moving towards more socially responsible fm · jo teagle, partner, clayton utz bree o'connell,...

6/4/19

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MOVING TOWARDS MORE SOCIALLY RESPONSIBLE FMJo Teagle, Partner, Clayton UtzBree O'Connell, Senior Associate, Clayton Utz

• What is socially responsible FM?• What do Governments expect from FM suppliers?• What are the challenges?• What are some practical ways of showing corporate social responsibility?

OVERVIEW

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WHAT IS SOCIALLY RESPONSIBLE FM?

• FM procured in a manner which addresses one or (preferably) more social responsibilities

• Key areas of social responsibility:- Creating opportunities for disadvantaged groups (i.e.

indigenous persons, disabled persons, refugees, youths)- Gender equality- Future proofing skills base via apprenticeships- Commitment against domestic violence - Environmental sustainability

• Variety of State/Territory specific policies/frameworks

• No one size fits all approach

OVERVIEW OF SOCIAL PROCUREMENT POLICIES

• Queensland Procurement Policy• Queensland Indigenous (Aboriginal and

Torres Strait Islander) Procurement Policy

• Victorian Social Procurement Framework

• NSW Procurement Policy Framework • Aboriginal Procurement Policy• Aboriginal Participation in

Construction Policy (NSW)

• Sustainable Procurement Policy (WA)• Aboriginal Procurement Policy (WA)• Western Australia Industry Participation

Strategy

• Social Procurement Guidelines (SA)• South Australian Industry

Participation Policy

• Sustainable Procurement Policy (ACT)

• Zero tolerance towards violence against any person in the workplace (Tas)

• Buy Local Plan (NT)• Aboriginal Contracting

Framework (NT)

• Indigenous Procurement Policy (Cth)• Workplace Gender Equality

Procurement Principles and User Guide (Cth)

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SOCIAL PROCUREMENT POLICIES

Assist Commonwealth, State and Territory governments to meet their "promises" regarding social responsibility such as:

• Queensland and Victorian Governments' aim to achieve net-zero emissions by 2050

• NSW Government's aim for Aboriginal businesses to be awarded at least 3% of the NSW Government's contracts and for 3000 FTE opportunities for Aboriginal people by 2021

• Victorian Government's 21 actions to improve work, study and business opportunities for Victorians with a disability

• Tasmanian Government's position of zero tolerance towards violence against women and efforts to obtain White Ribbon Workplace Accreditation, and position of zero tolerance towards violence against any person in the workplace

VICTORIA'S SOCIAL PROCUREMENT FRAMEWORK

• Launched in April 2018

• Applies from 1 September 2018

• Intended to support and not replace, the broader legislative and policy framework already in place:- Legislation- Supplier Code of Conduct- Local Jobs First- Ministerial Directions for Public Construction Procurement in Victoria- Aboriginal Procurement Target (1% Aboriginal business procurement

target by 2019-2020)- Sustainable Procurement

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• Version 4 issued in July 2015• Includes policy regarding sustainable procurement to achieve the Government’s commitment to

spend public money efficiently, economically, and ethically• Sustainable procurement considers issues such as:

Environmental management Ethical procurement Socio/economic benefits

Pollution control, waste minimisation, recycling and disposal options

Planning laws and asset design use and maintenance, including heritage and culture

Social procurement and social investment

Energy efficiency and resourceconsumption

Manufacturing and production Skills development, workplace and supply chain diversity

Adopting environmental technologies and biodiversity

Employee rights and conditions, unfair competition and ethical behaviour.

NSW PROCUREMENT POLICY FRAMEWORK

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Requires NSW Government agencies in procuring goods or services to:

Adopt strategies to avoid unnecessary consumption and manage demand

Select products and services with lower environmental impact across their lifecycle

Foster a viable market for sustainable products and services by supporting businesses that support sociallyresponsible suppliers, adopt ethical practices and demonstrate innovation.


• Guidance on implementation is provided by the Australian and New Zealand Government Framework for Sustainable Procurement APCC Sustainable Procurement Practice Note and Guides

• Agencies should require suppliers to:

Demonstrate a commitment to ethical behaviour and sound governance structures and processes.

Meet their employment obligations as required by relevant legislation and other related instruments.

