July 07, 2022 | Supply Chain Strategy Blogs
Goals such as net-zero emissions, supply chain sustainability, and supplier diversity are no longer just good-to-have objectives for supply chain and procurement leaders.
They realize that adopting sustainable practices can help develop resilience throughout organizations and supply chains, reducing risk to a large extent and driving positive results.
Consider these numbers.
According to Sustainable Procurement Barometer 2021, 48% of respondents from mid-sized companies said sustainability would positively impact business finances while 47% felt a sustainable approach can improve operational efficiency and reduce costs. Also, about 69% respondents said they considered sustainability track records when choosing new suppliers and renewing contracts.
In fact, in a survey of retailers in Europe by the International Trade Centre, 85% said they had seen an increase in sales of sustainable products in the past 5 years, and 92% expected it to increase in the next five years.
Thus, more and more consumers are demanding sustainable products, pushing businesses to prioritize ESG goals and provide complete visibility of their supply chain activities.
But we should be careful not to confuse sustainability with ESG.
The terms, sustainability and environmental social and governance (ESG), although similar, mean different things too. Thus, they may not be used interchangeably. ESG is considered a part of the much larger umbrella of sustainability.
ESG is used by an enterprise for measuring the sustainability and ethical impact of an investment on a business, according to Market Business News (MBN).
This aspect focuses on how a company helps improve the environment and its performance.
This aspect examines how companies influence their stakeholders – personnel, customers, suppliers, partners, and investors and how they can better themselves.
This aspect focuses on the company structure, leadership, policies, and compliance.
Also Read: What is Sustainable Procurement?
Also read: What is Supply Chain Sustainability?
The procurement teams in organizations are in an ideal position to spearhead the adoption of sustainability across the enterprise. Reimagining cost to focus on ESG-based value empowers procurement to drive the sustainability agenda and maximize value for the wider business, says this GEP white paper 6 Steps for Procurement to Drive ESG Excellence for the enterprise.
Here are eight benefits of ESG improvements:
The objective is to create businesses that only take what they need while leaving economic, environmental, and societal systems capable of indefinite existence. Hence, it’s crucial that a complete understanding of ESG and sustainability in all their different aspects is achieved, without which, businesses will just be groping in the dark.