Procurement’s Moment of Truth: From Compliance to Strategic ESG Leadership
- Kerstin Schmitz
- Jul 30
- 10 min read
A Role Redefined by Regulation and Responsibility
The role of procurement is undergoing a quiet, yet radical, transformation. While historically framed by efficiency metrics and cost management, procurement teams are now at the centre of sustainability, transparency, and resilience. They are actively engaging with multi-tier supplier networks to verify environmental and social performance, seamlessly integrating evolving regulatory requirements into operational workflows, and pioneering the delivery of traceable, product-specific sustainability data. This robust data foundation confidently meets both legal obligations and stakeholder expectations.
This evolution gains momentum from a powerful wave of interconnected legal frameworks that are raising the bar for sustainability and value chain transparency. Together, these regulations are shaping a shared vision for how responsible sourcing and verifiable sustainability data can become a competitive advantage. The EU’s Corporate Sustainability Due Diligence Directive (CSDDD), the German Supply Chain Act (LkSG), France’s Duty of Vigilance Law, the Ecodesign for Sustainable Products Regulation (ESPR), and the EU Battery Regulation collectively establish a powerful new paradigm for businesses across their entire value chains. [1] [2] [3] [4] From upstream raw material sourcing to downstream product end-of-life, these directives champion transparency, foster auditable risk mitigation, and drive measurable product-level impact.
At the same time, climate volatility, shifting geopolitical landscapes, and growing investor and consumer expectations are reinforcing the importance of resilient and sustainable supply chains. [5]
This dynamic environment opens the door to a new question: How can procurement teams extend their role to strategic enablement and help shape a future-oriented enterprise?
Procurement Is About People, Not Just Processes
Much of the discussion around procurement transformation centers on tools, systems, and regulatory workflows. But at its core, procurement is driven by people — and their motivations matter.
A 2025 Verdantix survey of manufacturers in Europe and North America found that over 70% of procurement professionals are prioritizing digital transparency tools to enhance resilience and build stakeholder trust. [5] This signals a broader ambition: procurement is increasingly seen as a lever for efficiency, compliance, corporate responsibility, and long-term value.
Importantly, this shift reflects a personal dimension. Many professionals — particularly from younger generations — are eager to align their work with their values. They bring a sense of purpose to navigating the complexities of global supply chains and see ESG engagement not just as an obligation, but as a way to shape meaningful change. [6] As procurement teams collaborate across functions and data environments, they are discovering new ways to drive innovation and amplify their strategic impact. [7]
Compliance as a Catalyst for Excellence: Setting a New Baseline
Today’s evolving regulatory landscape actively builds a robust and continuously strengthening foundation for proactive engagement and heightened accountability. It transforms basic compliance into a spring-board for operational excellence and strategic advantage.
CSDDD and LkSG: These directives champion human rights and environmental due diligence that extends across the entire value chain. For procurement, this signifies a powerful mandate to proactively identify, assess, prevent, mitigate, and effectively remediate adverse impacts, reaching far beyond initial Tier 1 engagements. Under CSDDD, this includes a robust due diligence policy, sophisticated risk management systems, transparent grievance mechanisms, and a clear climate transition plan, reinforcing a commitment to responsible practices. [8] [9] [10] Note: The current German government coalition has announced plans to repeal the LkSG upon the full implementation of the CSDDD, aiming to replace it with legislation that streamlines the CSDDD's requirements and eliminates the distinct LkSG reporting obligation.
French Duty of Vigilance Law (Loi de Vigilance): As an early pioneering legislation, this law requires large French companies to establish, implement, and publicly report on a vigilance plan designed to identify and prevent severe human rights abuses and environmental damage resulting from their own activities, those of their subsidiaries, and their direct and indirect suppliers with whom they have an established commercial relationship. For procurement, this means actively contributing to risk mapping, implementing assessment procedures for suppliers, and taking appropriate measures to mitigate identified risks, with potential for civil liability in case of non-compliance leading to harm. [11] [12]
ESPR and the Digital Product Passport (DPP): This forward-looking regulation elevates the importance of traceable product sustainability metrics — including carbon intensity, durability, and recyclability — as an integral component of the emerging DPP. For procurement, this translates into an exciting opportunity to ensure suppliers can provide granular, verifiable, and harmonized product data to populate these passports, effectively transforming sustainability attributes into a foundational sourcing criterion and competitive differentiator. [4] [13]
EU Battery Regulation: This regulation introduces specific due diligence obligations for critical raw materials like lithium, cobalt, nickel, and natural graphite used in batteries. Procurement teams managing these materials are empowered to establish comprehensive due diligence policies, robust risk management systems, and ensure exemplary transparency and traceability, including precise carbon footprint declarations for batteries. This proactive approach not only assures compliance but also showcases supply chain leadership. [14]
These initiatives collectively champion transparency and verifiable data. Consequently, structured, product-level data is rapidly ascending from a desirable feature to an indispensable component of visionary procurement strategies and a foundational requirement for market access.
