practices.
Scalable & replicable: It can be adapted to various sectors and locations.
Challenges associated
Complexity in implementation: It is important to limit administrative complexity, provide clear guidelines and training for procurement officers and businesses to ensure smooth adoption.
Business resistance: Companies may be hesitant to meet additional requirements. Engaging with them early to design criteria is key.
Measuring social & environmental impact: To ensure sufficient tracking of outcomes, it is important to develop standardised frameworks and use digital tools.
Regulatory & legal constraints: The inclusion of some social and environmental clauses in procurement may face legal or regulatory barriers.
Helpful tips
Align with policy & legal frameworks: Ensure procurement guidelines comply with national and local regulations.
Build capacity: Provide training for procurement officers and suppliers to ease adoption.
Start with pilot programmes: Test in selected sectors before expanding.
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