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It is now clear that the model in which companies pursued an ESG approach purely internally is no longer suitable. Most carbon footprint and ESG performance measurement mechanisms now incorporate companies' value chains into their reporting model.
With the strengthening of regulations such as the CSRD (Corporate Sustainability Reporting Directive) or the CSDDD (Corporate Sustainability Due Diligence Directive), and rising stakeholder expectations, it is becoming even more essential for companies to incorporate their entire supply chain into an ESG approach.
Furthermore, ESG risks – particularly environmental ones – are no longer simple long-term projections, but tangible realities that directly affect companies. The recent flooding in northern France or the cyclone in Mayotte disrupted numerous activities, putting entire supply chains under strain. These events illustrate companies' growing vulnerability to climate disruption and highlight the urgency of transitioning towards more resilient, sustainable models.
Yet involving suppliers in such a dynamic represents a genuine challenge: how can they be encouraged to adopt sustainable practices without compromising economic performance? How can environmental requirements, social responsibility and competitiveness be reconciled?
Assessing and selecting your suppliers
The first step in implementing an ESG strategy that involves your supply chain is to carry out an assessment of your current suppliers. This means evaluating them against ESG criteria, identifying those whose current processes already meet your objectives, those that need support to get there, and those for which you will have no choice but to find an alternative.
Mapping ESG risks
Reviewing your supplier ecosystem should allow you to identify those most at risk. Certain categories are generally more exposed to environmental and social risks. These include industries such as textiles, agriculture, and extractive industries, which are particularly sensitive to issues such as pollution, deforestation, or worker exploitation.
To do this, you can rely on sector risk mapping tools, which help assess priority suppliers and adapt ESG requirements according to their level of risk.
However, a major challenge lies in collecting ESG data across complex supply chains. While obtaining information from tier-1 and tier-2 suppliers is generally feasible, it becomes much more complicated to access data from tier-3, -4 or -5 suppliers, often located abroad. This difficulty can be overcome through enhanced traceability tools and partnerships with third-party organisations specialising in value chain certification.
Incorporating ESG criteria into your supplier selection process
To begin assessing your suppliers, you can incorporate ESG criteria as early as the supplier selection stage. You can draw on frameworks such as ISO 26000, dedicated to corporate social responsibility, or ISO 20400, dedicated to sustainable procurement.
You can also consult the information disclosed in your suppliers' non-financial reports. Most of them cover environmental aspects, and some, such as the European CSRD or the GRI, also incorporate social and governance criteria.
Finally, on-site audits can be carried out to verify supplier compliance with your ESG requirements and identify potential areas for improvement.
Communicating with and raising awareness among your suppliers
Involving your suppliers in your ESG approach is not only about processes that some may see as coercive. It is also a process that requires dialogue and support.
Transparency and dialogue
An effective ESG policy relies on clear, transparent communication with your suppliers. It is essential to communicate your ESG requirements and objectives in advance, so that the players making up your supply chain can align with them.
Publishing a sustainability report is an essential step, allowing you to communicate publicly and transparently on your roadmap and the resources you have allocated to it.
However, it is important to take into account the administrative burden this can represent for suppliers, particularly SMEs and mid-caps, who must respond to numerous ESG questionnaires from different clients. This work, often perceived as complex and time-consuming, requires resources that they do not always have available. One solution could be the use of shared platforms to simplify data collection, or the harmonisation of ESG criteria between companies, drawing on certain non-financial reporting standards.
In addition, you can publish a supplier code of conduct setting out your expectations regarding respect for human rights and environmental impact.
Supporting and training
Each supplier, depending on its size, sector of activity and location, is more or less aware of social and environmental issues. By offering training or dedicated sessions on environmental risk management or respect for human rights, you can ensure they have acquired the same level of understanding and are therefore able to meet your expectations.
You can also provide them with tools and technical resources such as sector guides or assessment platforms.
That said, this training needs to be adapted to local realities. While training on these topics is more easily applicable in Europe and the West, it is often much more complex to introduce this type of approach in certain countries, where some ESG requirements – particularly regarding human rights – may not find immediate resonance. In these cases, it is essential to take a gradual approach, adapted to local contexts.
Rolling out a responsible purchasing policy
Responsible purchasing policies aim to align the company's procurement strategy with its ESG commitments. Beyond simply involving your suppliers in your ESG approach, they aim both to engage them over the long term and thereby secure your action plan.
Two approaches are generally observed in the client-supplier relationship:
- A strict contractual approach, as practised by large CAC 40 companies, with strong requirements and penalties for non-compliance.
