What is ESG?

_{Environmental}

Procurement is pivotal in driving sustainability. By partnering with suppliers who prioritize reducing carbon footprints, using eco-friendly materials, and minimizing waste, procurement teams can significantly impact the environment.

Every choice—like sourcing green energy or biodegradable packaging—propels sustainability goals, making procurement a vital force for environmental progress.

_Social

Procurement can drive social change by championing ethical labor, promoting diversity, and strengthening communities.

Collaborating with diverse suppliers fosters innovation and boosts local economies, while fair and inclusive practices ensure a more equitable future across the supply chain.

_Governance

Governance underpins a successful procurement strategy. It ensures compliance with regulations and ethical standards while fostering trust and accountability.

Effective governance reduces risks, ensures transparency in supplier management, and enhances the organization's reputation for integrity.

The first step in aligning procurement with ESG is understanding how each aspect impacts the entire supply chain, from sourcing materials to delivering finished goods. It requires a deep dive into supplier networks, governance frameworks, and sustainability commitments.

Environmental

Driving sustainability through smart procurement

With growing regulatory pressures and environmental awareness, businesses are aligning their supply chains to meet net-zero targets. Procurement is one of the most powerful levers for reducing an organization’s environmental impact.

Procurement teams can significantly reduce emissions, waste, and resource consumption by carefully choosing suppliers, setting sustainability criteria in contracts, and measuring products’ lifecycle impacts.

Reducing environmental footprint

Procurement teams should prioritize suppliers who follow sustainable practices such as using renewable energy, reducing emissions, or minimizing packaging waste. Selecting suppliers with transparent and verifiable sustainability credentials is critical to driving real impact.

For instance, partnering with a supplier who operates zero-emission factories or utilizes recyclable materials in production can contribute to an organization’s carbon neutrality goals.

Tools for green procurement

_{^{How Scanmarket by Unit4 can help}}

Scanmarket’s Carbon Accounting reporter is a tool designed to complement our Spend Analytics solution.

It extends the visibility of your supply chain beyond the bottom line by monitoring spend trends and measuring, reporting, and understanding scope 3 emissions, helping to advance your decarbonization and sustainability journey.

80%of a company’s greenhouse gas emissions can be traced back to its supply chain.

Learn more about Carbon Accounting

^Benefits

Environmental impact reduction

Carbon Accounting and Supplier Management tools help prioritize eco-friendly suppliers focused on reducing emissions, waste, and resource consumption. Aligning procurement decisions with environmental goals significantly lowers the organization’s carbon footprint and promotes sustainable practices.

Read the datasheet – Carbon Accounting

ESG benchmarking for sustainable sourcing

Procurement teams can assess suppliers using environmental criteria like emissions and renewable energy usage. This benchmarking ensures visibility into supplier impact, enabling smarter choices to support the organization’s green objectives.

Read the blog about Scope 3 Emmisions

Supplier collaboration on sustainability initiatives

Scanmarket’s platform fosters collaboration with suppliers on shared environmental goals. By tracking initiatives like waste reduction and energy efficiency, procurement teams build stronger, more sustainable partnerships.

Informed decision-making for eco-conscious procurement

Data insights empower procurement to analyze supplier metrics, from carbon footprints to lifecycle impacts. This ensures procurement decisions are strategic, sustainable, and aligned with environmental priorities.

^69%^{of CEOs now view reducing carbon emissions through procurement as critical for growth.}

The social dimension of ESG

Procurement teams have the power to drive positive social impact by working with suppliers who prioritize ethical labor practices, ensure fair wages, and promote workplace diversity.

More organizations are also turning to supplier diversity programs to create economic opportunities for underrepresented groups, such as minority-owned or women-owned businesses.

Building a diverse supply chain

Diversity and inclusion in procurement are more than just a checkbox—they offer tangible business advantages. Working with diverse suppliers promotes innovation and creates economic growth in communities, leading to higher agility and resilience in the supply chain.

