If you’re sourcing products, managing vendors, or overseeing contracts, Environmental, Social, and Governance (ESG) isn’t just something you “should think about someday.” It’s something you need to build into your procurement process right now.
It’s good for the planet and also gives your business or organization a tremendous advantage. Here’s why I encourage any serious team to integrate it…
Why Every Business Must Integrate ESG into The Procurement process
There are a ton of benefits why ESG needs to live at the center of your procurement strategy:
- There is MASSIVE and GROWING pressure from investors, regulators, and stakeholders to show real ESG action.
- Integrating ESG into procurement improves risk management across the entire supply chain.
- Contracts with ESG language make compliance easier (and protect your reputation).
- ESG-driven sourcing attracts higher-value clients and better RFP outcomes.
- Building a supplier network around ESG creates long-term cost savings and efficiency.
- ESG procurement is one of the fastest ways to meet your company’s sustainability targets without reinventing everything.
That said, here’s a quick breakdown of how ESG reflects in what we do at International Supply Partners:
- We’ve worked with some of the biggest companies out there to help them use recycled PPE kits across their teams. This way, they cut down on PPE waste while saving costs.
- We’ve helped clients hit their supplier diversity goals by connecting them with our certified, minority woman-owned business and vendor network.
- We’ve also rolled out products like the disability empowerment kits to support inclusive hiring. It’s part of how we build up local inclusive communities while making supply chains stronger.
This is just some of the initiatives we’ve carried out geared towards ESG. While it’s scalable and repeatable for your own several businesses, it’s important to reflect on where your business or organization currently stands.
How To Do An ESG Audit
While many teams rush to add ESG clauses into contracts, a 2023 Deloitte survey found that only 21% of procurement leaders consider their ESG data “comprehensive and reliable.” That gap makes it even more important to begin with a proper ESG audit. Here’s how to go about it.
1. Review Your Existing Vendor Contracts
Take a close look at your current supplier agreements and review them through an ESG lens. Ask yourself:
- Does the contract mention anything about reducing waste or emissions?
- Are there any guidelines around ethical labor practices, diversity, or inclusion?
- Is there a clear point of accountability if the supplier doesn’t follow through?
- Are you collecting any ESG data from your vendors?
If the answer to most of those above is vague, that’s okay. But you’ve just spotted an opportunity to strengthen your supply chain with an audit.
2. Look for Gaps and Weak Spots
A lot of contracts mention things like “ethical sourcing” or “environmental responsibility,” but don’t actually define what that means or how it’s tracked. That’s not helpful. So you want to look out for
- Vague language that can’t be measured
- Unclear reporting requirements or deliverables
- No consequences for non-compliance
- No timelines or follow-up structure
3. Use an ESG Audit Checklist
You don’t have to reinvent the wheel. At ISP, we use ESG audit checklists with our own clients to make this process simple and structured. A good checklist breaks things down and gives you a way to score your current vendors across:
- Environmental impact
- Labor and human rights
- Diversity and inclusion
- Transparency and governance
What to Include in Your Contracts
Once you’ve audited your existing contracts and identified the gaps, the next step is building in the kind of ESG clauses that drives action and not just checks a box. Here’s what that looks like in practice.
1. Environmental Clauses
This includes legally binding obligations on how suppliers handle their impact on the plant. Even small changes, written clearly into your contracts, can make a big difference over time.
What to include:
- Emissions tracking or reduction targets (e.g. require vendors to report monthly CO₂ output or commit to greener logistics)
- Use of recycled or biodegradable materials, especially in packaging, shipping, or PPE
- Waste reduction efforts (e.g. commitments to minimize landfill contributions or participate in circular systems)
Sample Clause:
“Supplier agrees to use packaging that is at least 60% recyclable or biodegradable, and to submit quarterly reports on packaging composition and disposal methods.”
2. Social Clauses
Social impact reflects in how people are treated across your supply chain and your contracts can help set the tone for fairness, inclusion, and community investment.
What to include:
- Clear labor standards (e.g. no forced labor, fair wages, safe working conditions)
- Supplier diversity requirements (e.g. percentage of spend with minority, woman, or disability-owned businesses)
- Community impact measures (e.g. local hiring targets or workforce development programs)
Sample Clause:
“Vendor must demonstrate annual engagement with certified diverse suppliers and report at least 15% subcontracting spend with women- or minority-owned businesses.”
3. Governance Clauses
This is the structure and accountability side of ESG. You want contracts that promote ethical behavior, transparency, and real oversight.
What to include:
- Anti-bribery and corruption language
- Requirements for ESG reporting or disclosure
- Audit rights (so you can verify ESG claims when needed)
Sample Clause:
“Contractor agrees to comply with the Company’s Anti-Corruption Policy, and must provide ESG compliance documentation upon request, including audit results or third-party certifications.”
Overall, the best ESG clauses are specific, in that they include numbers, timelines, and expectations that can be followed up on. The more clear and practical your contract language is, the more likely it is to be impactful.
Choosing the Right Suppliers
While you can write the best ESG contract clauses in the world, if your vendors don’t have the capacity to follow through, you won’t have anything to show for the effort. That’s why finding the right partners is equally as important as what’s written in the contract.
So what does an ESG-ready partner actually look like? For starters, they should be able to clearly explain how they track and report emissions, waste, and recyclables. Do they have documented labor standards and ethical sourcing policies? Are they upfront about how they hire, how they support communities, and how they maintain transparency in their operations. And importantly, be sure they’re not scrambling to meet ESG goals when asked but already have results to show for it.
Turning ESG Intentions into Action
Integrating Environmental, Social, and Governance (ESG) into procurement is a strategic move that not only enhances resilience but creates long-term value across the supply chain.
However, to make ESG effective, it must move beyond intention. It must be embedded in policies, reflected in contracts, and demonstrated through measurable outcomes. That shift from aspirational to operational is where the real impact happens. At International Supply Partners, ESG is a core part of how we work. And If your organization is ready to align procurement practices with ESG objectives, we invite you to connect with us. Together, we can build supply chains that are not only efficient and reliable but responsible.