Improving collaboration between procurement and ESG teams

What does it take for procurement and the ESG team to collaborate effectively? Is it about implementing shared systems, integrating procurement personnel within the ESG team, or simply holding regular meetings? These considerations are essential as organisations work to meet a steadily increasing regulatory compliance burden with obligations including tracking supplier carbon emissions and modern slavery reporting.

The truth is that procurement cannot meet ESG-related goals without the active involvement of the ESG team. Likewise, the ESG team cannot hope to achieve its objectives without procurement support. This interdependence underscores the importance of collaboration between these two functions.

Ahead of the 4th Annual ESG Procurement Conference 2025, Quest Events spoke with Lexia Laracy, Head of Procurement Excellence at APA, for her insights into how to improve vital collaboration between procurement and ESG teams.

What roadblocks have you encountered that hinder collaboration between procurement and ESG teams?

"In my experience”, said Laracy, “misaligned priorities can hinder collaboration; for instance, sustainability metrics may not always align with procurement or overall business objectives, particularly in the face of budget constraints. Fragmented data sources can also create challenges, as the lack of aligned or shared systems can lead to disparate information.

Knowledge gaps can also be a challenge, with procurement practitioners sometimes having a limited understanding of how to prioritise or balance different ESG requirements”, she added. “These factors can result in unclear accountability, where there's a lack of clarity around ownership for supplier sustainability performance. Siloed operations can also contribute to the problem, in instances where teams work independently with minimal cross-functional interaction. This can be problematic when multiple internal teams are engaging suppliers for different purposes. The other challenge can be where standards are being applied inconsistently by practitioners, as varying ESG criteria across procurement categories can lead to confusion."

Can you share practices that have successfully fostered collaboration between these two functions? 

“One notable approach at APA has been the co-design of the procurement governance framework in partnership with business risk owners, such as ESG. This process allows us to align on guiding principles, strategy, and performance considerations”, said Laracy. “For instance, we’ve established cross-functional governance models where procurement and ESG teams collaborate to design standards, policies, and processes related to data capture, knowledge sharing, supplier assessment frameworks, supplier development programs, and benefits calculation methodologies. We’ve also defined joint KPIs that measure cost efficiency and sustainability metrics, ensuring that both aspects are prioritised. Moreover, we take a unified approach to executive engagement and sponsorship, which is crucial for driving engagement and securing buy-in across the organisation”, she said.

Laracy pointed to the recent uplift of APA’s Procurement Governance Framework, where the procurement team brought together risk owners from across the organisation to leverage insights and expertise. “Utilising a corporate scorecard, we conducted ideation sessions aimed at improving our understanding of short, medium, and long-term objectives, which helped us define and align the role of procurement”, she explained. “We identified target areas of focus for category managers and made improvements to guidance on how practitioners can consistently seek information from our suppliers. This information is essential for broader reporting on social, community, biodiversity, and environmental impacts.”

How has technology facilitated (or impeded) cross-functional collaboration in your experience?

Laracy agreed that technology can both enable and impede procurement-ESG collaboration, depending on how it is utilised. “Some of the best ways that it can enable collaboration include driving discussions to align sustainability metrics, utilising blockchain-based traceability solutions for supply chain, automating cross-functional workflows, approvals and reporting, and using AI-driven analytics to identify improvement opportunities. But challenges can also be faced due to legacy systems lacking ESG data fields, incompatible software, and overwhelming data volume without analytics capabilities”, she explained.

What advice would you give to organisations looking to improve collaboration between procurement and ESG teams?

In Laracy’s experience, organisations that successfully improve collaboration between procurement and ESG teams treat this partnership as a strategic transformation rather than merely a compliance exercise," she said. To achieve this, her advice is to focus on the following areas:

1. Start with leadership alignment on shared objectives.
2. Develop integrated KPIs that reflect both procurement and ESG goals.
3. Create joint decision-making processes to ensure inclusive input.
4. Invest in common systems that facilitate data sharing and communication.
5. Establish regular cross-functional meetings to foster ongoing dialogue.
6. Implement training programmes to address knowledge gaps within teams.
7. Align governance frameworks, processes, and assessment frameworks to ensure consistency.
8. Communicate success stories to reinforce the benefits of collaboration.
9. Include sustainability factors in procurement benefits targets and reporting.
10. Build a Centre of Excellence with cross-functional membership to drive best practices.

Keen to learn more?

Join Lexia Laracy and a host of other thought leaders in the ESG procurement space at Quest Event’s 4th Annual ESG Procurement Conference 2025, 13^th to 15^th August at the Aerial UTS Function Centre, Sydney.