Key takeaways

• 89% of firms now include ESG criteria in supplier selection and contracts, making sustainability a strategic procurement priority.
• 50,000+ companies in Europe are required to report under CSRD, yet only 42% feel confident in meeting compliance requirements.
• 60% of UK organisations have faced ESG-related supply disruptions, highlighting the operational risks of poor supplier sustainability.
• 75% of professionals cite supplier engagement as a top challenge; collaboration is key to ESG success.
• Scalable, data-driven tools like Avetta’s ESG solution help suppliers and clients streamline reporting and strengthen performance.

Supply chains are under unprecedented pressure.

From geopolitical disruptions and climate events to rising regulatory demands, procurement and ESG leaders are navigating a complex web of risks and expectations.

But amidst this uncertainty, one truth is clear: organisations are only as sustainable as their supply chains.

The Rising Stakes of ESG in Procurement

Findings from Verdantix reveal that 89% of firms now embed ESG and sustainability criteria into supplier selection and contracts. This shift reflects a growing recognition that ESG is no longer a peripheral concern; it’s a strategic imperative.

Procurement teams are being called upon to ensure not just cost efficiency, but ethical sourcing, environmental stewardship, and social responsibility across every tier of the supply chain.

In fact, 54% of procurement teams now prioritise ESG and sustainability as a top KPI, reflecting a shift from traditional metrics like cost and delivery to values-driven decision-making. This evolution demonstrates the growing strategic role of procurement in driving sustainability across the business.

However, the path to ESG maturity is fraught with challenges. Suppliers, especially small and medium-sized enterprises (SMEs), face mounting pressure to provide sustainability data, often without the digital infrastructure or expertise to do so effectively.

40% of sustainability professionals have discontinued supplier relationships due to poor ESG performance. The message is clear: ESG due diligence is no longer optional.

Regional Complexity and the Legal Landscape

Europe’s diversity — spanning over 100 countries — brings a patchwork of legislation, cultural norms, and operational realities.

From the UK’s Environment Act to Germany’s Supply Chain Act (LkSG) and the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), companies must stay ahead of a rapidly evolving legal landscape.

The scale of regulatory impact is significant. Around 50,000 companies in Europe are now required to report under CSRD, and more than 100 countries outside the EU are expected to have companies cross CSRD thresholds for mandatory reporting. Yet only 42% of companies required to report are fully confident in meeting the new sustainability requirements — revealing a major readiness gap.

This complexity demands localisation, adaptability, and scalable solutions that work across geographies and supplier types.

Supplier Pushback: A Real Barrier to Progress

SMEs — who make up 99% of UK and EU businesses — often struggle to understand why ESG data is being requested, especially when they’ve had long-standing relationships with clients based on safety or quality alone.

The disconnect between client expectations and supplier capabilities is a major barrier to ESG progress.

This tension is already manifesting in operations: 60% of UK firms have experienced ESG-related supply disruption in the last two years, highlighting how sustainability gaps in the supply chain can directly impact business continuity.

To bridge this gap, scalable and supportive tools are essential. Suppliers need clear guidance, simplified language, and the ability to take ownership of their ESG journey without relying on costly consultants or generic internet templates.

Data-Driven Insights: The Game Changer

To meet these demands, leading organisations are turning to data-driven tools that offer clarity, consistency, and control. Platforms like Avetta’s ESG solution are helping clients and suppliers alike to:

• Map the full supply chain, including Tier 2 and beyond, for comprehensive visibility.
• Centralise ESG data collection, reducing duplication and improving accuracy.
• Benchmark and improve supplier performance, using year-on-year insights and transparent scoring.
• Streamline reporting, with automated dashboards and regulatory-aligned questionnaires.
• Support suppliers with scalable entry points, such as self-evaluation tools and simplified guidance.

These capabilities not only reduce the reporting burden but also empower suppliers to build credibility, win more work, and future-proof their operations.

Collaboration is Key

Verdantix’s data shows that 75% of supply chain professionals cite insufficient supplier engagement as a top challenge to ESG performance. This underlines the need for proactive collaboration. Procurement leaders must move beyond transactional relationships and foster partnerships that support suppliers in their ESG journey.

This means engaging suppliers early, providing clear expectations, and offering tools and training that help them succeed.

It also means recognising the diversity of supplier capabilities and tailoring support accordingly — especially for SMEs who may fall outside the scope of legislation but still play a critical role in ESG compliance.

Leading with Confidence

Ultimately, ESG due diligence is about more than compliance; it’s about leadership. By leveraging data-driven insights and tailored tools, procurement and ESG professionals can transform complexity into clarity. They can build resilient, responsible supply chains that not only meet today’s expectations but set the standard for tomorrow.

As sustainability becomes a defining factor in business success, those who lead with confidence and collaborate with purpose will be the ones who shape the future.

Turn ESG Complexity Into Clarity

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Avetta is a SaaS software company providing supply chain risk management solutions. Avetta’s contractor management platform is trusted by over 130,000 clients and suppliers in over 120 countries. Visit Avetta.com to learn how our solutions help businesses reduce risk and operate with confidence.