The modern landscape of procurement is undergoing a significant transformation, shaped by increasing scrutiny regarding the origins of products and the ethical implications tied to their sourcing. With the interplay of rising tariffs and intensified consumer activism highlighting the necessity for ethical practices, procurement has morphed from a back-office function into a critical front line for brand reputation and exposure to operational risks. The European Union’s recent ban on imports linked to forced labour exemplifies the adaptive regulatory environment that businesses must navigate. Environmental, social, and governance (ESG) considerations have quickly transitioned from niche concerns to central themes that can influence a company’s overall strategic direction.
Leading this charge is Ashish Dhongde, a procurement veteran and distinguished author known for his insights on supply chain risk and sustainable procurement models. His extensive experience in sectors such as food, beauty, and packaging reveals a complex interplay between sourcing decisions, brand reputation, and cost structures. Dhongde asserts that effective procurement practices can either cement or undermine ESG commitments. He emphasises that supplier contracts, quality protocols, and raw material standards are integral to realising these objectives.
As procurement processes adapt to incorporate ESG factors, traditional models that prioritised price and availability are revealing their limitations in today’s context. Current procurement challenges extend beyond mere cost considerations to encompass carbon footprints, ethical labour practices, and geopolitical uncertainties. The evolution necessitates that companies reimagine how they structure supplier contracts, source materials, and maintain quality assurance.
The stakes are high; a report by Deloitte highlights that companies with advanced ESG-linked procurement practices tend to enjoy better access to green financing and greater customer loyalty. The shifting investor expectations also signify a broader cultural transformation, as stakeholders increasingly seek transparency in sourcing practices. Dhongde insists, “Procurement is where ESG commitments are either realised or lost,” underlining the department’s pivotal role in integrating sustainability into core business operations.
Importantly, this evolving procurement narrative is punctuated by a frequent misconception: sustainability must come at a higher cost. Dhongde counters this notion, providing examples from his career where ethical sourcing practices resulted in financial benefits rather than detriments. For instance, a collaborative effort led to the creation of a streamlined procurement model that maintained full traceability and ethical certification while reducing costs, demonstrating that sustainable sourcing can mitigate regulatory risks and enhance consumer trust.
The increasing consumer demand for sustainable practices makes this issue even more pressing. According to the Harvard Business Review, sustainably marketed products are increasingly outpacing their conventional counterparts across various categories, most notably in personal care and food sectors. As consumer expectations evolve, procurement teams are now tasked with building adaptable systems that anticipate future demands rather than merely reacting to current ones.
Looking ahead, the future of procurement is poised to develop a framework centred on accountability. New metrics are emerging, moving beyond traditional measures like price per unit to include lifecycle emissions, ethical sourcing certifications, and supply chain diversity. This shift towards a proactive approach requires companies to be transparent about their sourcing decisions, facilitating informed choices among consumers and fulfilling regulatory expectations.
Notably, compliance with upcoming regulations, such as the European Union’s Corporate Sustainability Due Diligence Directive, is imperative for businesses aiming to avoid reputational damage and heavy fines. This directive underscores the pressing need for companies to rigorously map their supply chains and ensure that human rights and environmental protections are woven into procurement practices.
As procurement continues to evolve, it serves not only as a mechanism for operational viability but also as a critical lever for driving sustainable practices across industries, pushing brands to operate with accountability and foresight.
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Source: Noah Wire Services
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