In sectors like chemicals and pharmaceuticals, renowned for their intricate value chains and diverse product portfolios, this marks an exhilarating turning point. Leading firms are now successfully integrating advanced product sustainability solutions, including comprehensive lifecycle assessment (LCA) and product carbon footprint (PCF) capabilities, to meet the rigorous demands of new regulations and strategic goals. For instance, WACKER has already published PCFs for over 3,500 products, showcasing a commitment to comprehensive transparency. Similarly, Covestro is driving efficiency by automating their full LCAs, a key step in streamlining PCF calculation and supplier engagement workflows. These efforts, aligned with the TfS PCF Guideline [15], demonstrate a powerful momentum toward actionable, verifiable data. This significantly strengthens Scope 3.1 transparency, providing crucial insights into purchased goods and services and actively fosters operational excellence, forging a clear path for widespread industry best practices and a more sustainable future.
To support strategic alignment and proactive preparation, the following table outlines the core characteristics of current and emerging EU regulations with direct procurement implications. Each regulation shapes specific expectations for supplier engagement, data verification, and value chain visibility — enabling procurement teams to align actions with upcoming milestones.
DISCLAIMER: The information provided in this table reflects the state of regulatory developments as of June 2025. Several details, including implementation timelines, technical specifications (e.g., under the DPP), and national transpositions (e.g., for CSDDD), remain subject to change as further legislative and interpretive guidance emerges. Companies are advised to consult official sources and monitor updates from EU institutions and national authorities. [9] [11] [12] [13] [14]
Expanding the Global View: Procurement Leadership in a Worldwide Context
While the European Union is currently leading regulatory innovation in sustainable procurement, several regions around the world are shaping a complementary global landscape of expectations. Together, these frameworks mark a decisive shift toward procurement practices grounded in responsibility, traceability, and data-driven decision-making.
Table 2: Global Sustainable Procurement Frameworks and Their Implications
While not all frameworks listed are legally binding, they strongly influence procurement expectations across jurisdictions and are often reflected in national laws and corporate ESG strategies. [16] [17] [18] [19] [20] [21] [22]
These global developments confirm a clear trajectory: procurement is evolving into a central driver of sustainability leadership, risk resilience, and strategic value creation. Organizations that embed reliable, product-level data into their procurement decisions are positioning themselves for long-term advantage in a rapidly changing, data-centric economy.
Moving Toward Interoperability and Integration: Embracing a Streamlined Future
It’s encouraging to see that digital systems like ERP (Enterprise Resource Planning), P2P (Procure-to-Pay), and SRM (Supplier Relationship Management) are already well integrated into many procurement workflows. As sustainability requirements grow in complexity, the next frontier lies in complementing these systems with specialized platforms designed to generate and manage high-quality, product-level sustainability data.
Solutions aligned with the GHG Protocol Product Standard — the globally recognized framework for product carbon footprint accounting — are becoming increasingly relevant. They enable procurement to calculate PCFs based on primary enterprise data, match emissions factors for Scope 3.1 (Purchased Goods and Services), and maintain audit-ready consistency across entire product portfolios. This integration supports more confident, sustainability-aligned sourcing decisions and allows procurement teams to operate with greater effectiveness at the intersection of regulatory compliance, cost-efficiency, and strategic value creation. [23]
To fully unlock this potential, procurement must also tap into sustainability-relevant data that often remains siloed within sustainability teams, R&D departments, or corporate ESG functions. Making this data broadly accessible across sourcing and supplier functions — without bottlenecks or seat-based user licence restrictions — empowers every relevant decision-maker to act on consistent, verified insights at the moment they are needed.