Consider relevant government employment policy objectives that relate to particular community sectors, including apprentice training, opportunities for disabled or injured workers returning to work, Aboriginal and Torres Strait Islander people.

Comply with applicable regulatory and legislative requirements of occupation health and safety.

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Supporting businesses that employ people with disabilities -• Agencies are authorised to buy goods and services from approved Australia Disability Enterprises via a single

written quote (section 5 of the Public Works and Procurement Regulation 2014 (NSW)

Supporting Aboriginal businesses: • Agencies are allowed to purchase goods and services valued up to $150,000 (including GST) from a

recognised Aboriginal business provided the supplier’s rates are reasonable and consistent with normal market rates, and the agency obtains at least one written quotation (Board Direction 2013-04).

• Under the Aboriginal Procurement Policy, Agencies are authorised to:

Give first consideration to Aboriginal owned businesses on prequalification schemes before proceeding to market for procurements valued up to $250,000 (excl. GST), where appropriate.

Directly negotiate with suitably qualified Aboriginal owned businesses that can demonstrate value for money and delivery of quality goods and services for procurements valued up to $250,000 (excl. GST)

Apply an Aboriginal participation non-price evaluation criteria in relevant tenders where opportunities exist.

NSW ABORIGINAL PROCUREMENT POLICIES• Under the Aboriginal Participation in Construction Policy

(APIC), Agencies are required to apply a minimum 1.5 % ofproject spend for Aboriginal participation to relevant construction projects (subject to certain exclusions):

Projects nominated by an Agency that are primarily directed to one or more Aboriginal communities. This includes projects where an Aboriginal community is the sole or predominant beneficiary, a key user group or a predominant stakeholder.

All other construction projects where the estimated value is over $10 million.

All other construction projects where the estimated value is over $1 million.

• Project spend for Aboriginal participation must be for Aboriginal employment, engagement of Aboriginal owned businesses, education and training, and engagement or consultation with Aboriginal organisations or businesses

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NSW ABORIGINAL PROCUREMENT POLICIES

• Under the Aboriginal Participation in Construction Policy (APIC), Agencies are also authorised to apply additional measures:

Directly negotiate with suitably qualified Aboriginal owned businesses that can demonstrate value for money and delivery of quality construction goods and services for procurements valued up to $250,000

Run a closed tender with prequalified Aboriginal owned businesses that can demonstrate value for money and delivery of quality construction goods and services for procurements valued up to $1 million

Increase the percentage for Aboriginal participation

Introduce incentives to recognise suppliers where they exceed policy requirements, and consequences for suppliers unable to fully allocate to eligible spend by distributing any remainder of eligible spend to approved bodies

QUEENSLAND PROCUREMENT POLICY

• Came into force on 1 June 2018

• One of the policy aims is to support disadvantaged Queenslanders –by increasing procurement with genuine, quality social enterprises.

• One of the policy principles is the advancement of government objectives – providing the procurement framework to advance economic, environmental and social objectives.

• Procurements of goods and services seek to:- Achieve best value for money outcomes, pursuing economic,

environmental and social objectives as well as price- Do business with ethically, environmentally and socially

responsible suppliers

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QUEENSLAND PROCUREMENT POLICYGovernment targets and commitments

Social • Increase spend with genuine, quality social enterprises, providing award base wages and pathways to mainstream employment for disadvantaged Queenslanders.

• Take into account workplace policies and practices aimed at ending domestic and family violence as part of supplier evaluation and selection

• Ensure all procurements comply with Disability Discrimination Act 1992 (Cth).

Environmental • Procure Australian-sourced, environmentally accredited paper products• Achieve net zero emissions by 2050.• Achieve one million rooftops or 3000 megawatts of solar photovoltaics (PV) in

Queensland by 2020.

Economic • Increase government procurement with Aboriginal and Torres Strait Islander businesses to 3% if addressable spend by 2020.

QUEENSLAND INDIGENOUS (ABORIGINAL AND TORRES STRAIT ISLANDER) PROCUREMENT POLICY

• Commenced on 1 September 2017

• Applies to all Queensland budget sector agencies but does not apply to Government owned corporations or statutory bodies.

• Provides a whole-government framework to increase procurement with Indigenous businesses to be 3 per cent of government procurement contracts by 2022.

