Understanding ESG: Why it matters for finance and procurement  

Environmental, social and governance (ESG) has become vital in shaping how businesses operate and are assessed. ESG is now a core consideration for those striving to achieve sustainable growth, reduce risk and meet rising expectations from regulators, customers and employees.

Why ESG is important for finance and procurement leaders

For finance and procurement leaders, integrating ESG is about building a resilient and responsible organisation that is prepared for the future.

As ESG has moved from the periphery to the core of business strategy, finance and procurement teams play a key role in embedding sustainability, transparency and accountability across the business. These leaders are critical in ensuring that ESG principles are adopted and actively drive positive business outcomes.

Meeting regulatory demands and avoiding penalties

Regulatory requirements around ESG are becoming stricter, particularly in the UK and Europe. Large businesses must disclose their carbon emissions and demonstrate how they manage ESG risk. This obligation will be expanding to smaller businesses.

For finance and procurement teams, compliance isn’t just about avoiding penalties – it’s about ensuring that ESG practices are properly embedded within the organisation, providing transparency and building trust with stakeholders. Proactively managing these obligations now will prepare businesses for future regulations and improve their operational resilience.

Building a more resilient and responsible business

Incorporating ESG principles strengthens long-term resilience. By focusing on sustainability, governance and social responsibility, businesses are better equipped to navigate challenges such as environmental risks, supply chain disruptions and black swan events. Businesses that are committed to ESG are often more adaptable and better positioned to thrive in uncertain environments.

Finance and procurement teams play a pivotal role in ensuring that ESG is embedded into operational processes. From reducing waste and emissions to sourcing ethically, the right ESG strategy helps create a business that is prepared for future challenges and opportunities.

Responding to customer and employee expectations

Consumers and employees are placing more emphasis on corporate responsibility. Today’s customers want to support businesses that align with their values, and employees are more motivated to work for companies that prioritise environmental and social causes. Ensuring that ESG principles are reflected in everyday operations is key to building stronger relationships with both groups.

Finance and procurement teams are at the centre of this transformation by integrating ESG into decision-making processes, from ethical supplier selection to transparent financial reporting, these teams help shape a purpose-driven business that resonates with customers and employees.

Unlocking operational efficiency and long-term growth

Integrating ESG is about more than meeting regulatory requirements or enhancing reputations – a strategic move that leads to tangible business benefits. Companies that focus on sustainability and strong governance often see efficiency gains, lower operational risks and more robust supply chains.

Finance and procurement leaders are essential in driving this change. Their involvement ensures that ESG principles are applied across every area of the business, helping to create long-term value that extends beyond financial metrics. ESG practices create a foundation for a more responsible and sustainable business model.

A strategic approach to ESG

By embedding ESG into business operations, businesses can unlock efficiencies, reduce risks and drive long-term success while contributing positively to society.

As ESG becomes more integral to business strategy, finance and procurement leaders must take proactive steps to ensure they are meeting standards and leading the charge in making meaningful, sustainable changes, creating a pathway to building a more resilient business for the future.