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Procurement as a sustainability powerhouse: Managing ESG risk at a global bank
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- Case study
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The importance of effective ESG risk management to organisations’ financial and operational health is becoming increasingly clear – but the “how” remains a question for many. For one leading European bank, the answer lay in a function that isn’t always the first to come to mind: procurement.
Incoming European legislation, such as the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), has made ESG transparency a non-negotiable. However, for the bank, sustainability was about more than compliance. Committed to achieving net zero by 2050, the business sought to embed sustainability at the heart of its procurement activities, partnering with sustainability-forward suppliers to drive long-lasting impact.
Efficio was brought in to help the bank bridge the gap between ambition and execution by empowering Procurement to take on ESG risk management as a core pillar of its strategy.
Building a structured, scalable framework for ESG risk management
We worked closely with the bank’s procurement team to develop an ESG framework for supplier assessment and selection, equipping them with best practice methodologies and tools to support informed decision-making. This included:
Creating an ESG materiality map
A crucial first step in assessing ESG risk is to identify the highest-risk areas. The team assessed each spend category against a range of ESG topics – such as climate change mitigation and circular economy – to determine the level of material risk exposure.
This risk mapping helped Procurement identify the most relevant and critical risks for each category, guiding upcoming procurement activities.
Benchmarking ESG rating agencies
Different ESG rating agencies – such as CDP, EcoVadis, and S&P Global – use different scoring mechanisms. This can muddy the waters when assessing different suppliers’ ESG performance.
To address this, the client-Efficio team benchmarked ESG rating agencies against one another, comparing their methodologies and scoring systems. This empowered Procurement to make more informed supplier decisions, reducing the guesswork in risk assessments.
Designing a supplier questionnaire
To make sure ESG risk was factored into supplier assessment and selection processes, the team developed ESG questionnaires and a scoring methodology. Questions were category-specific; for instance, IT suppliers were assessed on energy efficiency, whereas real estate suppliers were evaluated based on building sustainability certifications and water-saving mechanisms.
This gave our client additional confidence that its partners were aligned with its corporate sustainability ambitions.
Building a supplier ESG risk assessment tool
Even with robust management, some level of ESG risk will always remain.
To help address this, the team developed an ESG residual risk assessment tool to calculate supplier-specific ESG risk. Key risk factors were identified through workshops, shaping the tool’s calculation and scoring methodology.
This tool allows Procurement to identify which suppliers need targeted actions to further mitigate their ESG risk.
Getting a global team on board
The bank’s procurement teams were spread across multiple markets, each with their own approaches to managing ESG risk. Making sure change truly took hold was about more than just providing tools and methodologies. Securing buy-in from all the global teams was critical.
The bank’s local teams typically looked to Global Procurement to set the standard. Therefore, clearly positioning this initiative as being Global-led was key to ensuring rapid buy-in and adoption throughout the business. This allowed the business to roll out globally standardised processes, making sure that best practice approaches were consistently being applied in all markets to accelerate progress.
Revising the role of Procurement in sustainability
As the updated framework was rolled out, it became clear that this was more than an operational change – it was creating a mindset shift.
The initiative sparked excitement. The procurement teams across the different markets recognised how the new framework would guide their ESG risk management efforts towards the most impactful areas and strengthen their approach to supplier selection, empowering them to directly contribute to the wider business’ goals. This reinforced both Procurement and the wider business’ perception of the function as a strategic enabler rather than just a compliance function.
Laying the foundation for future impact
The client-Efficio team’s work laid a strong foundation for lasting change across its global procurement teams. By building a structured, scalable approach to ESG risk management, we empowered Procurement to make more sustainable choices, positioning the bank for long-term success.