Winning Contracts and Securing Clients
Environmental, Social, and Governance (ESG) strategies are no longer optional for businesses aiming to remain competitive, especially in securing contracts and clients. The rise of ESG as a procurement factor has been catalyzed by both regulatory requirements and market expectations. Whether competing for private sector clients or bidding for public sector tenders, a strong ESG performance can differentiate your business and increase your chances of success.
ESG in Public Sector Procurement
The UK Government has embedded ESG considerations into public procurement through initiatives like the Social Value Model and PPN 06/20, which requires a minimum 10% weighting for social value in public tender evaluations. This percentage can increase depending on the contract and authority, emphasizing the importance of measurable ESG outcomes in areas such as environmental sustainability, diversity, and community engagement. Failure to meet these requirements can disqualify suppliers from tenders or put them at a significant disadvantage. Suppliers must provide verifiable data to substantiate their ESG claims, as misrepresentation can lead to exclusion from tenders for up to three years under the Public Contracts Regulations 2015 (PCR 2015).
The Growing Importance of ESG in the Private Sector
Private sector clients are equally influenced by ESG credentials. With growing pressure from stakeholders, investors, and consumers, companies prioritize suppliers that align with their sustainability goals. A strong ESG strategy demonstrates accountability, reduces risk, and enhances brand reputation, making it a critical factor in decision-making.
For example, 58% of UK businesses surveyed in 2024 reported that embedding ESG practices helped them secure new clients. Clients increasingly seek partners who can demonstrate clear commitments to carbon reduction, ethical sourcing, and diversity initiatives. ESG compliance is not just a box-ticking exercise but a business imperative.
How ESG Drives Competitive Advantage
Risk Mitigation: Effective ESG practices minimize risks, such as environmental penalties or reputational damage, making businesses more attractive to clients.
Innovation and Efficiency: ESG initiatives often lead to innovations in processes, products, and services. For instance, adopting renewable energy or waste reduction programs can result in cost savings and appeal to environmentally conscious clients.
Data-Driven Decision-Making: ESG frameworks require companies to gather and analyse data. This transparency reassures clients that their suppliers are both accountable and forward-thinking.
ESG as a Business Imperative in 2024
Businesses with a strong ESG strategy are better positioned to secure contracts and grow client bases. Public sector clients demand measurable ESG outcomes, and private sector clients view ESG as a marker of trust and innovation. Companies that lag in their ESG commitments risk being outcompeted in a market increasingly shaped by sustainable practices.
Investing in ESG is not just about meeting procurement requirements but about aligning your business with the future. Whether improving energy efficiency, fostering workplace diversity, or engaging with local communities, ESG is key to building lasting partnerships and driving growth in a competitive landscape.
To win contracts and secure clients in today's market, businesses must go beyond compliance and integrate ESG into their core operations. By doing so, they not only meet regulatory requirements but also create value for clients, stakeholders, and society as a whole.