Amazon Business Q&A: Why Procurement Needs ESG

Scope 3 emissions are facing a host of new regulations including the EU CSRD’s reporting requirements. 

Procurement teams can play an important role in reducing these by integrating ESG into their practices, but this isn’t a simple task.

Amy Worth is the Director & General Manager of Amazon Business UK, with more than 20 years of experience at Amazon. 

In this position, she leads the business development and account management teams at Amazon Business UK to support large customers in both the public and private sectors. 

Prior to this role, Amy grew and developed the consumer business in both digital and physical retail across APAC and EU. 

She has extensive experience in building and developing great teams across diverse markets, driving business efficiency and growth as well as building exceptional customer experiences. 

Amy shares her expertise with Sustainability Magazine.

Why is it important to focus on ESG in procurement?

Organisations around the world are increasingly realising that ESG is no longer just a necessary business goal, but adopting sustainable practices and developing Environmental, Social and Governance (ESG) initiatives can be a proactive enabler of long-term success.

With up to 90% of a company's carbon footprint linked to its supply chain, procurement is a good department to prioritise in order to effectively progress ESG ambitions.

New legislation is being rolled out all the time to mandate ESG adoption.

In the EU, public sector organisations are now required to consider environmental and social factors in their procurement decisions, with failure to comply resulting in legal repercussions. In the UK, public sector organisations are required to evaluate ESG within their procurement through the use of a 'social value model', with a minimum weighting of 10% given to ESG objectives in each purchase.

But new legislation doesn’t need to be viewed as a burden for organisations, and neither should it be the sole motivator for businesses to make more sustainable choices.

Consumer awareness and demand for social value is also rising. A third of consumers now say their trust in a brand would improve if they had a socially and environmentally responsible supply chain, while research has shown that sustainable procurement results in as much as a 15-30% increase in brand value.

So, while integrating ESG into procurement is important from both an ethical and regulatory perspective, there's also a compelling business case for ESG.

Simply put, businesses that implement ESG into their procurement strategy have a lot to gain – a competitive edge being one of them.

What are some of the challenges in implementing ESG measures?

Implementing ESG into procurement is not without its challenges and aligning operations with ESG principles can be a significant undertaking. Leaders can feel overwhelmed when overhauling their entire organisation to meet these new expectations.

Resistance to change can arise throughout the organisation. To tackle this, procurement leaders need to secure senior leadership buy-in by highlighting the value ESG can create, then encourage them further by getting end users on board with more efficient processes that lead to positive change.

But this change doesn’t happen overnight, and it can’t just come from one person. By adopting cultural change from the top which inspires operational shifts throughout the business, organisations can engage stakeholders at all levels, moving past entrenched practices and cultural norms towards a better future.

How can procurement professionals get ESG support from senior leadership?

Senior leadership buy-in is essential for procurement teams to drive the necessary cultural and procedural changes required to make a real difference.  Research has found that ESG can support cash flow by attracting customers with a more sustainable offering, as well as achieving better access to resources through stronger community and government relations. The research also found it can increase employee productivity and attract and retain quality talent by instilling a sense of purpose. 

Making the tangible benefits of implementing ESG into procurement operations clear to senior leadership is vital as it ensures any changes can be of a significant enough scale (backed by the right people) to make a difference.

How can businesses implement ESG in procurement?

Procurement leaders can overcome resistance to change by introducing new infrastructure in an unobtrusive way to quietly move people to new processes and make it a seamless transition for them. One way of doing this is introducing criteria for purchasing and ensuring purchases align with ESG principles.

For example, in the public sector, factoring in where organisations are buying from to ensure that purchases improve the economic, social and environmental wellbeing of their communities is of great importance. The 2023 Procurement Act, which is set to come into effect in early 2025, seeks to overhaul public procurement law in the UK by simplifying processes and giving a greater share of public sector supply opportunities to SMEs. This will have a significant impact, particularly as research found that in 2023, SMEs received only 20% of the public sector’s procurement spend.

To help champion local businesses and invest in their community, procurement leaders are now able to set filters that highlight local sellers. For example, by using Amazon Business’ ‘Buy Local’ filter, businesses are able to help local sellers to succeed and make more jobs available. Buying locally also has a wider impact on ESG as it means that there is less transport involved and therefore less of a carbon impact.

Similar to the ‘Buy Local’ feature, Amazon Business also has tools for sourcing environmentally friendly products, enabling businesses to easily filter searches to steer them towards products or suppliers that align with sustainability goals. By using these tools, businesses can ensure purchases align with ESG goals without causing an increase in workload for procurement teams. When these teams do get on board with these changes, it encourages middle management too by showing them ESG doesn’t have to impact their ever-crucial budgets.

In today's evolving business landscape, the integration of ESG principles in procurement is not just a moral imperative, but a strategic necessity. Companies that fail to embrace these practices risk being left behind as new regulations tighten and consumer expectations rise. It’s important that organisations can get all employees on board with putting ESG at the forefront of operations.

By prioritising ESG, organisations can unlock significant value including enhanced brand reputation, reduced costs, and long-term resilience. Those that choose to lead with ESG in procurement will not only comply with emerging standards, but will also thrive in a world that increasingly values sustainability and social responsibility.

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