- A cooperative approach, more common among mid-caps, where the aim is to identify risks and work jointly with suppliers to improve their practices.
Each company must choose the approach best suited to its business model and ESG strategy.
Formalising your ESG approach through contracts
Engaging your suppliers often requires going through a contracting phase. This involves incorporating environmental and social clauses into the contracts you sign with them. These clauses may include the selection of sustainable materials, the adoption of eco-design practices, commitments regarding environmental protection or respect for human rights, or greenhouse gas emission reduction targets aligned with the Paris Agreement.
By collaborating with committed suppliers, you can not only secure your supply chain but also foster innovation and competitiveness. Developing long-term partnerships based on shared values strengthens the company's resilience in the face of future environmental and societal challenges.
Incorporating an internal carbon price
On the strictly environmental dimension, more and more companies are choosing to incorporate an internal carbon price into their supplier selection criteria.
The carbon price is a strategic tool for encouraging suppliers to reduce their GHG emissions – an issue that is all the more crucial given that Scope 3 accounts for an average of 75% of companies' total emissions, according to the CDP. By incorporating an internal carbon cost into their purchasing decisions and favouring low-carbon-footprint suppliers, companies can accelerate their ecological transition.
A common approach is to set a price per tonne of CO2 during tenders. Supplier bids are then assessed taking into account an additional cost linked to the emissions generated, thereby influencing purchasing decisions in favour of the most sustainable solutions. This calculation method makes it possible to factor the environmental cost into the procurement strategy and accelerate the transition towards a greener value chain.
To find out more, download the replay of our webinar on value chain decarbonisation👇
Setting objectives and measuring progress
Embarking on an ESG approach does not mean you need to switch suppliers to select new ones better able to meet your social and environmental expectations.
The approach requires bringing your suppliers along with you – or at least those who can and want to – and putting in place a continuous improvement process. Your ESG performance and that of your suppliers are closely linked, and must therefore evolve together.
To do this, you need to set shared objectives and agree on the indicators to track in order to measure progress towards these objectives. These will not only allow you to track your progress and that of your suppliers, but also identify areas for improvement on both sides.
Non-financial reporting remains the key tool for ensuring clear, detailed monitoring of progress made and objectives ahead. It guarantees greater transparency and strengthens stakeholder engagement. It allows your suppliers to take a long-term view, build a sustainable transition pathway, ensure their resilience, and increase their competitiveness.
Duty of vigilance: a regulatory requirement
It should be noted that, beyond voluntary initiatives, in certain countries, companies must comply with regulatory requirements regarding environmental and social vigilance across their entire supply chain. This is known as the “duty of vigilance” or “due diligence”.
In France, Law No. 2017-399 imposes a duty of environmental and social vigilance on French companies with more than 5,000 employees and foreign companies with more than 10,000 employees on French territory. This duty of vigilance applies to their own activities and those of their subsidiaries and business partners.
In Germany, the LkSG law establishes a similar duty of vigilance for companies with more than 1,000 employees.
This duty of vigilance is expected to be extended to all European Union countries between 2027 and 2029 via the CSDDD directive, ultimately covering European companies with more than 5,000 employees and turnover exceeding €450 million, as well as non-European companies generating turnover of more than €450 million within EU territory.
Under the CS3D, companies will need to:
- Identify and prevent ESG risks within their supply chain.
- Implement a vigilance plan to anticipate, mitigate or put an end to impacts on the environment or human rights
- Undertake a transition plan aligned with the objectives of the Paris Agreement
With these regulations, companies will need to strengthen their supplier monitoring and control mechanisms, in particular through more frequent, stricter audits, along with a requirement for transparency regarding ESG data.
It should be noted, however, that the directive is currently being revised by the European Commission and could see its requirements scaled back and its implementation delayed.
Conclusion
Involving suppliers in an ESG approach is therefore no longer an option, but a strategic necessity. By incorporating environmental and social criteria into their purchasing processes, establishing constructive dialogue, and drawing on levers such as carbon pricing, companies strengthen not only their own resilience and competitiveness, but also that of their suppliers.
Faced with the climate emergency and growing stakeholder expectations, they are adopting a proactive approach to environmental and social responsibility, positioning themselves as reference players in their market, better equipped to face future challenges and thereby attract customers and investors.
At the same time, with the evolution of regulations such as the CSDDD directive, this approach is also becoming a legal imperative. But rather than a constraint, it should above all be seen as an opportunity for innovation and differentiation, contributing to a sustainable transition and the long-term viability of companies.