Procurement is playing a more strategic role in achieving environmental, social and governance (ESG) goals, facilitating transparency and communication between buyers and suppliers and enabling agility during disruptive times.
Given that 60-90% of a company’s ESG footprint lies with its suppliers and nearly 90% of greenhouse-gas emissions come from a company’s supply chain, it’s simple: include your third parties in your ESG Management.
While most people think of the ESG agenda as being focused on environmental
issues, many companies are expanding its remit to also take into account other aspects like supplier diversity.
Procurement’s evolving role as a strategic enabler for ESG is also reflected in the priorities set by chief product officers (CPOs) in this study from Economist Impact and sponsored by SAP. It included 119 chief financial officers, 109 chief operating officers, 102 chief procurement officers and 100 supply chain executives. They represented 14 sectors, spanning manufacturing, services and the public sector. 56.3% worked in organisations with annual revenue between US$300m and US$1bn, while the rest worked at organisations with more than US$1bn in annual revenue. In terms of geography, Asia-Pacific and Europe, the Middle East and Africa (EMEA) each had 150 respondents, while 130 came from the Americas..
It found that the top ESG priorities for the CPOs that responded were reducing waste (38%), decreasing energy consumption (32%) and increasing supplier diversity (28%). While promoting an ESG agenda requires collaboration across an entire organization, procurement has an increasingly important role to play in ensuring products are sourced in a sustainable manner, setting an ethical course for the value chain at the origin. Growing consumer demand for sustainable products also presents a prime opportunity for procurement to serve as a strategic enabler.