What is Social Value?
An explanation of social value — how it is defined, measured and reported, and why it is increasingly relevant for SMEs tendering for public and private sector contracts.
Key Takeaways
- Social value refers to the broader social, environmental and economic benefits a business creates beyond its core commercial activity.
- The Public Services (Social Value) Act 2012 requires public bodies to consider social value in procurement decisions.
- SMEs can evidence social value through employment practices, community involvement, apprenticeships and environmental commitments.
What social value means
Social value is the wider benefit that an organisation creates for society beyond its direct commercial activity. It encompasses economic value (local employment, supply chain spend), social value (wellbeing, skills, community cohesion) and environmental value (carbon reduction, green space). The concept has been formalised in the Public Services (Social Value) Act 2012, which requires public bodies in England and Wales to consider how the services they procure might improve economic, social and environmental wellbeing. Social value is now a scored evaluation criterion in most public sector tenders and is increasingly used by large private sector buyers.
How social value is measured
There is no single mandatory method for measuring social value, which creates flexibility but also inconsistency. The most widely used framework in UK public procurement is the Social Value TOM System (Themes, Outcomes, Measures), which provides a menu of social value commitments with standardised financial proxies. SROI (Social Return on Investment) is another methodology that attempts to quantify social outcomes in monetary terms. Some contracting authorities provide their own social value measurement tools. As a practical matter, most SME tender responses require you to commit to specific, measurable social value outputs — hours of employment support, apprenticeship weeks, carbon reductions — rather than an abstract calculation.
Social value for SMEs
Many SMEs already create significant social value without recognising or articulating it. Local employment, use of local suppliers, training and development, charitable giving and community involvement are all social value contributions. The task is to identify, quantify and communicate them in the language that procurement teams use. Start by listing the social value activities you already do and estimate their scale. Then review the social value requirements in any public sector frameworks or tender documents you engage with, and align your commitments to what is being asked for. Social value is an area where local SMEs often have a genuine advantage over large national competitors.