Insights

Making ESG real: Actionable data drives sustainable procurement

Jack Deakin, Strategic Digital Transformation Lead, UST

The ESG imperative

It’s an increasingly obvious truth - environmental, social, and governance (ESG) factors are no longer just nice to have in today’s business environment. They've become essential to long-term business resilience, success, and shareholder value. But there is a crucial piece of the puzzle that many companies miss - the tactical application of actionable ESG data in decision-making, particularly in procurement.

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Procurement's role in sustainability

Because your supply chain is a huge part of your organization’s impact on the world, your procurement managers are on the front lines of your company's sustainability efforts, even if they don’t realize it. Every supplier chosen, contract signed, and product sourced have ESG impacts that shape your company’s long-term business success.

It's easy to feel good when you see a glossy sustainability report showing your company's high-level ESG commitments, but are these commitments translating into actionable change at the ground level? How do daily procurement decisions contribute to or detract from these goals?

The truth is, without actionable ESG data at your fingertips, it’s hard to know. We're not talking about broad, high-level ESG scores or goals here. We're talking about granular data presented in the right context to directly inform your procurement decisions.

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The pitfalls of high-level ESG goals

It’s an uncomfortable truth that high-level ESG goals and targets, while important, are not sufficient. They may sound impressive when discussed during board meetings or in public relations releases, but they fall short of driving real, substantial change and sustainable value. In other words, there is no significant benefit to an ESG policy that isn’t integrated into the everyday decision-making processes where change really happens.

What if your procurement managers could see the carbon footprint or water usage during the production of goods right next to their price? What if procurement managers could compare suppliers not just on cost, quality, and delivery time but also on their waste management practices or labor policies?

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Empowering procurement with ESG data

Imagine the transformational shift this could bring about. Sustainability would no longer be an abstract concept far removed from the realities of daily business operations. Instead, it becomes a tangible, quantifiable component of every procurement decision. Some benefits of providing timely access to ESG data include:

• Risk mitigation: ESG data can help identify and assess potential risks associated with suppliers and vendors.
• Supplier selection: Procurement can prioritize suppliers that demonstrate strong ESG practices, encouraging sustainable and responsible business practices throughout the supply chain.
• Supplier monitoring: Monitoring supplier ESG performance enables procurement teams to ensure that suppliers maintain their sustainability and social responsibility commitments.
• Compliance and regulation: Access to ESG data can help the procurement function ensure compliance with environmental regulations and align with industry standards and best practices.
• Long-term business resilience: Encouraging suppliers to adopt sustainable practices and improve social conditions can help the procurement function build a more stable and responsible supply chain.

This is not just about doing good; it is good business. It is about risk management, cost savings, and building a resilient supply chain. Suppliers with poor ESG performance are more likely to face regulatory penalties, operational disruptions, and reputational damage. Conversely, suppliers with strong ESG performance can focus their efforts on offering innovative products, efficiency gains, and a stronger brand.

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Actionable steps for procurement teams

However, to make this a reality, we need to rethink how we present and use ESG data. It's time to move beyond vague commitments and high-level targets. It’s time to link traceable data from the supply chain to the procurement process. It's time to put actionable ESG data in the hands of the people who need it most - our procurement managers. Let's empower them to make informed decisions that drive tangible progress toward our sustainability goals. And let’s give them that data when it matters - at the decision point, in formats that provide information on the ESG status they need to know now.

Because, at the end of the day, sustainability is not just about what we aspire to do. It's about what we actually do, day in and day out, in every single decision we make. Only by fully integrating ESG data into our everyday procurement processes can we hope to turn our lofty sustainability ambitions into a reality.

If you would like to learn more about ensuring actionable ESG data is available to your procurement function, visit ust.com.