• Acknowledges that not all government procurement spend is in markets that are serviceable by Indigenous businesses and the baseline for measuring progress against the target does not include all procurement activities

• Procurement approaches include:- Set-aside approach - reserving certain Government procurement contracts for

specified Indigenous businesses (unless no suitable Indigenous business can be identified in the market analysis stage)

- Selective offer process with Indigenous businesses

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WA SUSTAINABLE PROCUREMENT POLICY • Gazetted 27 June 2014• Similar approach to NSW• Guidance provided by the Australian and New Zealand Government Framework for Sustainable

Procurement APCC Sustainable Procurement and the Department of Finance Sustainable Procurement Practice Guidelines

• Agencies should require suppliers to:

Demonstrate a commitment to ethical behaviour and sound governance structures and processes.

Meet their employment obligations as required by relevant legislation and other related instruments.

Consider relevant government employment policy objectives that relate to particular community sectors, including apprentice training, opportunities for disabled or injured workers returning to work, Aboriginal and Torres Strait Islander people.

Comply with applicable regulatory and legislative requirements of occupation health and safety.

WA SUSTAINABLE PROCUREMENTIn procuring goods and services Agencies should consider the following:

Environmentalimpacts

• Improved air quality by reducing or eliminating emissions to air (e.g. greenhouse gases, such as carbon dioxide, and other pollutants)

• Reduced use of water (e.g. water saving or efficiency)• Improved water quality by reducing or eliminating releases to water (e.g. chemical

pollution of water courses)• Reduced demand on raw materials and natural resources (e.g. sustainable forestry,

biodiversity)• Improved soil quality by reducing or eliminating releases to land (e.g. chemical

fertilisers)

Social impacts • considering human health impacts• supporting the use of local and emerging small businesses• supporting socially inclusive practices, such as employment and training focused on

disadvantaged groups• assessing the impact of occupational health and safety concerns

Economic impacts • Job creation (e.g. green technologies)

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WA SUSTAINABLE PROCUREMENT• Sustainability may be addressed by including: Minimum accreditations that respondents must have in order to pass through the desk top assessment stage of an evaluation; e.g. possessing a license to operate a high temperature incinerator or having an ISO 14001 certified Environmental Management System.

Requirements that encourage respondents to offer items that meet or exceed the sustainability specifications and/or special conditions of contract; e.g. white goods must have Energy Star rating above a specified threshold.

A requirement that respondents provide information on a range of sustainability related criteria in order to allow their sustainability credentials to be scored and/or compared; e.g. provide evidence of any program or initiative your organisation has in place to minimise/reduce the amount of packaging used.

A contractual requirement that respondents should move to the provision of more sustainable products over time, should they be awarded a contract; e.g. the supplier to increase the proportion of products covered by a certain class of environmental label over the term of the contract.

Contract clauses and/or key performance indicators that aim to achieve a specified level of sustainability performance; e.g. quarterly reporting on the proportion of products offered covered by a recognized environmental label.

WA SUSTAINABLE PROCUREMENT POLICIES

• Australian Disability Enterprises and Aboriginal businesses supported via the State Supply Commission's Open and Effective Competition policy - allows Agencies to procure from a registered Australian Disability Enterprise or a registered Aboriginal

business without undertaking a competitive procurement process

• Reduction in greenhouse emissions and offset CO2 emissions of WA Government Fleet vehicles achieved via the Greening WA Government Vehicle Fleet policy.

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WA ABORIGINAL PROCUREMENT POLICY

• The Aboriginal Procurement Policy (APP) applies to any contracts awarded from 1 July 2018 and applies to all state governmental agency.

• Under the APP, Agencies are required to award a target percentage of government contracts to registered Aboriginal businesses. The targets apply to all contracts for goods, services, community services and works.

Financial Year APP Targets

2018 - 2019 1% of the number of awarded contracts



SA SUSTAINABLE PROCUREMENT POLICY • Issued September 2016

• Similar approach to NSW and WA

• Guidance is provided by the Australian and New Zealand Government Framework for Sustainable Procurement Sustainable Procurement

• Agencies should:

In the context of whole-of-life value for money, select goods and services which have lower environmental impacts across their life cycle compared with competing goods and services

Foster a viable Australian and New Zealand market for sustainable goods and services by supporting businesses and industry groups that demonstrate innovation in sustainability

Support suppliers to government who are socially responsible and adopt ethical practices

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SA PROCUREMENT POLICIES

• Under the Industry Participation Policy, Agencies can procure directly from eligible Aboriginal businesses, up to the value of $220,000, where that business meets certain criteria set out in the procedural guidelines supporting the policy, and provides value for money.

