How more responsible procurement is reshaping business strategies

Procurement’s remit has always been to deliver what the business needs, in as cost-effective a manner as possible. Ensuring internal customers make use of the function is a core part of this, allowing businesses to direct spend to specific suppliers that have been selected, often at preferential rates in exchange for volume commitments.

Creating a smooth customer journey is essential to ensuring usage, particularly if rogue spend is to be avoided. This means offering a seamless experience, where customers can find what they need quickly, without having to go through lengthy approval processes.

In recent years, however, the criteria for assessing suppliers—and the need for customers to go through these—has changed. The pressure for organizations to improve their corporate social responsibility (CSR) credentials means procurement has to ensure suppliers meet certain standards. In some organizations, there may also be a mandate to make more use of particular types of suppliers, such as local businesses, small firms or those which are owned or run by minority groups.

According to Amazon Business’s 2025 State of Procurement Report, 80% of organizations have mandates to use certified suppliers, and 63% of decision-makers state their responsible purchasing goals and priorities have increased in the past year. The most common goal is to select suppliers that follow sustainable practices, which is a factor for 61% of businesses.

But other requirements are also common. Almost half (46%) of businesses are required to use local businesses—an increase from 39% the previous year—which not only helps to support the local economy but also reduce emissions associated with delivery as fewer miles are being traveled. It can also reduce the risk associated with more geographically dispersed supply chains.

More than four in 10 (44%) insist on using certified small businesses, while 28% have the same mandate around diversity-owned enterprises. Other specific requirements include military or veteran-owned firms (17%), women-owned businesses (16%) and LGBTQ-owned or operated organizations (12%).

Implementing such mandates can not only help meet organizations’ wider priorities and community goals but can also help to enhance the customer’s—and other employees’—perception of the brand. This can lead to higher levels of engagement and retention and reduce the need to replace talented staff and train up new employees.

It can also make it easier to attract new employees. This is particularly the case with Generation Z—those born from the mid-1990s to the early 2010s—who tend to have a strong sense of social justice. The Purpose Pulse 2024 report, compiled by Purpose Union, Root Cause and the Brand & Reputation Collective, finds that 58% of Generation Z in the UK and US expect companies to take a stance of social issues.

“Sustainability and purchasing from small and diverse businesses is no longer optional—it’s core to doing business well,” says one technology procurement senior leader. “Procurement teams are leading the charge in building supply chains that align with socially responsible purchasing priorities and delivering measurable impact.”

For any procurement function to mandate the use of particular suppliers, though, it’s essential they have a means of verifying credentials, and having real-time data is important to ensure this is accurate. In organizations where there are no mandates to purchase from certified sellers, the most common reason why such goals don’t exist is the difficulty in partnering with qualified suppliers, cited by 38% of such businesses.

The starting point for any procurement function looking to implement more responsible purchasing is to define targets and policies, and then to assess the credentials of existing suppliers.

These can then be compared against potential new suppliers, using key performance indicators assessing the economic, social and environmental impact of such suppliers and the improvement any move would have on the buying organization’s responsible purchasing goals.

Taking on such a project in-house is a significant undertaking which would consume large amounts of time and resources. An alternative approach is to use a solution such as Amazon Business, which allows suppliers to upload their certifications and provides tools that highlight supplier options that meet an organization’s criteria.

Amazon Business has more than 7,000 active certified small and diverse sellers, drawing from more than 40+ third-party certifications, including two Amazon-owned certifications, Compact by Design and Pre-owned Certified.

One example of a business that has acted to improve its CSR credentials is Nasdaq, which originally partnered with Amazon Business to tackle tail-end spend.

As a result of mandating the use of particular types of suppliers, 52% of its annual spend is now with diverse entities.

“The relationship between Nasdaq and Amazon business has evolved over time,” says Jake Friedman, Director of Procurement. “The original challenge was tail-spend management. Amazon allowed us to make this simpler, especially as we had a growing footprint across the globe.

“A recent success story has been D&I. We’re looking at whether we can buy things from different avenues, such as veteran-owned, women-owned or minority-owned businesses. As we grow, Amazon will grow with us, and it will be a strong partnership for years to come.” 

Originally published on Business Reporter.