What is Sustainability?

How ESG relates to sustainability in procurement

Sustainability and Environmental, Social, and Governance (ESG) are related but distinct concepts, especially when viewed from a procurement perspective. Both terms encompass an organisation’s attitudes to ethical factors such as the environment and people.

Sustainability in procurement refers to the idea of conducting business operations to meet present needs without compromising the ability of future generations to meet theirs. In procurement terms, sustainability considers the role of supply chains towards an organisation’s long-term resilience. This involves sourcing goods and services to minimise negative impacts on the environment, society, and the economy. This includes considering factors such as reducing waste, minimising carbon footprint, using renewable resources, ethical sourcing, and ensuring fair labour practices within the supply chain.

ESG in procurement is a set of standards for a company’s operations that investors use to evaluate its resilience and sustainability. ESG encompasses a broader scope beyond environmental concerns, including social and governance aspects. In procurement, ESG factors are incorporated into the decision-making process to assess the environmental impact of sourcing materials or services, the social implications concerning the workforce or local communities, and the governance practices of suppliers. ESG is a valuable risk management tool organisations can use to screen their environmental and social impacts and assess governance practices within the business. ESG is similar to corporate social responsibility (CSR). CSR refers to the overall big picture of organisational values and goals, whereas ESG encompasses the more measurable activities and their application at a practical level.

Sustainability is and should be embedded in all organisations and is the most seismic change and challenge for the procurement and supply profession. The world is heating up and vital resources such as precious minerals, water and food are becoming scarce, not to mention the wildfires, droughts and floods that are now regular occurrences. Organisations are increasingly thrust into the spotlight from government, campaigners and customers, so it’s more important than ever that supply chains are sustainable to protect the future of our planet.

CIPS ESG/Sustainability Model

The CIPS Sustainability model demonstrates how good governance underpins an organisation's sustainability strategy and ambition. Sound governance requires a sustainability culture that is strengthened with increased transparency and ethical practices, along with a robust approach to risk management. This structure provides a bedrock for targets and initiatives that deliver on social, economic and environmental factors that support the future of the organisation, the planet and society. An organisation's targets are often linked to the UN Sustainable Development Goals selecting the goals where they have the most influence and impact.

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What are Sustainable Development Goals (SDGs)?

In 2015 all United Nation Member States adopted the 2030 Agenda for Sustainable Development providing a roadmap for world peace and prosperity for people and the planet, now and in the future. The 17 Sustainable Development Goals (SDGs) are an urgent call for action for global partnership in all developed and developing countries. They understand that combating poverty and other forms of deprivation requires policies that enhance health and education, lessen inequality, promote economic growth, combat climate change, and fight to protect our oceans and forests.

The 17 Sustainable Development Goals can be categorised into the five P’s:

• People
  This pillar is focuses on fostering inclusion, to end poverty and hungers in all forms and to ensure that all human beings can fulfil their potential in a healthy and inclusive environment.
• Planet
  The planet focuses on engaging in climate action. Protecting the planet from degradation, managing natural recourse and take urgent action climate change to support present and future generations.
• Prosperity
  Prosperity is all about supporting growth, jobs and reducing poverty, particularly in low income and developing countries to ensure everyone has fulfilling lives.
• Peace
  There can be no sustainable development without peace, and vice versa. It’s about strengthening institution and governance to tackle corruption, so societies are free from fear and violence.
• Partnership
  Based on global solidarity through the participation from all countries, stakeholders and people.

Each of the 17 SDGs recognises that development must balance social, economic, and environmental sustainability and that actions in one area will have an impact on results in others. The SDGs can be defined as company targets and aspirations, which may be a catalyst for business success by assisting organisations in identifying important risks, creating an efficient business model, and putting a selected growth plan into action.

For more information on the 17 SDG’s please click below:

Visit the 17 goals

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