Organizations' commitment to sustainability and how companies deal with environmental, social and governance (ESG) aspects increase the capacity for innovation, new business opportunities and greater competitiveness.
Proof of this is the growing interest of investors, partners and consumers. A study on the subject EY Global Reporting and Institutional Investor Survey, released at the beginning of 2023, shows that 78% of investors believe that companies should direct their efforts and resources towards ESG, even if this reduces profits in the short term.
Another piece of data that confirms the growing relevance of ESG is the Corporate Sustainability Index (ISE), from B3. The portfolio brings together shares of companies committed to social and environmental impacts. In 2023, the ISE has a record number of participants: 70 companies and 37 sectors of the economy. Together, the companies total more than R$2 trillion in market value.
ESG issues and procurement must go hand in hand towards innovation
To remain competitive and well-regarded in the market, companies will have to focus on finding solutions that expand their sustainable performance in the social, environmental and economic pillars.
This means that sustainability must be intrinsic to all company operations, especially in the supply chain, with the choice of partners that are responsible and environmentally correct.
The involvement of consumers, employees, investors and communities is also growing, and the trend is for people to become increasingly engaged, demanding that companies act responsibly.
For this reason, companies need to have an innovative bias, regardless of the sector in which they operate, and this must now be intrinsically linked to ESG. But it is worth remembering that being sustainable today goes beyond the environmental concept: it is how businesses respond to changes in society.
There is a great challenge in adapting the business to a more complex environment, especially for leaders. The path can be less arduous when there is commitment from the entire organization. And of course, in this sense, the purchasing area carries a great responsibility.
To achieve sustainable potential, it is necessary to consider strategies in addition to managing risks related to suppliers.
It is necessary to incorporate sustainability as a true business strategy, viewing the topic as a driver of innovations in purchasing.
In other words, finding in society's problems what can be transformed into a business opportunity can generate not only a positive impact for people, but also a movement that leverages business growth.
How to engage your partners with ESG and innovation issues?
Investing in the innovation journey and having suppliers as part of the strategy is a matter of survival. And, to start, it is possible to gradually improve the level of maturity in supplier selection and management. To be hired, partners must meet at least the legal and technical requirements required by regulations and standards.
Once these requirements are delivering a desirable result, it is time to challenge suppliers with regard to innovation, inviting them to participate in the product transformation process, because new solutions are not only within organizations.
A practical example: when looking for new packaging, company “supplier A” has a more competitive cost than “supplier B”, but the latter has a research laboratory and collaborative processes. The chance of innovating is greater with “supplier B”, which can increase the profit and competitiveness of the business.
And in this path, technology is a great ally for the purchasing area, mainly because there is a complexity in the level of information from partners that must be managed continuously and in a transparent and integrated way.
ESG and supplier management: how can technology be an ally?
Managing suppliers and engaging them with sustainability issues is a challenge for most companies. In addition to issues involving price, quality and delivery, other concerns must be included in the business strategy, such as the impact of activities on the environment, supply shortages and risks of joint fiscal and labor liability.
To manage all variables, including ESG issues, and reduce related risks, it is essential to rely on technology.
Supplier management practices, such as registration, approval, evaluation, inspection and third-party management, can be carried out in a Supplier Relationship Management (SRM) solution, facilitating the purchasing area's engagement with ESG.
Check out the main benefits of a Supplier Relationship Management (SRM) solution:
- Management and control of all suppliers and outsourced services
- Economy, agility and compliance in supplier and third-party management
- Building sustainable and trustworthy partnerships
- Collaboration between business partner companies
- Verification of supplier compliance
- Partner assessment throughout the supply process
- Reduction of risks related to suppliers and third parties
To find out how Mercado Eletrônico's Supplier Management solution can help your company, ask our experts to contact you. Simply click here.
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