ESG has emerged as the second top priority for procurement executives globally, according to Deloitte’s 2023 Global Chief Procurement Officer Survey.
This marks a significant jump from its seventh place standing in 2021. Deloitte’s survey included around 350 procurement leaders across over 40 nations, shedding light on the mounting regulatory and stakeholder pressures to handle and report on various sustainability aspects, notably within companies’ value chains.
ESG has become an integral part of decision-making for 85% of firms, with procurement playing an influential role. Other priorities include corporate risk management and FP&A, which hold significance for roughly 70% of the surveyed firms. Driving operational efficiency topped the list with 74%, and digital transformation matched ESG, both at 72%.
The study indicates that efforts to quantify sustainability factors are still in the nascent stages, despite 60% of respondents reporting that they measure suppliers based on sustainability to some degree, and 63% stating they collaborate with suppliers on ESG initiatives.
Key ESG factors identified by Chief Procurement Officers (CPOs) in the survey included waste reduction and material circularity at 72%, followed by climate mitigation at 62%. However, less than half (40%) of the surveyed procurement organisations do not define or measure their own set of relevant ESG factors.
CPOs indicated that the top areas for ESG-related investments are assessments, developing visibility and reporting platforms, creating supplier investment funds and consortia, and incorporating ESG into core people, process, and consulting/transformation support.
The report stated, “Procurement’s role in delivering value here can mean something as narrow as baseline compliance to the regulations, but it can also mean many other things, including identifying more carbon efficient suppliers.”
It also added, “ESG support is a critical C-suite issue for CPOs to support and one they should arguably be using to their advantage. It includes renewing ways to engage and collaborate with suppliers to balance cost, resiliency, ESG, and other factors.”
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