The importance of ESG and sustainability in procurement

Date Posted:Wed, 1st May 2024

ESG in procurement is a set of standards for a company’s operations that investors use to evaluate its resilience and sustainability. In procurement, ESG factors are incorporated into the decision-making process to assess the environmental impact of sourcing materials or services, the social implications concerning the workforce or local communities, and the governance practices of suppliers. ESG is a highly valuable risk management tool that organisations can use to screen their environmental and social impacts and assess governance practices within a business.

It’s more important than ever that supply chains are sustainable to protect the future of our planet. CIPS uses the Sustainability model to demonstrate how good governance underpins an organisation's sustainability strategy and ambition. Sound governance requires a sustainability culture that is strengthened with increased transparency and ethical practices, along with a robust approach to risk management. This structure provides a bedrock for targets and initiatives that deliver on social, economic and environmental factors that support the future of the organisation, the planet and society. An organisation's targets are often linked to the UN Sustainable Development Goals selecting the goals where they have the most influence and impact.

Additionally, sustainable supply chains minimise business disruption from environmental, social, and economic impacts and provide a solid basis from which to protect (and enhance) a company’s reputation and brand value. Cost savings may be realised too, by focusing on whole life costing methods for sourcing goods and services. Sustainable procurement drives both resource efficiency and innovation within the supply chain, promoting alternative ways to manage waste and add value.

If they haven’t already, businesses should be developing, and adhering to, an ESG strategy or code of conduct. Being able to demonstrate that you have policies in place to keep your business and your supply chain free from ethical issues such as fraud, corruption and modern day slavery, is essential for CEOs and CPOs today.

At CIPS, we provide support and training on ethical and sustainable procurement and offer various certifications for companies and individuals. CIPS also works with several entities via our Procurement Excellence Programme (PEP), an initiative whereby we review an organisation's procurement policies and practices (including sustainability policies) and certify them once we have closed the gaps and evidenced that they are now meeting the required standard. Furthermore, the CIPS Corporate Ethics Register lists organisations that have taken proactive steps towards ethical standards, in the last 12 months, to safeguard against unethical conduct in procurement and supply management.

On 16th May we will be holding the largest CIPS MENA Conference and Excellence in Procurement Awards in Riyadh, KSA. This is an opportunity for procurement professionals to hear from world renowned leaders and learn more about the industry shift towards a more sustainable procurement process. As part of the conference, we also recognise outstanding individuals and teams in the procurement profession in the Excellence Awards, with one of the awards being presented to ‘Sustainable Procurement Project of the Year.’

To find out more about the conference and to register, visit

https://www.cipsmenaconferenceandawards.com/register-to-attend/

by Sam Achampong, Regional Managing Director, CIPS MENA