Procurement’s ESG obsession is a distraction: fix the real problem with technology

Procurement leaders are chasing Environmental, Social and Governance (ESG) goals as if it’s 2015, but they’re missing the bigger picture. Supplier visibility, risk management, and cost control are spiraling out of control. ESG isn’t the problem; it’s a symptom of a procurement function that has lost sight of what matters most.

The best enterprises aren’t talking about ESG compliance anymore; they’re actively solving real issues using AI and automation. Siemens slashed its supplier compliance reporting time by 60% with AI-driven risk analytics. Unilever uses blockchain to ensure ethical sourcing across 25 global markets. Meanwhile, companies still relying on self-reported supplier ESG scores are flying blind, setting themselves up for supply chain disasters. It’s time to stop talking about ESG and start fixing procurement with technology.

Technology is fixing procurement’s real problems beyond just ESG

Conversations about ESG in procurement are stuck in the past. While enterprises are still debating supplier diversity targets, forward-thinking companies are using technology to eliminate supplier opacity and drive tangible business outcomes.

AI-driven procurement is exposing supplier blind spots. Companies still using outdated supplier data and manual ESG compliance checks risk being left behind by others evangelizing the tech wave.

• Maersk uses AI to predict supply chain disruptions, giving procurement teams weeks of lead time to find alternative suppliers instead of scrambling when a factory shuts down.
• A global consumer goods giant eliminated greenwashing using AI-driven sustainability tracking, detecting fraudulent ESG claims, and cutting non-compliant suppliers by 30%.

Procurement technology can track supplier fraud without compromising CFO priorities.

If your procurement team can’t identify the raw material sources of your Tier 2 suppliers, you don’t need ESG data; you need a better procurement strategy. For instance, a European automaker found that 70% of its suppliers claimed to have carbon-neutral sourcing, yet AI-powered supply chain tracking exposed major fraud in 40% of them. Instead of waiting for ‘better ESG data,’ they used technology to verify supplier claims in real-time.

CFOs don’t care about ESG. They care about cost, risk, and resilience. The companies winning on sustainability aren’t pitching ESG compliance; they’re using AI and automation to prove that cleaner, more ethical supply chains lower costs. A major global confectionery company consolidated $250m in spend across various regions through digital supplier aggregation and delivered 20% savings using TCS-led sourcing analytics solutions. On the other hand, Tesla is using machine learning (ML) to optimize raw material sourcing, ensuring ethical cobalt supplies while lowering procurement costs.

The real issue isn’t ESG but procurement leaders who lack visibility into their supply chains. Most global enterprises struggle with real-time supplier risk tracking and depend on self-reported ESG scores while often failing to identify Tier 2 suppliers. Companies that wait for better ESG data will fall behind, while those using AI and automation to uncover supplier risks will excel. For instance, a leading electronics manufacturer reduced supplier failures by 40% through AI-driven risk tracking, identifying non-compliant suppliers before disruptions occurred.

Procurement is becoming autonomous with the advent of AI and agents

Enterprises still treating ESG as a checklist exercise are setting themselves up for  failure. Instead, they should integrate it as an inherent technology practice to focus on the major objectives of the enterprise challenges, including tariffs and supply chain issues. Winners are taking control with AI-powered procurement intelligence that exposes supplier risks, automates compliance, and optimizes sourcing decisions. Here’s how leading enterprises are integrating AI into procurement:

• Supplier intelligence: AI-powered sourcing audits verify supplier claims in real-time, reducing fraud and improving contract accuracy.
• Risk analytics: AI-driven models predict supplier failures before they happen, allowing companies to secure alternative vendors in advance.
• Automated compliance: Enterprises integrating AI and blockchain have cut compliance reporting time by huge margins, reducing errors and improving transparency.
• Creating the dashboard: Creating a central location for the ESG dashboard including direct and indirect suppliers, their Tier 1, Tier 2, and Tier N sourcing practices, ESG metrics, and KPIs against the suppliers.

Roadmap to fix the underlying procurement issues

Leading enterprises aren’t waiting for suppliers to tell them what’s happening; they’re using AI-powered sourcing audits to catch fraud, predict disruptions, and flag non-compliance before it hits. Manual compliance tracking is no longer viable at scale; it’s too slow, reactive, and expensive. The companies succeeding today are automating ESG and supplier risk tracking with AI and blockchain.

Procurement leaders who only react to risk instead of predicting it are playing a losing game. Machine learning-powered risk analytics give top enterprises the advantage of weeks of lead time before supplier failures occur. For example, when a tier-1 supplier collapsed overnight, a global electronics firm with AI-driven risk intelligence had already locked in alternative suppliers while its competitors were left struggling for solutions.

The Bottom Line: Procurement leaders can use AI, automation, and other emerging technologies to enhance supplier visibility and manage ESG risks while maintaining cost, continuity, and compliance.

Enterprises that still view ESG as a siloed, manual compliance task will continue to be slow, reactive, and outdated. This isn’t about sustainability alone. The future of procurement isn’t ESG checklists; it’s real-time supplier intelligence. The most innovative companies are already automating risk, compliance, and sourcing. The rest will be scrambling to explain supply chain disasters to investors.