In the rapidly evolving world of corporate procurement, sustainability and ESG (Environmental, Social, and Governance) have moved from buzzwords to business imperatives. Recent conversations with industry leaders, as captured in SAP’s “The Future of Procurement” podcast, reveal how organizations are navigating this complex landscape—balancing regulatory demands, stakeholder expectations, and the pursuit of competitive advantage.
We had a conversation with Japen Holist, Head of Sustainability Go-to-Market in North America at SAP, on the latest ESG and Sustainability Trends in Corporate Procurement. Japen helps define what ESG means for corporations and draws on his own experiences to explain why procurement plays such a large role in corporate sustainability efforts.
Is sustainability just about regulatory compliance? Why does technology play such a large role in corporate ESG initiatives, and how can improving ESG measures lead to competitive advantages?
ESG: Beyond Compliance to Strategic Value
ESG is no longer just about regulatory compliance; it’s a framework for evaluating intangible drivers of company value, from brand reputation to future growth potential. The shift from shareholder to stakeholder capitalism—championed by the World Economic Forum—means companies must consider the impact of their actions on employees, suppliers, communities, and the environment. While some argue that ESG initiatives can cut into profits, forward-thinking leaders see them as opportunities to differentiate, build trust, and unlock new markets.
Sustainability Trends in Procurement
Procurement organizations are at the forefront of driving sustainability. Key trends include:
- Sustainable Sourcing: Companies are prioritizing responsible sourcing, green buying, and supplier diversity. Real-world examples, like Patagonia’s repair program, show how sustainable practices can foster customer loyalty and brand advocacy.
- Regulatory Compliance: With increasing regulations, especially in regions like Europe and California, organizations must adapt quickly or risk falling behind. Most companies respond reactively, but proactive compliance can be a market differentiator.
- Social Impact: Labor rights, fair treatment, and community engagement are gaining prominence. Initiatives like the Uyghur Force Labor Protection Act highlight the need for collaboration—even among competitors—to solve systemic supply chain challenges.
- Governance: Transparency and accountability are now critical. Ethical behavior, supplier audits, and risk assessments are becoming standard practice, moving procurement from adversarial negotiations to collaborative partnerships.
The Circular Economy: Mimicking Nature for Competitive Advantage
Perhaps the most transformative trend is the rise of the circular economy. Instead of the traditional linear model—extract, produce, dispose—companies are reimagining processes to eliminate waste and reuse resources. The story of Interface Carpet, which redesigned its products and processes to mimic nature, demonstrates how circularity can drive down costs, reduce environmental impact, and create lasting competitive advantages.
Data, Technology, and the Road Ahead
Sustainability is increasingly a data problem. Accurate measurement of carbon emissions, water usage, and other metrics is essential for managing risks and meeting regulatory requirements. Technology platforms, especially ERP systems, are enabling organizations to automate data collection and analysis, paving the way for AI-driven decision-making. As reporting standards become stricter and supply chains more complex, those who embrace transparency and collaboration will thrive.
Conclusion: Embracing Change for a Sustainable Future
The future of procurement is bright but challenging. Success will require a mindset shift—viewing sustainability not as a cost, but as a catalyst for innovation and growth. By harnessing data, fostering collaboration, and embracing circularity, organizations can turn ESG from a regulatory hurdle into a strategic asset. As the landscape continues to evolve, now is the time for procurement leaders to reflect, adapt, and lead the way toward a more sustainable and resilient future.
Let’s connect!
How is your organization approaching ESG and sustainability in procurement? Share your experiences, challenges, or success stories in the comments—or reach out directly to continue the conversation.
🌐OpenSAP:
https://podcast.opensap.info/future-of-procurement/2025/04/29/episode-016-exploring-esg-sustainabili...
https://podcast.opensap.info/future-of-procurement/2025/05/06/episode-017-exploring-esg-sustainabili...
🍎Apple Podcasts: Parts 1 & 2
https://podcasts.apple.com/us/podcast/the-future-of-procurement/id1764078646?i=1000705402905
https://podcasts.apple.com/us/podcast/the-future-of-procurement/id1764078646?i=1000706498083
🎵Spotify: Parts 1 & 2
https://open.spotify.com/episode/7Dxy7pFpTY8xZuY7t4xis3?si=DzyDYYvsQ3CFZQSfshfaXA
https://open.spotify.com/episode/4oR1YXLcbVM4anVxz4MYyY?si=CGvFdo85RHiPy27pTbWrUw
#Procurement #Sustainability #ESG #CircularEconomy #SupplyChain #BusinessTransformation #SAP #Leadership #Innovation #SpendManagement
Bluesky
