It’s no secret that ESG is quickly becoming a key component for companies everywhere. ESG performers are enjoying faster growth and higher valuations than other players in their sectors, by a margin of 10 to 20 percent in each case.
Having good ESG scores can demonstrate to investors and potential customers that your company is better equipped to navigate potential future risks and opportunities related to sustainability and Social Impact, allowing investors to make decisions about where to expand their portfolios. Government agencies are beginning to use ESG scores to grant businesses permission for land, water, electricity, and a variety of crucial resources, based on how ethical and responsible their ESG scores indicate.
Businesses that make strides towards creating quantifiable Social Impact see an increase in sales and overall investment. Consumers are demanding high standards of sustainability and quality of employment from businesses, and are spending accordingly.
Procurement is at the Forefront of ESG
In the procurement industry, many Chief Procurement Officers are struggling with how to best implement ESG into their long-term strategic sourcing plans. As executives identify ways to drive progress, it’s important not to overlook procurement. Procurement can play a key role in identifying numerous parts of ESG, from helping to curb greenhouse gas emissions, cutting waste, and sourcing recycled content, as well as protecting and advancing human rights.
Here’s the best way to start of a formulated plan to improve your ESG scores by creating a new procurement strategy:
- Qualify your organization’s current ESG rating. There are a variety of third-party ESG rating organizations, and each of them takes a slightly different approach to calculating ESG scores. MSCI, Bloomberg ESG Data Service, Sustainalytics, RepRisk, and new entrant Institutional Shareholder Services (ISS), are some of the current leaders in the space. Factors like a qualitative analysis of the company’s handling of ESG issues, analyzing a company’s ESG performance with environmental, social, and governance scores compared to their peers, and an overview of any potential ESG controversies, are all considered.
- Integrate ESG metrics into your supplier management, selection, and overall procurement processes. Givewith’s SaaS software delivers a unique sales and procurement differentiator in the form of curated Social Impact programs – helping our customers strategically win business. By staying strategically focused on Social Impact and ESG-compliant projects tailored for your business, your organization can support these Social Impact programs, and bolster your ESG scores.
- Implement sustainable purchasing practices into the organization and be an advocate in your organization and beyond by tracking sustainable procurement performance and training the community on the application of sustainable procurement principles. Including “sustainability as standard” in procurement processes is an effective way to reduce ESG-related risks and spot opportunities for incremental improvements. Lead your organization in developing new approaches, narrow down to the ones that matter most, and then apply them at scale across the entire enterprise and its supply chain—to create true lasting impact.
Implementing an ESG strategy that works for shareholders, suppliers, employees, customers, and for broader society is the best way to give the opportunity for procurement to help transform your strategic sourcing and our world for the better.
Givewith is a SaaS solution that allows businesses to differentiate their offering in the proposal/RFP process, gain customer and supplier insights about shared Social Impact areas, and deliver against those priorities in a simple, easy-to-use software. If you’re ready to get started with Givewith for Sales, fill out the form on this page to get in touch with one of our representatives.