Fridays (in 2023) means that it’s time for another CPO Rising Listicle. Each list will include a variety of procurement tips, trends, insights, research, lists, strategies, and/or recommendations designed to help procurement teams improve operations. We’ll also include a summary graphic for you to share with your team.
In our 2023 CPO Rising Report, we cite Environmental, Social, and Governance (ESG) as a top five priority for chief procurement officers (CPOs). Environmental, Social, and Governance (ESG) is a set of principles that are embedded in procurement decision-making. These principles focus on the environmental and social impacts within the enterprise and between stakeholders and suppliers. CPOs play a crucial role in managing and addressing ESG issues within their organizations, while also measuring compliance levels. Here are:
Four Important ESG Issues That CPOs Must Manage and Address
1. Sustainable and Ethical Sourcing: CPOs need to ensure that their procurement processes align with sustainable and ethical sourcing practices. This includes selecting suppliers that adhere to environmental standards, social responsibility, fair labor practices, and ethical business conduct. CPOs must evaluate supplier sustainability performance and integrate sustainability criteria into supplier selection and evaluation processes.
2. Supply Chain Transparency: CPOs must prioritize supply chain transparency to identify potential risks and drive responsible sourcing. They should work with suppliers to obtain visibility into their sub-tier supply chain, ensuring compliance with environmental regulations, labor standards, and other ESG-related requirements. This involves conducting audits, implementing supplier codes of conduct, and establishing mechanisms for reporting and remediation.
3. Supplier Diversity and Inclusion: Promoting supplier diversity and inclusion is another critical ESG issue for CPOs. They should proactively engage diverse suppliers in their procurement processes, including minority-owned, women-owned, and small businesses. CPOs can develop supplier diversity programs, set diversity goals, and track and report progress to foster a more inclusive supply chain.
4. Collaboration and Stakeholder Engagement: CPOs must collaborate with internal stakeholders, suppliers, and industry partners to address ESG issues effectively. They can work closely with sustainability teams, corporate social responsibility departments, and cross-functional teams to integrate ESG considerations into procurement strategies. Engaging suppliers through dialogue, sharing best practices, and collaborating on ESG initiatives can drive positive change across the supply chain.
Integrating ESG considerations into procurement strategies enables CPOs to align their organizations with sustainable practices, manage risks, meet stakeholder expectations, drive operational efficiency, and contribute to long-term business success.
RELATED RESOURCES
The Role of Sustainability and ESG in the Post-COVID 19 Supply Chain
EcoVadis @IvaluaNow: Enterprises Catching ESG Tailwinds
IvaluaNow: Enabling Procurement’s Role in Carbon Reduction
Ivalua NOW 2023 – Dispatch #1: CEO Keynote
