Dive Brief:
- Amazon Business 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’s subsidiary, which surveyed over 3,000 global buyers for its third annual procurement study, found gathering ESG and corporate social responsibility information from suppliers is “increasingly painstaking,” as challenges in research and reporting rise 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 Business 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.
“We are entering a new era of smart business buying where senior leaders are understanding the impact procurement can have on efficiency and overall company success,” Alexandre Gagnon, vice president of Amazon Business Worldwide, said in a press release.
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.”
To combat lack of information on suppliers’ ESG practices, Chris Costello, Amazon Business’ general manager, said the company’s online purchasing tool offers buyers a platform to communicate directly with suppliers and obtain key ESG information needed to meet their responsible purchasing goals.
“With the right tools in place, procurement teams can help their organizations tackle goals related to environmentalism, diversity, and more,” Costello said.
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.
The goal of the new initiative is to rapidly advance clean energy procurement, address scope 3 emissions and decarbonize global supply chains through the collaboration of these corporations and suppliers.
Clarification: The story has been updated to reflect that Amazon Business, a subsidiary of Amazon, released the report.