Closing this integration gap holds immense promise for procurement’s impact. With structured, interoperable product data flowing across departments and systems, teams can move beyond manual workflows—eliminating time-consuming spreadsheet matching, reducing repetitive supplier email requests that can drain productivity and morale, and harmonizing diverse inputs across business units. This evolution represents more than just a digital enhancement; it reflects a strategic leap in procurement’s ability to drive cross-functional alignment, accelerate compliance-readiness, and embed sustainability into the very fabric of sourcing operations at scale.
Enabling Product-Level Insight and Scope 3.1 Leadership
While sustainability discussions sometimes remain abstract, the operational call driven by regulation is becoming wonderfully concrete: demonstrate your product data! The GHG Protocol’s Scope 3.1 category (Purchased Goods and Services) presents one of the most significant opportunities—and historically, one of the most complex—components in corporate emissions reporting.
Regulations like the ESPR and the EU Battery Regulation are raising expectations further, inspiring companies to strengthen upstream data traceability and verification. These developments are already influencing procurement practices by embedding sustainability metrics into sourcing criteria — making them an integral part of everyday decision-making.
Industry frontrunners are actively shaping this shift. For example, Henkel is piloting digital product passports for chemicals in consumer products, envisioning a future where essential sustainability data is inherently linked to materials for enhanced transparency. [4] In parallel, Spherity is collaborating with the Chem-X initiative to develop an open, secure data space for sharing sustainability and product data across chemical value chains. [24] [25]
Other innovations like SiGREEN by Siemens and the TfS PCF Data Model are further accelerating supplier data exchange and validation across platforms — already enabling procurement teams to access harmonized PCF information at scale. [26] [15]
Similarly, pharmaceutical companies are exploring QR-based traceability systems — originally introduced for anti-counterfeit protection — as a means of integrating product-level environmental data. [27] [28]
These forward-looking initiatives illustrate a deeper evolution: procurement is becoming a generator of strategic insight. This shift — enabling both seamless compliance and high-impact decision-making — begins at the product level and positions procurement to lead the next chapter of sustainable value creation.
Building Capacity for a Strategic Future: Empowering Procurement
To confidently lead the transformation toward sustainable supply chains, procurement teams need the right conditions to act decisively. This means removing friction, equipping them with the right tools, and ensuring alignment across the organization. Four key enablers stand out:
Clarity: Break down complex ESG requirements into clear, actionable procurement criteria. Support supplier engagement with tangible, outcome-driven expectations — turning policy into practice.
Capacity: Provide targeted training in ESG data use, lifecycle thinking, and collaborative supplier management. This empowers teams to make informed decisions across a wide range of sustainability topics.
Collaboration: Establish strong interfaces with ESG, legal, sustainability, and R&D functions. Cross-functional alignment ensures due diligence efforts are integrated and procurement operates with shared purpose.
Continuity: Ensure validated, audit-ready data flows seamlessly across systems — from suppliers to procurement and into enterprise reporting. This digital backbone minimizes manual effort and strengthens both compliance and agility.
Together, these capabilities empower procurement not just to comply, but to lead — unlocking strategic value while reinforcing its role as a catalyst for a more resilient, transparent, and sustainable business future.
Procurement as a Pillar of Resilient Sustainability
Procurement is entering a new era — not just elevated by regulation, but energized by the opportunity to drive innovation, deepen supplier collaboration, and shape the future of sustainable sourcing.
Empowered with trusted, product-level data and collaborative, integrated systems, procurement teams can act decisively, co-create shared value, and confidently lead their organizations toward transparent, resilient, and profoundly sustainable supply networks. They are uniquely positioned to harmonize cost efficiency with ethical sourcing, transforming potential regulatory drivers into opportunities for strategic differentiation and growth — a shift increasingly reflected in global procurement best practices. [29]
This transformation is already unfolding. Across industries, leading organizations are scaling product-level data exchange, embedding sustainability into sourcing strategies, and forging closer supplier relationships. These actions are not just responses to regulatory change — they reflect a broader shift in how procurement defines its strategic value.
As these practices take root, procurement’s role is expanding — not as a compliance gatekeeper, but as a visionary driver of long-term business value and sustainability leadership. Quietly but resolutely, forward-thinking companies are already forging this path — demonstrating that procurement, empowered with data and purpose, can be one of the most powerful levers for sustainable transformation.
References:
[4] A guide to the Ecodesign for Sustainable Products Regulation (ESPR) - Circularise
[7] Sustainable Procurement Barometer 2024 - Ecovadis
[24] Spherity joins Chem-X to drive sustainability and digital transformation in the chemical industry
