Why ESG Should Be a Priority in Procurement Best Practices

By The oboloo Team

Why ESG Should Be a Priority in Procurement Best Practices

As businesses continue to prioritize sustainability and social responsibility, ESG (Environmental, Social, and Governance) has become a buzzword in the procurement industry. Implementing ESG practices in procurement best practices not only benefits the environment and society but also contributes to long-term business success. In this blog post, we will explore what ESG is, its benefits for procurement best practices, and practical tips on how to implement it.

What is ESG?

ESG stands for Environmental, Social, and Governance. These three factors are used to measure a company’s sustainability and social responsibility performance.

The “E” in ESG refers to a company’s environmental impact. This includes their carbon emissions, waste management practices, energy efficiency, and natural resource usage.

S” represents the social aspect of ESG which encompasses human rights issues such as labor practices, employee diversity and inclusion policies, community involvement initiatives among others.

Finally,”G” measures the governance factor of companies including board composition diversity , executive compensation structure etc.

The goal is to ensure that companies are operating ethically and transparently while prioritizing long-term success over short-term gains.

Incorporating ESG into procurement best practices allows businesses to evaluate suppliers based on their commitment to these values. By doing so they can create more sustainable supply chains while also supporting like-minded organizations committed towards creating positive change in society..

The Benefits of Incorporating ESG into Procurement Best Practices

Incorporating ESG (Environmental, Social and Governance) into procurement best practices has become increasingly important for businesses in recent years. By integrating sustainability considerations into their supply chain management, companies can benefit in a number of ways.

First, incorporating ESG factors can help to reduce operational costs. Sustainable procurement practices often involve using more efficient methods and materials that ultimately lead to reduced waste and energy consumption. This not only benefits the environment but also saves money over the long term.

Second, implementing ESG in supply chain management can enhance a company’s reputation by demonstrating their commitment to sustainable business practices. This is particularly relevant as consumers are becoming increasingly environmentally conscious and aware of corporate social responsibility.

Third, incorporating ESG into procurement best practices can mitigate risks associated with environmental or social issues within the supply chain. By conducting due diligence on suppliers’ sustainability policies and performance metrics, companies can identify potential problems early on and take steps to address them before they become major issues.

Incorporating ESG considerations into procurement best practices is not just good for the environment but it also makes good business sense too.

How to Implement ESG in Procurement Best Practices

Implementing ESG into procurement best practices requires a thorough review of current policies and procedures. The first step is to evaluate the existing supplier base, identifying which suppliers are meeting ESG standards and which ones need improvement. Once this is done, organizations can begin to prioritize sustainability in their supplier selection process.

It’s also essential to communicate with suppliers about expectations for sustainable practices and require them to implement these changes. This may involve providing training or resources on how they can improve their environmental, social, and governance performance. It’s important to work collaboratively with suppliers rather than simply imposing new requirements without support.

Organizations must also monitor supplier compliance regularly through audits or assessments. This will help identify any areas where they are falling short of ESG standards so that corrective measures can be taken immediately.

It’s vital to track progress over time by setting clear goals for sustainable practices within the supply chain. By measuring results against these objectives, organizations can see where improvements have been made and what further action needs to be taken.

Implementing ESG into procurement best practices requires commitment from all stakeholders involved in the supply chain—from executives down to individual employees—to create a more socially responsible business model that benefits both people and planet alike.


The incorporation of ESG into procurement best practices is vital for any organization that values sustainability and ethical business practices. By implementing ESG criteria in supplier selection and evaluation, organizations can reduce their environmental impact, enhance social responsibility efforts, mitigate risks, improve brand reputation, and increase profitability.

Moreover, with increasing pressure from stakeholders such as customers, investors, regulators to adopt sustainable procurement strategies in recent years; it has become more important than ever for companies to prioritize ESG in their procurement processes.

Therefore, companies should focus on developing a comprehensive strategy that integrates sustainability throughout all aspects of the supply chain. From establishing clear policies and guidelines to regularly monitoring suppliers’ compliance with established standards. Companies must continuously evaluate their performance against predetermined goals or benchmarks to ensure they remain on track towards achieving their sustainability objectives.

Ultimately integrating ESG into procurement best practices not only benefits businesses but also contributes significantly towards building a sustainable future for generations to come.

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