ESG focus rising among Australia & NZ procurement leaders

A new report has found that procurement leaders in Australia and New Zealand are increasingly viewing Environmental, Social, and Governance (ESG) factors as key components for strategic growth.

The "Future-Focused Procurement: The Rise of ESG" report, commissioned by OneAdvanced and developed by insights consultancy The Research Agency, gathered insights from over 600 procurement leaders across various sectors including education, government, retail, manufacturing, distribution, and healthcare. The report sheds light on evolving perspectives around ESG's role in procurement.

Adam Bowles, Managing Director for Australia and New Zealand at OneAdvanced, emphasised the importance of the findings in addressing the challenges of ESG reporting within procurement. "The report shows why ANZ's procurement leaders need to have a seat at the boardroom table," he stated. "They are crucial for bridging the gap between ESG intentions and actions and are actively seeking guidance on effective ESG prioritisation and integration."

The report revealed that there remains some uncertainty concerning ESG practices, with 57 per cent of organisations viewing ESG adoption as a moderate to high priority. Conversely, 13 per cent were unsure of their organisation's prioritisation of ESG, and only 33 per cent indicated having adopted such practices.

Damien Sheehy, Global Head of Procurement at Flight Centre, participated in the research interviews and shared perspectives on the procurement sector's evolution. "ESG is a competitive advantage in procurement, positioning companies to win more business," noted Sheehy.

The research highlighted that while the balance between servicing and strategy in procurement functions remains stable, Australia has seen a shift towards a more strategic approach compared to New Zealand, with 43 per cent for Australia and 35 per cent for New Zealand.

Rohan De Silva, Head of Procurement at MECCA Brands, acknowledged a transformation in procurement's role within organisations. "As procurement evolves and matures, I expect it will transform itself from a back-office support function to a partner that also focuses on business development opportunities," he remarked.

The report indicated that while strengthening business outcomes was previously the top priority for procurement to be an optimal business partner, improving efficiency and productivity has now taken precedence.

Adam Bowles summarised the shift in procurement responsibilities. "From managing suppliers, reducing risk and increasing efficiencies, the responsibility of procurement teams has shifted strategically. It is not just about what you spend; it's about how you spend it to drive better outcomes for your organisation," he concluded.

Additional findings from the research included that procurement professionals operating in a strategic capacity report higher satisfaction levels (31 per cent) than those in a servicing role (22 per cent). Furthermore, 58 per cent of organisations indicated compliance and ethics practices as the most widely adopted area of ESG.

Regarding the motivators behind ESG adoption, the top driver at 37 per cent was doing the "right thing," followed by regulation at 33 per cent, leadership inspiration at 32 per cent, improving operational efficiency at 30 per cent, and reducing reputational risk at 29 per cent.