Using CSR and ESG to identify supplier suitability
Including CSR and ESG criteria to better assess risks and opportunities related to sustainability is becoming an important step during the tendering process for many companies and it's more important than ever that suppliers take this responsibility seriously.
CSR (Corporate Social Responsibility) and ESG (Environment, Society, Governance) is high on the list of many procurement professionals with a worldwide drive to create a more sustainable future being front and centre of today's desired business practices.
ESG (Environment, Society, Governance)
ESG is an important framework used to measure sustainability and social responsibility in investments. Procurement integrates ESG when evaluating supplier impact on the environment as a company while also considering social and governance factors.
Integrating ESG into the procurement tendering process is important to ensure that the suppliers will be a key factor in helping the company's own ESG targets, short or long-term ones while working together with the supplier to identify if there are incentives that can help achieve those ESG targets and how much the supplier can assist in this.
ESG has always been part of a responsible investors considerations, as the environmental, social and governance criteria are as important as the financial criteria when making a business decision – so for procurement it is not only about generating savings, but also ensuring that the ESG impacts of the suppliers are taken into consideration during the tendering process.
CSR (Corporate Social Responsibility)
CSR is an issue being taken into consideration by big and small companies in the public and private sector. It's about how the company or corporation behaves and actions regarding its impacts in social, environmental and business areas – it's the company being responsible and transparent on its position and possible impacts on the community and on the supply chain.
CSR relates to procurement when it comes to being responsible for achieving an environmental friendly supply chain with good social actions and targets from suppliers, and this can also be assessed during the tendering process with the same criteria as the ESG framework.
Procurement professionals can help their own companies achieve their CSR and ESG targets, or even achieve 'green credentials', by ensuring that the supply chain suitably meets those goals.
It's about committing to achieving a responsible business with the support of a responsible and suitable supply chain that can drive innovation and productivity with social impact in mind, that is becoming as important as the financial impacts on the company, the market and the community.
How to implement CSR and ESG checks in your supply chain
There are a few ways of measuring CSR and ESG suitability:
- Research suppliers (new and existing) using a 3rd party agency or in-house resource
- Create surveys for suppliers to complete with their information
- Conduct on-site audits to ensure that the supplier is following its CSR and ESG actions
Here at Maistro, our innovative tender management platform allows procurement professionals to implement easy PQQ's and RFI's, directing new and legacy suppliers to our powerful SRM portal to qualify, consolidate and gain a better understanding of your supply base.
Get in touch to find out how.