{"id":9878,"date":"2023-07-20T15:37:57","date_gmt":"2023-07-20T13:37:57","guid":{"rendered":"https:\/\/www.onlineprocurement.com\/support\/esg-supplier-assessment-what-it-is-and-why-it-matters\/"},"modified":"2025-12-23T16:59:43","modified_gmt":"2025-12-23T15:59:43","slug":"esg-supplier-assessment-what-it-is-and-why-it-matters","status":"publish","type":"post","link":"https:\/\/www.onlineprocurement.com\/en\/trend-insights-e-procurement\/esg-supplier-assessment-what-it-is-and-why-it-matters\/","title":{"rendered":"ESG supplier assessment: what it is and why it matters"},"content":{"rendered":"

ESG supplier assessment: what it is and why it matters<\/h1><\/div>
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More and more companies are qualifying and evaluating their suppliers on the basis of compliance with environmental, social, and governance (ESG) sustainability criteria,<\/strong> in addition to the \u201ctraditional\u201d requirements aimed at ensuring the quality of supplies, such as technical capability or financial reliability.<\/p>\n

This is done by calculating the so-called ESG rating<\/strong><\/em>, a score that summarises the supplier\u2019s level of compliance with the three dimensions of sustainability in a single numerical indicator.<\/p>\n

Let\u2019s take a look at why ESG compliance is becoming increasingly important for procurement departments<\/strong> and how it can be effectively monitored using Online Procurement\u2019s supplier management<\/a> and vendor rating systems<\/a>.<\/p>\n<\/div>

Assessing suppliers for ESG: what it involves<\/h2><\/div>
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Conducting a sustainability assessment of the supplier base<\/strong> means analyzing and quantifying the existence of specific requirements in 3 main areas:<\/p>\n<\/div>\n<\/div>\n<\/div><\/div><\/div>

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Environmental<\/strong><\/h4><\/div>

Impact on the environment and land, measures to combat climate change, measures to reduce carbon footprint, sustainable use of resources, possession of certifications or eco-labels (e.g. SA8000, EU Ecolabel)<\/p>\n<\/div><\/div><\/div>

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Social<\/strong><\/h4><\/div>
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Employee relations in terms of working conditions, wages, safety, diversity, and equal opportunity, impact on local communities, respect for human rights and commitment to future generations<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div><\/div><\/div>

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Governance<\/strong><\/h4><\/div>
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Management structure and diversity, tax policies, anti-corruption measures, internal processes, competitive practices, business ethics and transparency<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Quantifying ESG factors requires practical tools<\/a> and a concerted effort by companies and their suppliers<\/strong>, especially when analyzing complex supply chains that span multiple geographies and\/or have a variety of sub-levels.<\/p>\n<\/div><\/div><\/div><\/div><\/div>

When and how to assess supplier compliance with ESG criteria<\/h2><\/div><\/div><\/div>
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Assigning a sustainability rating to a supplier can take place in two stages:<\/p>\n