Trakti Smart "Legal" Contracts Blog

Why ESG is important for procurement and supply chain future

on January 19, 2023

Environmental, social, and governance (ESG) is currently a contentious issue for both employers and employees. ESG reporting is both a moral requirement and a wise commercial decision. Particularly Gen Z and Millennial workers are aware of ESG issues and how they impact both existing and future workplaces. It is crucial to comprehend the highest degree of ESG, supply chain ESG, and the reasons why ESG is important for procurement and supply chain future.

What is Supply Chain ESG?

ESG throughout the supply chain will become more relevant and useful as businesses delve deeper. The majority of a manufacturer’s ESG footprint is typically hidden deep inside their supplier chain and not as a result of direct activities in many business verticals.

Therefore, the best outcomes can be achieved by developing initiatives and solutions that are closely related to the supply chain. A concept called supply chain ESG takes into account your company’ full environmental footprint.

It entails delving deeply into the supply chain to comprehend where supplies originate, who handles them, and the route they follow from all over the world to processing facilities at your sites.

Furthermore, emphasising supply chain ESG provides a business more insight into the sources and methods of material sourcing.

For instance, a supply chain ESG framework enables a company to ensure that materials aren’t made using child labor, conflict minerals, or in a way that compromises the sustainability of the environment.

When you think why ESG is important for procurement and supply chain future, think how effective supply chain ESG solutions enable a manufacturer to both have a beneficial impact on the environment and reduce risk by foreseeing potential supply chain shortages or redesigns. Manufacturers who implement effective ESG initiatives may find and keep top talent.

Why Start The Journey With Your Supply Chain?

The supply chain and ESG are intimately connected. This is due to the fact that manufacturers are unable to fully comprehend their own ESG status without taking into account the impact of their suppliers or taking a close look at their supply chain.

Given that the supply chain makes up a sizable component of a manufacturer’s ESG footprint, any subsequent initiative must be linked to it.

Additionally, a manufacturer’s extensive network of partners who provide parts, materials, chemicals, service, and other crucial components must be considered when enhancing a company’s ESG position. It will be crucial to make sure that measures are put in place to solve these concerns as more manufacturers and people pay attention to the significance of ESG.

You may reduce risks and develop significant ESG programs that are proactive and transparent with a thorough understanding of your supply chain and the numerous difficulties that could impact anything from market access to reputation.

How Trakti Can Help

Trakti, the industry pioneer in contract automation, can help you by giving a comprehensive view of your supply chain. Deep visibility is provided by automatic contract negotiation and management platform integrated in Blockchain, increasing openness throughout your whole supply chain.

It enables you to access the areas where dangers are concealed past your direct suppliers.

Please feel free to get in touch with us or book a demo if you have any questions about the Trakti Platform or why ESG is important for procurement and supply chain future.

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