ESG in Procurement: Where Money Meets Mission

Do you know where your products come from, and what it costs to get them here?

With steep new tariffs disrupting supply chains and public pressure mounting on sourcing practices, procurement has become a frontline concern for brand reputation and exposure to risk, as well as a long-term consideration for many existing products and offerings. The EU’s recent ban on imports linked to forced labor is just one example of how rapidly the rules are shifting. Environmental, social, and governance considerations, or ESG, are not fringe issues anymore.

Ashish Dhongde, a seasoned procurement leader and author of Advanced Concepts of Risk Management and Resiliency in Supply Chain, has been at the center of these changes. His work, published across the SAARC and ICMR journals, explores supply chain risk, sustainable procurement models, and the operational realities of turning ESG commitments into practice. A veteran of the consumer goods industry, Dhongde has spent nearly two decades shaping sourcing practices in some of the world’s most closely watched product categories—food, beauty, and packaging—where sourcing decisions now influence brand equity as much as cost structures.

ESG in Practice: Why Traditional Models Are Breaking

Traditional procurement systems were built to optimize price, availability, and lead times. But those inputs don’t capture the risks that dominate today’s supply chains: carbon exposure, labor practices, raw material provenance, and geopolitical instability. In effect, the procurement model has outgrown its architecture.

Investor expectations are changing as well: ESG metrics are now factored into lending and equity decisions. Consumers, especially Gen Z and millennials, are pushing for radical transparency on sourcing. Governments are codifying ESG into trade law. According to Deloitte, firms with mature ESG-linked procurement practices are better positioned to secure green financing and build customer loyalty across premium segments.

“Procurement is where ESG commitments are either realized or lost,” says Dhongde. “The supplier contracts, the quality protocols, the raw material standards—all of those things live in procurement systems.”

This change is forcing companies to rethink how supplier contracts, materials sourcing, and quality protocols are structured. For example, Dhongde has led initiatives to integrate post-consumer recycled materials into high-volume packaging formats. Rather than a single operational tweak, these projects required operation-wide adjustments, from navigating material inconsistencies to addressing supply gaps in the U.S. recycling infrastructure. His teams built robust qualification protocols that could support broader adoption of sustainable inputs across product lines. These efforts demonstrate what effective ESG looks like in practice: a comprehensive, cross-functional reengineering of how a company sources its materials.

The Price Tag: The Misconception About ESG Costs

One of the most persistent myths in procurement is that sustainability inevitably costs more. That’s rarely true in the long run—and increasingly, it’s not true in the short term either.

Dhongde points to initiatives where ethical sourcing practices also benefitted the bottom line. In one example, he facilitated a multi-party agreement that consolidated certification premiums, without compromising full traceability and ethical certification. The result was a leaner, more replicable procurement model that others have since modeled.

The economics are straightforward: sustainable sourcing can lower regulatory risk, reduce volatility in raw materials, and create consumer goodwill that translates into pricing power. A recent analysis by McKinsey found that companies with ESG-aligned procurement systems outperform on both resilience and long-term cost control. In Dhongde’s words: “The cost of preparedness is almost always lower than the cost of improvisation.”

The Consumer Effect: When Procurement Becomes a Brand Issue

While regulations and investor scrutiny matter, the most consistent pressure on procurement teams comes from consumers. Harvard Business Review reports that sustainably marketed products have outpaced conventionally marketed products in nearly every consumer category. This trend holds across sectors—but it’s especially sharp in personal care and food, where ingredient sourcing is closely tied to consumer identity, health, and values.

This has material consequences for sourcing. Dhongde has led efforts to develop alternative ingredient systems for plant-based or allergen-conscious products. These efforts required working with suppliers whose technologies were still evolving, and demanded a deep understanding of both formulation science and consumer expectations.

“In the past, procurement responded to demand signals from the business,” Dhongde notes. “Now, the most forward-looking teams are building upstream systems around what the consumer will expect three years from now.”

The Next Procurement Model: Building for Accountability

As ESG has entered the mainstream, the language of procurement has expanded. The old metrics—price per unit, lead time, minimum order quantities—are being supplemented by new ones: lifecycle emissions, ethical certifications, traceability, supplier diversity, and risk-adjusted sourcing.

What began as a reactive shift—responding to scandals, disruptions, and activist pressure—is evolving into industry standards discipline. According to Dhongde, the future of procurement lies in layered accountability: systems that evaluate suppliers on performance and ethics, contracts that embed resilience and transparency, and processes that make trade-offs explicit.

“You need to be able to explain why you chose this supplier, this material, this contract,” says Dhongde, “because that’s what consumers and regulators will ask.”