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In India's fast-moving consumer goods (FMCG) industry, sustainability has shifted from being a buzzword to becoming a business priority. Regulators are tightening norms, consumers are more vocal about eco-friendly choices, and investors are asking tougher ESG questions.
Procurement, once measured mainly on cost and delivery, is now at the center of this transformation. From greener packaging to holding suppliers accountable on ESG compliance, procurement leaders are being asked to do much more than negotiate prices.
Here's how this change is reshaping the Indian FMCG space.
1. Rethinking Sourcing Criteria
Sustainable sourcing goes beyond price and quality checks. It begins with questions like: Where is this material coming from? How was it produced?
More FMCG companies now insist that raw materials be ethically sourced, certified (e.g., RSPO or Fairtrade), and produced with minimal environmental damage. This approach encourages long-term, trust-based partnerships rather than purely transactional deals.
2. Green Packaging Procurement
Few sustainability issues are as visible to consumers as packaging. With plastic waste dominating public debate, FMCG brands are under constant pressure to reduce their environmental footprint.
Procurement teams are leading change by:
- Sourcing recycled or biodegradable materials.
- Partnering with vendors to design lighter, minimal packaging.
- Exploring refillable or reusable packaging formats.
Leaders like ITC and Hindustan Unilever have already set ambitious targets for plastic reduction. But meaningful change often begins with how procurement sets expectations with suppliers.
3. Supplier ESG Compliance & Scorecards
Sustainability commitments cannot stop at a company's four walls—suppliers must also be part of the equation. Many procurement teams now track suppliers using scorecards that cover:
- Environmental: emissions, water use, waste reduction
- Social: labour practices, workplace safety, inclusivity
- Governance: ethics, transparency, audit readiness.
These scorecards are not one-off exercises. They are refreshed regularly and directly influence how much business a supplier receives.
4. Challenges in Implementation
The shift to sustainable procurement is not without hurdles. Many smaller Indian suppliers lack the resources or expertise to meet ESG expectations. In such cases, procurement must act as a coach rather than a gatekeeper - setting phased targets, offering training, and co-developing action plans.
Data visibility poses another challenge. Verifying supplier claims can be complex, but new digital tools are making it easier to validate information and track progress.
5. Procurement as a Sustainability Driver
When done right, sustainable procurement is more than a compliance exercise. It can:
- Strengthen consumer trust in a brand.
- Reduce long-term supply chain risks.
- Deepen collaboration with suppliers.
This marks procurement's evolution into a truly strategic role - not just delivering cost savings but shaping the future of supply chains.
Leading the Change
Procurement service providers also play a pivotal role in this journey. They help organisations identify responsible suppliers, improve data visibility, embed ESG considerations into sourcing decisions, and build long-term supplier partnerships. By acting as enablers, they help companies overcome challenges and accelerate the shift toward sustainable, resilient, and future-ready supply chains.
Sustainable procurement is a journey, not a quick fix. It often starts with small steps, choosing better materials, asking sharper questions, and engaging suppliers more proactively.
In a sector where speed and scale dominate, Indian FMCG companies will not transform overnight. But with clear leadership and the right priorities, procurement can take the lead in building responsible, resilient supply chains.
Originally published by BW Marketing World.
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