The commitment of organizations to sustainability and how they handle environmental, social and governance (ESG) aspects boosts their capacity for innovation, along with new business opportunities and greater competitiveness.

Hence the growing interest of investors, partners and consumers. A study on the theme called EY Global Reporting and Institutional Investor Survey, released in early 2023, indicates that 78% of investors consider that businesses should direct their efforts and resources to ESG, even if it will decrease their profits in the short term.

Another data that attests the growing relevance of ESG is the Corporate Sustainability Index (CSI), from B3. The portfolio assembles shares of businesses committed to social and environmental impacts. In 2023, the CSI features a record number of participants: 70 companies and 37 industries. Together, these companies add up to more than R$ 2 trillion in market value.

ESG issues and procurement must stand side by side towards innovation

To stay competitive and well regarded in the market, businesses must be concerned on how to find solutions that could expand their sustainable performance in the social, environmental and economic pillars.

This means that sustainability should be intrinsic in all company operations, particularly in the supply chain – by choosing conscious and environmentally correct partners.

The involvement of consumers, employees, investors and communities is also growing, with a trend of people becoming more and more engaged, and demanding that businesses act in a responsible way.

For this reason, businesses must showcase an innovative bias, regardless of the industry in which they operate – and this must now be intrinsically related to ESG. But it’s worth reminding that being sustainable today goes well beyond the environmental concept: it’s how businesses respond to changes in society.

There is a great challenge in adapting businesses to a more complex environment, mainly for their leaders. But the path can be less arduous when there is commitment from the organization as a whole. And, of course, the procurement area has a great responsibility in this sense.

To achieve a sustainable potential, certain strategies must be considered, along with supplier-related risk management.

Sustainability must be incorporated as a true business strategy, and the issue must be faces as a driver of innovations in procurement.

In other words, finding – among society’s problems – what can be converted into a business opportunity can represent not only a positive impact for people, but also a movement that leverages business growth.

How can you engage your partners in the ESG and innovation issues?

Investing in the innovation journey and having suppliers as part of your strategy is a matter of survival. And to begin with, you can develop, little by little, the maturity level in the selection of suppliers and their management. To be chosen, partners must meet at least the legal and technical requirements demanded by regulations and standards.

After such requirements show a desirable result, it’s time to challenge suppliers with regard to innovation, and invite them to participate in the product transformation process, as new solutions doesn’t occur only within organizations.

Let’s have a practical example: when looking for a new package, ‘supplier A’ has a more competitive cost than ‘supplier B’, but the latter has a research laboratory and collaborative processes. So the chance to innovate is greater with ‘supplier B’, who can increase the profit and competitiveness of your business.

In this path, technology is a great support for the procurement area, mainly because there is some complexity in the information level from the partners, which shall be managed continuously, and in a transparent and integrated way.

ESG and supplier management: how can technology be your ally?

Managing suppliers and engaging them with sustainable matters is challenging for most businesses. In addition to issues involving price, quality and delivery, other concerns must be part of the business strategy – such as the impacts of activities on the environment, potential shortages and risks of fiscal and labor co-responsibility.

To manage all such variables, including ESG issues, and decrease related risks, it’s vital to call on technology.

Supplier management practices, such as registration, certification, evaluation, inspection and third-party management, can be conducted in a Supplier Relationship Management (SRM) solution, thus making easier the engagement of the procurement area with ESG.

See below the key benefits of a Supplier Relationship Management (SRM) solution:

  • Management and control of all suppliers and outsourced services
  • Savings, agility and compliance in the management of suppliers and third parties
  • Building of sustainable and reliable partnerships
  • Collaboration with companies that are your business partners
  • Checking of supplier compliance
  • Evaluation of partners throughout the supply process
  • Less risks related to suppliers and third parties

To find out how Mercadoe’s Supplier Management solution can help your business, ask for contact from one of our experts. Just click here.

See you next time! 😉