ESG, which stands for Environmental, Social, and Governance, is a term that has gained prominence in the corporate world in recent years.

These three pillars refer to environmental, social, and governance issues that companies need to take into account to be considered sustainable and responsible.

In the procurement sector, ESG plays a fundamental role, as a company’s purchasing decisions can affect the environment, local communities, and human rights. That’s why more and more companies are incorporating ESG criteria into their procurement policies.

Environmental

In the environmental pillar of ESG, companies need to take into account their carbon emissions, use of natural resources, waste management, among other factors. When a company decides to buy from a supplier that does not consider these factors, it may be contributing to environmental degradation.

Therefore, it is important for companies to consider environmental criteria when choosing their suppliers. For example, it is possible to choose suppliers that use renewable energy sources, that have environmental certifications, that have clear waste management policies, among other measures.

Social

In the social pillar of ESG, companies need to take into account the impacts that their purchasing decisions can have on local communities. For example, if a company decides to buy from a supplier that uses child labor, it is contributing to the violation of human rights.

Therefore, it is important for companies to choose suppliers that respect human rights, that do not use child or slave labor, that have clear diversity and inclusion policies, among other measures.

Governance

In the governance pillar of ESG, companies need to take into account transparency and ethics in business. This includes adherence to norms and regulations, transparency in relationships with suppliers, customers, and stakeholders, among other factors.

When companies choose suppliers that do not have good corporate governance, they risk getting involved in scandals and harming their reputation. Therefore, it is important for companies to choose suppliers that have a good reputation, that adopt good governance practices, and that are in compliance with applicable norms and regulations.

The importance of ESG in the procurement sector is increasing, as companies need to take into account the impacts that their purchasing decisions can have on the environment, local communities, and human rights. Incorporating ESG criteria into their procurement policies can bring benefits both for companies and for society as a whole.

Therefore, it is important for companies to invest in training and capacity building for their procurement professionals, so that they are prepared to evaluate and select suppliers based on ESG criteria.