Written by: Mike Edmunds

Posted on: 16/03/23

Putting ESG First: The Ultimate Guide for Procurement and Supply Chain Professionals

In my experience working in the software development world, especially working closely with procurement teams over the past twelve years, the ESG movement is one of the most interesting challenges and opportunities facing business.

It appears that ESG is an important part of everyone’s agenda – environmental, social, governance. What do they mean? In brief terms, these words refer to a business’s environmental impact, social and ethical standards, and level of compliance with government-mandated criteria. It is holistic in the sense that it considers the big picture, and how each of its three pillars lean into and affect one another, rather than focussing on smaller, more consequential details.

They are the new signposts for business acumen, and while things often change in the world of business, the core message embedded in the mission of ESG will remain. It would be wise to sit up and take notice as we move into the beginning of what is set to be one of our most challenging years yet for innumerable reasons – get off on the right foot and take advantage of the opportunities ESG will afford us.

But just what opportunities does ESG present for the modern business? A business’ mission statement, the efficacy of its product, and the skills of its employees are irreplaceable assets; combined with the adoption of ESG, particularly in an era wherein environmentalism and social justice has never been more centralised in the forefront of everyone’s minds, is a positive business opportunity no matter which angle you consider it from. But here are a few as food for thought:

  • In the wake of the global climate crisis, consumers are primed to reward businesses who have taken steps to mitigate their environmental impact in tangible and accountable terms.
  • There have been recent waves of public criticism translating into real-world business consequences as consumers become aware of, and have access to, a wealth of information regarding their favourite brands’ business ethics – and aren’t afraid to put their money where their mouth is if what they find is lacking.
  • The Paris Agreement places ongoing pressure on 193 countries and states to adhere to more stringent and actively increasing environmental improvement targets, in turn placing pressure on the businesses operating within them.

These may not sound like opportunities at face value, but that is exactly what they are. The whole world is rooting for you and your business to make the changes you need to make to fall into step with the future – everyone wants you to succeed! The world depends on it!

Don’t just take my word for it:

“The supply chain will be the epicentre for ESG. Suppose your suppliers have poor ESG ratings based on ESG criteria and independent checks you carry out against them. In that case, you shouldn’t be using them. This means your approach to sourcing will need to change if you aren’t detailing what you need from your Suppliers when it comes to ESG.” – Daniel Barnes, What is ESG Criteria in Procurement?, worldofprocurement.co.uk

Barnes speaks succinctly on the issues of ESG in procurement and supplier management, and I would take his approach further. So too would Suzanne Offerman, who claims that advancements in technology and software are the future of ensuring compliance whilst keeping costs and risks low:

“Offerman said that tech adoption differentiated companies that most successfully navigated recent supply chain disruptions. “Those companies that had systems and processes in place could pivot and were more agile, more open to change, and more successful navigating through the pandemic, Brexit retaliatory tariffs — all of the barriers that we’ve seen recently,” she said.” – Suzanne Offerman, Supply Chain Management: Unleashing Innovation to Stay Ahead of Change and Uncertainty, tax.thomsonreuters.com

What does this mean for ongoing business as a Procurement or Supply Chain professional, as the New Year presents fresh targets and challenges in areas never previously considered before? It means overcome. Just as reflection is necessary when embarking on a journey of personal self-improvement, assessing and taking stock of your business to do the same on a larger scale is paramount. Look long and hard at current processes and ask what more can be done? How can we improve? Where are we falling short? It’s good to be honest with yourself about where you stand. Then: take the leap, make the changes, and reap the benefits of having courage.

So, let’s take stock: we know what ESG is, we know why it’s important, and we know (thereabouts) the changes we can make to our businesses to better comply and entice consumer confidence as well as stakeholder support. But how best to implement these changes?

Offerman presents an interesting point in her suggestion that technology, and technological advancement and adoption, was the standout marker of whether a company survived or floundered under the challenges which supply chain disruptions wrought. I must say that I agree: technological advancements such as Artificial Intelligence, APIs, and completely cloud-based software platforms are the future in ensuring a company can withstand the troubles which have become ever more commonplace. Time management of employees; ensuring the accuracy of data shared; risk to brand reputation and public opinion; all are considerable detriments to a healthy and smooth-running business model.

Technology is the answer.

ARCUS® is the answer.

Trade Interchange’s ARCUS® Supplier Management Platform is a cloud-based solution comprised of 9 modules, each supporting API integration and AI capabilities with the same purpose in mind; making the transition to the future simpler and more streamlined. Software and digitisation will revolutionise your typical day-to-day practises, saving you time and hassle by allowing you to focus on more important things where your talents can really shine. It will reduce the capacity for human error and increase inter-departmental collaboration, allowing information to flow easily and quickly whilst increasing the level of transparency in your business. It will cut through the noise when it comes to supplier on-boarding, separating the wheat from the chaff so you only ever receive the best possible suppliers which align with your business ethics and needs.

If you’ve been waiting for the ‘right time’ to seek out new solutions, this is it. 2023 is set to be a year of challenges, but with ARCUS®, the future is sure to be brighter.

Take the leap.

This is the first of a series of thought-pieces I will be running throughout the year. Follow me to stay in the loop and be notified when the next piece is published.

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