• For contracts above $220,000, industry participation weighting can be increased above the 15% minimum and accompanied by tailored measures for Aboriginal participation which are directly relevant to raising economic participation for Aboriginal businesses and employees.

• A Tailored Industry Participation Plan has been developed for large contracts in the Anangu Pitjantjatjara Yankunytjatjara Lands to meet the minimum requirement of 30% total on-site labour hours filled by Anangu personnel.

TASMANIAN PROCUREMENT POLICIES• Climate change and environmental policies• Agencies must give consideration to (but not above VFM considerations):

Energy Conservation and Greenhouse Emissions

Waste Water efficiency

• energy efficient goods and mechanical services, including vehicles;

• goods manufactured using energy efficient practices and processes which will contribute to minimal greenhouse gas emissions;

• goods which will contribute to minimal greenhouse gas emissions during operation;

• video or telephone conferencing as an alternative to vehicle and air travel; and

• 'green power' (energy sourced from renewable sources).

• recycled/recyclable goods with recycled composition or components;

• reclaimed materials, eg crushed concrete aggregate;

• goods which have less packaging than alternatives;

• goods with a take-back scheme at end-of-life;

• goods which guarantee longevity or are reusable; and

• equipment that can use consumables made from recycled/recyclable materials.

• water efficient goods;• goods manufactured with water

efficient practices and processes which do not contribute to water pollution; and

• goods manufactured with water efficient practices and processes which do not contribute to decreased environmental flows

• Agencies may: - require products to meet environmentally sustainable specifications as specified on the Australian Procurement and

Construction Council website. - may consider it necessary to seek details of appropriate certification of companies and products against relevant

environmental standards

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TASMANIAN PROCUREMENT POLICIESPurchasing from businesses that employ persons with disabilities• To facilitate purchasing from these businesses, the Department of Treasury and Finance has entered into

a Head Deed with National Disability Services Limited. The Deed operates essentially as a non-mandatory whole of government common use contract

• Agencies can choose to either seek quotations or purchase directly, at their discretion, from businesses that predominantly exist to provide the services of persons with a disability provided that the process undertaken is consistent with the intent of the Government's procurement policies and the principles contained in the Treasurer's Instructions 1101 and 1201

Zero Tolerance Towards Violence Against Any Person in the Workplace• Government procurement and associated contractual documents are required to contain specific clauses

supporting the Government's position of zero tolerance towards violence against women and zero tolerance towards violence against any person in the workplace. Template clauses include:- The Contractor acknowledges and undertakes to uphold a zero tolerance policy towards violence

against any person in the workplace in its interaction with employees, agents and subcontractors of the Principal and in delivery of the Works.

- The Contractor must and will ensure that its employees, agents and subcontractors will at all times in delivery of the Works act in a manner that is non-threatening, courteous and respectful.

ACT SOCIAL PROCUREMENT POLICY

• ACT government has established a social enterprises panel to supply a range of services to government

Established landscape maintenanceLitter-pickingWeeding in sensitive environmentsPlanting, landscape establishmentMaintaining dog parksHabitat fuel reductionLetterboxing and envelope stuffing etc"Table hands", in-house copying/scanning of documentsCateringRecyclables sortingSmall scale sorting

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ACT SUSTAINABLE PROCUREMENT• The policy seeks to value-add, using procurement to require social and environmental standards,

encourage suppliers to adopt socially responsible and ethical practices and support innovation in the market.

