ESG (Environmental, Social & Governance)
Environmental, Social and Governance (ESG) is a concept used in the procurement process that considers the effect of an organization’s operations on the environment, social wellbeing, and corporate governance when making decisions.
It revolves around three key areas: environmental, social and governance.
The environmental factor looks at how a company manages its resources and treats the natural environment, including carbon emissions, waste management and water consumption. The social element takes into account how well an organization takes care of its employees with regards to diversity, working conditions, fair wages and other related topics. Finally, governance examines a company’s leadership structure and the degree of transparency when it comes to their decision-making processes.
By assessing these criteria, organizations are able to develop more conscious procurement strategies that prioritize ethical practices, sustainability and transparency.
