Understanding ESG & Sustainability

To retain competitive advantages and win Requests for Proposals (RFPs), business owners need to understand how Environmental, Social, and Governance (ESG) factors and sustainability principles are increasingly critical in the procurement process. If you are not aware of this terminology, you need to invest the time to learn and create a sustainability score card. Take time to evaluate your business and make adjustments that incorporate ESG & Sustainability.

Upcoming Training

At CVMSDC.org we are committed to providing ongoing training to keep business owners aware of current ESG/ Sustainability trends. Join us December 4-5^th in Greenville, SC at our MBE Summit 2024 to learn more. (Visit www.cvmsdc.org to register for MBESummit 2024)

Here is a breakdown of key things business owners should know:

1. Understanding ESG as a Decision-Making Factor (Environmental, Social, Governance)

Environmental

Many organizations prioritize suppliers that are reducing their carbon footprints, managing waste, and improving energy efficiency. Business owners should track and report their own environmental impact. What changes can you make in your business to be more environmentally conscious?

 

Social

Companies are also concerned about diversity, equity, and inclusion (DEI), community engagement, labor practices, and employee well-being. Demonstrating strong social values can give a competitive edge. Companies with a social impact create stories that resonate. Look at the growth of TOMS shoes as an example; buy a pair, give a pair.                    What is your social impact?

Governance

Transparent business practices, ethical supply chains, strong leadership structures, and data privacy protections are key aspects of governance. A focus on compliance and corporate governance is essential. Do you have updated governance policies, Do you have an HR consultant that can help you address governance?

2. Sustainability Reporting

Many RFPs now require detailed sustainability reports. Business owners should be familiar with frameworks such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) or Task Force on Climate-related Financial Disclosures (TCFD). These public sources also include training tools. Taking time to become familiar with the terms and expectations can make the difference in winning a bid.

It is essential to track your company’s sustainability initiatives and be able to provide measurable data on energy consumption, water usage, waste management, and carbon emissions.

3. Green Certifications and Standards

Acquiring certifications such as ISO 14001(Environmental Management System) or LEED (Leadership in Energy and Environmental Design) can enhance credibility. Certain sectors may prioritize vendors with certifications in sustainable practices, particularly for construction, manufacturing, and logistics. Are you thinking about what you can do differently, and what your suppliers can do differently?

4. Supply Chain Sustainability

Companies are increasingly focused on the sustainability of their supply chain. Being able to demonstrate that your suppliers also follow ethical and sustainable practices can strengthen your RFP. Supply chain transparency and traceability (e.g., knowing where and how raw materials are sourced) are becoming major competitive factors. How can you improve your supply chain?

5. Energy Efficiency and Innovation

If your business uses energy-intensive processes, investing in energy-efficient technology or renewable energy solutions can be a significant competitive advantage. Innovating in product design to reduce material use, waste, or environmental harm is highly valued, especially in sectors like manufacturing, construction, and consumer goods. What are you doing to improve energy efficiency?

6. Diversity, Equity, and Inclusion (DEI)

Organizations are looking for partners that foster workplace diversity and have equitable hiring and promotion practices. Companies that are inclusive are more creative, more competitive, and more profitable. Some RFPs specifically ask for supplier diversity information, including partnerships with minority-, women-, or veteran-owned businesses. Are you intentionally inclusive?

7. Compliance with Regulations

Being aware of and complying with local, national, and international environmental and social regulations is critical. This could include labor laws, anti-corruption regulations, environmental protections, and data privacy laws (like GDPR). If you do not know the rules, hire a consultant to help you!

8. Risk Management

ESG is tied to risk management. Businesses that can demonstrate how they are mitigating climate-related risks, cyber-risks, or reputational risks associated with poor governance practices will be more attractive to large buyers.

9. Long-term Value Creation

Companies are looking for partners who contribute to long-term sustainability goals. Demonstrating how your business creates long-term environmental, social, and financial value for stakeholders beyond short-term profits is key.

10. Transparency and Communication

Openly communicating your ESG initiatives and making them part of your brand narrative can set you apart. Many businesses include this information not just in RFPs, but also in marketing, annual reports, and investor presentations. Create a Sustainability score card/ report.

In summary, businesses that can demonstrate strong ESG credentials and sustainability practices are better positioned to win RFPs. Proactively integrating these principles into your business strategy not only makes you more competitive but also aligns your company with broader market trends toward sustainability and corporate responsibility.

If you find this information helpful, let CVMSDc.org be a resource for your business. As an economic growth engine, we exist to help minority businesses.

Visit www.cvmsdc.org to learn more and mark your calendars for December 4-5^th – join us in Greenville, SC to learn more about ESG and Sustainability.