What social procurement is, and what it is not
An ordinary purchase can carry a social commitment. The contract has to say what that commitment means, or it means nothing.
Disclosure. Just Gold, which funds and publishes Pride in Business, has been a Social Traders certified social enterprise since 2019. It has also worked with Social Traders as a client, including producing its digital awards and providing photography and video for Convene 2026.
Take a cleaning contract. The buyer needs buildings cleaned to an agreed standard at an agreed price. It could also require the contract to provide employment for people facing barriers to work. The commercial requirement has not gone anywhere; another outcome has been added to the same purchase. That is social procurement. Rather than treating social spending as something separate from operations, a buyer asks what its ordinary purchasing can achieve, and directs money it was going to spend anyway towards a supplier or a contract structure that produces something extra.
The idea is simple. The execution is where the confusion lives.
Two routes to the same outcome
Victoria’s guidance draws the distinction that most discussions of this subject miss. A buyer can purchase directly from a social benefit supplier, or it can take an indirect route, using tender requirements and contract conditions to secure commitments from a mainstream supplier. In the cleaning example, the buyer might appoint a social enterprise that provides supported employment, or it might appoint a conventional contractor that agrees to an employment or subcontracting target. Both count. They are reached by different means and they produce different records.
This matters to any business that does not hold a particular certification, because it may still be able to contribute to a contract’s social objectives without claiming a status it does not have.
Not a donation, not a favour, not free
A purchase and a donation carry different obligations. Under a contract the supplier has work to deliver and the buyer has terms to honour, and a supplier’s social purpose does not excuse it from being assessed on whether it can do the job. Sponsorship is different again: it buys association or visibility, which can be valuable, but it is not interchangeable with buying cleaning, construction or professional services.
Social procurement also costs something. There is a search cost in finding suppliers, a verification cost in checking claims, and a monitoring cost in confirming outcomes. There may be benefits an ordinary price comparison misses. Neither a saving nor a premium should be assumed before the purchase is assessed, and organisations that promise their procurement teams it will be cost neutral tend to lose those teams at the first budget review.
How it differs from supplier diversity
The two are often used as synonyms and they are not. Supplier diversity usually begins with who owns and controls a business. Social procurement is broader and can concern employment, purpose and environmental outcomes as well. A social enterprise may also be Indigenous owned, women owned or LGBTIQA+ owned, and recording its social enterprise status reveals nothing about its ownership. A buyer needs to be clear about which outcome it is counting, because the two answer different questions and it is possible to be strong on one while entirely blind on the other.
The scale of what is being counted
Social Traders reported 304 million dollars in spending by its business and government members with certified social enterprises in the 2025 financial year, an increase of 18 per cent on the year before. That is a measure of one network’s purchasing, not a national total, but as a measure it is a solid one, because it is built from reported member spend rather than survey estimates.
Where LGBTIQA+ owners sit
An LGBTIQA+ owned business that meets the social enterprise standard can be certified and counted on that basis today. It may also contribute to employment or other outcomes in a contract, through the indirect route. Neither of those answers the separate question of whether the buyer recognises LGBTIQA+ ownership at all. A business can be winning work and delivering social value while its owners remain absent from the buyer’s diversity reporting, because no field exists for them. The purchasing is happening. The counting is not. To understand which, you have to start from the transaction: what was promised, who delivered it, and what was recorded.
Sources
- Victorian Government. Social procurement overview.
- Victorian Government. Social procurement: direct and indirect approaches.
- Social Traders. FY25 Impact Report, pages 8, 9 and 17.
Source pages last checked 19 September 2026.
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