eProcurement & Procure-to-Pay Resources

Environmental, Social and Corporate Governance (ESG) and Procurement

Published September 22, 2021 at 11:30 AM

As businesses begin their slow, deliberate return to normal operations, many Procurement organizations are finding their role and influence diminishing.  The business is no longer operating in “crisis” mode when the focus was on cost savings and predictable supply in the face of the uncertainty of the last year.  With the return of more traditional corporate goals comes the potential for procurement's reduced influence.  Opportunities exist for procurement to continue to play a strategic role in the organization. 

Earlier this year, we highlighted a Gartner report, “4 Tactics Procurement Can Use to Sustain Influence as Economic Conditions Improve” that offers some steps for procurement.  In addition, an area of opportunity exists in support of the business’ environmental, social and corporate governance initiates. 

Understanding ESG 

According to Market Business News, “ESG stands for Environmental Social and Governance and refers to the three key factors when measuring the sustainability and ethical impact of an investment in a business or company.”  The three central factors associated with ESG include the following: 

  • Environmental criteria such as waste and pollution, greenhouse gas emission, deforestation, and others. 
  • Social criteria such as employee relations, diversity of workforce/supplier base, and community outreach 
  • Governance criteria such as tax strategies, donations, and board diversity 

Why is ESG important?

In a 2019 article, Jan Czaplicki of Carbon Click highlighted the rise of “responsible investment” and how modern investors are not only reviewing a business' financials, but also the company's level of dedication to ESG strategies.  For a company exploring outside investment, ESG can be an important criterion. 

For existing, mature businesses that want to continue to strengthen their brand, a Forbes article noted the role that a commitment to ESG, including strong reporting, can have an impact on the perception of a brand and ultimately the bottom line.  

Potential Low-Hanging Fruit for Procurement 

There are limitations in what a company can do rapidly to show its commitment to an ESG program.  Hiring a diverse workforce can take time, for example. However, the procurement organization is well-positioned to play a strategic role in aligning supply with Brand, PR and Investor goals around ESG. 

Supplier management in indirect spend offers a tremendous opportunity to leverage a diverse community of suppliers and show the company's commitment to diversity and sustainability.  In a comparatively short period, procurement can build relationships across the supplier network that represent a diverse and sustainable supply ecosystem.    

BuyerQuest Marketplace and ESG 

BuyerQuest’s Marketplace solution offers procurement a seamless technology to build and support a diverse supplier community.  Bringing new suppliers into the Marketplace is intuitive, and an easy-to-use interface allows suppliers to manage their products directly. In addition, integration makes it easy to take rich data from suppliers and add it to the marketplace.  

Continue to Keep a Seat at the Table 

With a diverse supplier base aligned to the business’ strategic Environmental, Social and Governance goals, procurement is well-positioned to play an important role in driving brand loyalty and ultimately revenue.  The robust reporting capabilities in BuyerQuest help to provide a picture of procurement’s successes with tangible data and reporting.  

Learn more about BuyerQuest Marketplace 

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