• Agencies should consider the following impacts on sustainability:

Impact Issues

Climate change • Climate change impacts associated with the production, distribution, use and disposal of the goods • Specific focus on Greenhouse gases: carbon, methane (CH4), HFCs, PFCs, SF6, NO2 and low level ozone

Energy • Energy use and efficiency. • Use of renewable energy e.g. solar, wind, wave, tidal

Water use and quality

• Water use and efficiency• Water recycling• Impact on water pollution, and measures to reduce discharges

Waste • Volume and type of waste created associated with the production, distribution, use and disposal of the goods• Hazardous or toxic waste• Reusability and/or recyclability• Product efficiency and longevity: options for reuse, repair, upgrade or modification to increase product life• Environmental pollution that reduces fertility and diversity of wild species

Impact Issues

Toxic substances/pollutants/emissions

• Substances that adversely affect human health or the environments associated with the production, distribution use and disposal of the goods. Such substances include:

• heavy metals, (e.g. lead, mercury, cadmium)• ozone-depleting chlorinated compounds such as CFCs• organic solvents, (e.g. chlorinated and aromatic hydrocarbons)• carcinogens, mutagens, teratogens• volatile organic compounds (VOCs)• phosphorous• phthalates (additives in PVC)• substances that can bioaccumulate• substances that result in acute or chronic toxicity

• Consider reactivity, corrosiveness, flammability, irritation potential of toxic substances and pollutants

Resources use and intensity (incl. natural landscapes, habitats)

• Volume and type of raw material and consumables associated with the goods• Sustainability of utilising the resources (renewability of resources)• Product efficiency and longevity: options for reuse, repair, upgrade or modification, to increase product life• Impacts on land use e.g. land clearance for farms, factories, mines, plantations causing habitat degradation and

modification (linked to climate change impacts)• Impacts on important habitats• Recycled content of goods (reduces demand for virgin resources)

Social responsibility and ethical practices

• Impact on human health• Impact on fair working conditions• Promotion of social enterprise• Abolition of compulsory labour and child labour• Impact on local communities• Other social priorities

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NT PROCUREMENT POLICY• Local content assessment criteria typically includes:

- Employment- Upskilling- Aboriginal development initiatives

• Worth a minimum of 40% in tender evaluations

• NT Government currently developing an Aboriginal Contracting Framework to support Aboriginal employment and business opportunities

WHAT DO GOVERNMENTS EXPECT FROM FM SUPPLIERS?

• Ranges from encouraging compliance to mandatory requirements and prescribed targets

• The more complex, higher value the procurement, the more stringent the social obligations become

• Seek suppliers that will assist them to meet their own social obligations

• Commitment to relevant social obligations

• Targets:- Employment/apprenticeship targets- Carbon targets/Energy usage reductions

• But… Value for Money is paramount

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WHAT ARE THE CHALLENGES?

• How does a supplier establish a commitment to social objectives?- Written policies are good- Evidence of policy implementation is better

• Balancing social obligations against value for money considerations:- Value for money remains paramount for Government- Commitment to social obligations form part of the VFM assessment but do not override economic

considerations

• Meeting obligations when contracts don’t guarantee volumes of work- Particularly difficult for strict targets- Focus needs to be on actions designed to achieve obligations rather than actual outcomes

WHAT ARE THE CHALLENGES?

• Difficulties in measuring performance against social obligations- Measuring a supplier's social obligation commitments usually achieved via confirmation of compliance

with its own social policies (supplier confirms via statutory declaration, compliance subject to audit/inspection)

- Measuring performance against targets easier - still have to consider what is included/excluded from calculation

- Taking into account intervening/extraneous factors

• How to drive performance against social obligations - is there room for sanctions?- Governments generally not inclined to impose sanctions for failures to perform against social

obligations (unless part of an overall scorecard approach, and even then such performance usually given low weighting)

- More likely to be imposed where specific targets are set

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PRACTICAL WAYS OF SHOWING CORPORATE RESPONSIBILITY

• Develop written social obligation policies and make them easily accessible

• Undertake regular review of policies/processes to ensure social procurement objectives are addressed

• Publish reports on/maintain records of achievement of social objectives

• Engage a dedicated 'social obligations engagement' officer

• Meet applicable targets:- Employment/engagement targets- Carbon footprint/energy cost targets

KEY THINGS TO REMEMBER

• Governments are looking beyond the bottom line when conducting FM procurements

• FM providers are expected to be good corporate citizens to assist Governments to achieve their broader social objectives

• FM providers need to take practical steps to ensure they can meet social obligations required by Governments

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moving towards more socially responsible fm · jo teagle, partner, clayton utz bree o'connell,...

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