TAIPEI (Taiwan News) —ESG has become a key focus area for procurement executives around the world, rising to the second spot in their top priorities.
In a recent survey by global professional services firm Deloitte, ESG has risen from seventh place in a prior 2021 study for procurement officers. The survey covered some 350 procurement leaders from more than 40 countries.
The procurement officer role is very important in the efficient running of any company. Typically, a procurement officer performs the following essential duties –
- Review procurement documents and prepare orders
- Negotiate contracts with suppliers
- Develop and monitor cost-reduction strategies
- Develop and monitor inventory control procedures
- Develop and monitor purchasing policies
- Manage vendors
The increased prioritization of ESG prioritization among procurement officers appears to come as companies face increasing regulatory and stakeholder pressure to manage and report on a variety of sustainability factors and the supply chains that companies rely on for their ongoing existence.
As an export/import driven country, it is vital that Taiwan’s companies not only understand what is happening domestically, but they must also be aware of and have policies and procedures in place to deal with international regulatory developments.
Whilst the regulations remain to be finalized, there seems little understanding, in Taiwan, of the possible ramifications of the European Union’s (EU) corporate sustainability due diligence directive (CSDDD). The CSDDD is expected to become effective in 2024 and non-EU companies with revenues earned in the EU above stated thresholds would also be required to follow the rules.
The aim of the CSDDD is to foster sustainable and responsible corporate behaviour and to anchor human rights and environmental considerations in companies’ operations and corporate governance. The new rules will ensure that businesses address adverse impacts of their actions, including in their value chains inside and outside Europe.
Taiwan’s companies also need to be aware of and be prepared to implement, where appropriate, the IFRS Foundation’s International Sustainability Standards Board’s (ISSB) new global sustainability and climate disclosure standards, expected to form the basis for emerging sustainability reporting requirements by regulators around the world, and marking a major step toward the integration of sustainability reporting into the broader financial reporting process.
The new standards (IFRS S1 and IFRS S2) will begin applying for annual reporting periods beginning in January 2024, with companies beginning to issue disclosures against the standards in 2025.
IFRS S1 provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium, and long term. IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1. Taiwanese companies and their procurement officers must be ready to meet these new disclosure and reporting standards.
While ESG rises in the list of priorities for procurement professionals, it seems that initiatives by Taiwan’s companies to quantify sustainability factors remain at an early stage. Taiwan’s procurement officers must perform risk assessments and ensure that ESG is inculcated in their core people, incorporated into their processes.
It is also critical that senior management in Taiwanese companies support their procurement officers in the challenges that ESG poses as it develops globally.
