Procurement leaders are prioritizing ESG, but gathering data is ‘increasingly painstaking’: report

Dive Brief:

Amazon said most businesses’ procurement leaders consider ESG factors in purchasing decisions but have difficulty finding sustainable suppliers, which hinders their sustainability goals, according to a report published last week.
The e-commerce giant, which partnered with KRC Research to survey over 3,000 decision-makers for its third annual procurement study, found gathering ESG and corporate social responsibility information from suppliers is “increasingly painstaking.” The report pointed to challenges in research and reporting in tandem with buyers feeling pressed for time.
The company, however, found 4 in 10 procurers consider ESG factors despite not having any responsible purchasing mandates. Further, 81% of respondents said they have mandates to purchase from sellers that may prioritize sustainability, local and small businesses, or historically disadvantaged groups.

Dive Insight:

Amazon said responsible purchasing is “both a requirement and an opportunity for organizations” and forming more sustainable supply chains and inclusive vendor ecosystems can support compliance with national or international environmental regulations. Additionally, such responsible purchasing also grants businesses a competitive edge by helping them develop more meaningful and value-based relationships with customers and employees, according to the report.

Eighty-nine percent of buyers and procurement leaders said they consider an organization’s ESG policies and diversity, equity and inclusion priorities when they make purchases. Thirty-three percent of respondents said they want to set or meet goals for ESG in their procurement function or prioritize buying from certain types of suppliers.

However, buyers also reported challenges in prioritizing responsible purchasing. Eighty-five percent of respondents said the difficulty of sourcing from suppliers who follow sustainable practices prevents their company from setting or achieving sustainability goals for procurement.

Such challenges are further amplified with unexpected changes in company-issued ESG mandates, especially since buyers often feel they are short on time and not provided sufficient purchasing data from suppliers. Respondents said it was important for suppliers to proactively communicate information about their products, standards and company operations to “better support buyers’ responsible purchasing efforts.”

The procurement report comes a month after Amazon joined a coalition of other major companies — including Apple, Nike, Meta, PepsiCo and REI Co-op — to launch the Clean Energy Procurement Academy, which aims to curb supply chain emissions by providing businesses with the technical skills and knowledge required to transition toward clean energy.