Procurement teams can embed social criteria into the supplier selection process by requesting certifications (such as women-owned or minority-owned businesses) and ensuring that all suppliers adhere to ethical labor standards.

Tools for driving social impact

Scanmarket’s approach to enabling a diverse and inclusive supply chain is threefold: streamlining the engagement of diverse suppliers, managing DE&I initiatives in procurement, and having the ability to spend confidently through data visibility.

^{Hackett Group found that companies with diverse supplier programs have a}^133%^{higher return on procurement investments than those without.}

How are social responsibility initiatives affecting the supply chain?

^Benefits

Promote ethical
sourcing practices

Automatically evaluate and verify supplier credentials, certifications, and compliance with governance standards, ensuring each partner aligns with your organization’s ethical, legal, and regulatory requirements from day one.

Steps to implement ethical sourcing to spark positive change

Encourage innovation
through diversity

Collaborating with diverse suppliers brings fresh perspectives and innovative ideas to your procurement strategy. A varied supplier base ensures a dynamic, forward-thinking approach that drives both social and business success.

Advancing diversity within the supply chain

Track and optimize supplier spending

Gain visibility into expenditures with diverse suppliers. Easily identify opportunities to increase spending, measure progress toward diversity goals, and refine strategies to achieve meaningful, measurable outcomes.

Ensure transparency in
supplier engagement

Leverage digital tools to provide complete visibility into supplier practices, from ethical labor to diversity metrics. Transparent processes build stakeholder trust and ensure alignment with your organization's social responsibility goals.

^60%^{of consumers expect the brands they support to have a position on social issues.}

Enhancing governance and compliance

As regulatory frameworks around ESG evolve, governance and compliance in procurement play a pivotal role in ensuring businesses not only meet legal obligations but also foster ethical practices.

Procurement can serve as a key driver in upholding corporate governance standards, ensuring that supplier partnerships align with compliance, transparency, and ethical requirements.

By embedding governance principles into procurement contracts, managing risks, and maintaining rigorous compliance checks, procurement teams help safeguard the organization's reputation and ensure adherence to both internal and external standards.

Strengthening integrity and risk management

Procurement teams must prioritize working with suppliers who meet robust governance criteria, such as adhering to anti-corruption laws, labor rights, and data protection regulations. It's critical to partner with suppliers that are transparent about their operations and have strong compliance frameworks in place.

For example, selecting suppliers who follow strict data security measures or who comply with anti-bribery regulations ensures that the organization remains accountable to regulatory bodies and stakeholders.

Tools for driving governance in risk and regulatory compliance

Scanmarket by Unit4 solutions help procurement teams monitor and manage supplier compliance against key governance metrics, facilitating transparency and adherence to regulations.

By centralizing data on supplier certifications, risk assessments, and compliance checks, this solution supports efficient risk management and helps maintain the integrity of supplier relationships, ultimately strengthening governance throughout the supply chain.

79% of procurement leaders view compliance as a major challenge in achieving ESG goals.

^Benefits

Streamlined supplier onboarding

Why selecting a vendor with ISO 27001 certification matters

Improved data privacy management

Ensure your suppliers meet stringent data protection regulations like GDPR through centralized compliance checks and monitoring, safeguarding sensitive company and customer data across the supply chain and reducing the risk of data breaches.

Safeguarding sensitive data and upholding regulatory standards

Supplier compliance and transparency

Track regulatory changes and assess supplier compliance in real-time. Access detailed reports on governance practices, enhancing transparency, mitigating risks, and ensuring accountability for audits and reporting while staying aligned with evolving legal and ethical standards.

Ethical sourcing and
anti-corruption support

Automatically flag and exclude suppliers that fail to meet your organization’s ethical standards, such as anti-corruption, fair labor practices, and anti-bribery policies, ensuring that all your partners align with your values for responsible sourcing.