ESG is a business priority that can’t be ignored, two procurement thought leaders have told Chief Purchasing Officers during a recent round table event.
Speaking at Procurement and Supply Australasia’s (PASA’s) Annual CPO Exchange on the Gold Coast, Angela Van Eekelen, former Procurement Global Policy and Compliance Manager for ANZ Bank and Virgin Australia’s Procurement Portfolio Manager Sesh Sarkar both say the stakes have raised with Environmental, Social, and Corporate Governance.
Angela said it is vital for organisations to manage obligations and expectations to begin addressing ESG for organisations to manage obligations and expectations.
“It’s an area where you can no longer ignore it. It’s part of everyday life,” Angela said.
“It’s part of the contractual basis. It’s a part of winning business today. And it just literally makes good business sense to encompass this and have a fair understanding of what it involves.”
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Angela’s presentation, ‘Procurement’s Next Frontier – Becoming accountable for the ESG agenda’, was a highlight of Day One of the CPO Exchange at the Gold Coast Sheraton Grand Mirage.
On how to kick off an ESG agenda in procurement, Angela’s advice was to keep it simple.
“Very early in the journey, I would recommend starting with basics, which is to understand who’s doing all the purchasing all the contracts, make sure that they’re digitised so that you can search on clauses.
“Understand the legislation (and) the regulations that are involved and then look outwards, look at those suppliers who can assist you and provide you with information to manage your portfolio.”
Sesh said ESG generated lots of debate during a CPO round table discussion.
“It’s clear that’s now a mandate, right? It’s not optional anymore,” Sesh said about ESG.
“Procurement teams across all industries now need to be cognizant of what the requirements are not just from a legislative perspective, but also from a stakeholder perspective (also) what do businesses now demand in terms of compliance?”
More than half (55%) of Fortune Global 200 firms have established a target for partial or total elimination of greenhouse gas emissions, Forrester: The State of Environmental Sustainability in the Fortune Global 200 found. Furthermore, 23% have set a carbon neutral date.
Angela encouraged procurement teams to review environmental impacts pertinent to their business such as energy, emissions, water, materials, waste and biodiversity and baseline their current carbon footprint.
How to uphold ESG responsibilities: A checklist
- Updates to corporate brands, values, code of conduct
- Creation of new roles to address ESG
- Monitoring/measuring supply chain contract obligations, Eg: due diligence
- Increased participation in local and regional business locations
- Increased reporting transparency
- Hiring practices – greater awareness
- Workplace health and safety programs – within organisation and downstream supply chain
- Labour standards – incorporated into worker contracts
- B Corp certification: 80%+ score on social and environmental performance
- Condition of doing business – Insistence on inclusion of ESG clauses in contracts
- Green investments