About 60%-80% of ESG footprint of any company comes from its suppliers. Over the last few years a number of companies have enhanced focus on responsible capitalism, and have thereby carved out roles of Chief Sustainability Officer (CSO). A CSO is a board position reporting directly to the CEO with focus on ensuring that the external perception and reality of a company’s activities are aligned to regulatory requirements, customer expectations/unexpressed objectives and belief of local communities that the company is indeed working towards the benefit of communities where they operate.

Considering that in most organizations, procurement has a seat at the table regarding any topic related to suppliers, CPOs are partnering extensively with the CSOs to further the ESG ambitions of organizations. A commonly mistaken perception is that sustainability has a premium that suppliers command and thereby, requires an investment commitment from the organization. Any critical negotiation with some of the key suppliers revolves around price benchmarking and traditionally suppliers have gotten away with a non-negotiable sustainability premium beyond the market price benchmarks. However, with increasing innovation and focus, focus on sustainable solutions/products, often results in reduced costs and thereby prices. This aligns with the core procurement objectives of driving strategic cost differentiation for the organization as well as forms the core of partnership with the CSOs.