Institutional Buyers Channel Their Inner Investor

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As multinational corporations, governments and other large organizations realize their biggest environmental impacts lie in their supply chains, they are taking a page from investors’ book by turning to sustainability ratings and research for help.

The idea is to borrow existing environmental, social and governance (ESG) information behind the more than $20 trillion global sustainable investment market and apply it to the trillions spent each year on institutional procurement so that purchasers can quickly gauge which suppliers are more sustainable, without having to duplicate work that has already been done.

“We're essentially trying to learn from investors because they've been looking at this space a little longer and have experience using this data,” said Anastasia O'Rourke, who as a special consultant at Industrial Economics Inc. helped lead a research team testing out the idea. Part of her work involved meeting with pension fund managers to find out how assessments of ESG performance across an investment portfolio could be translated to a web of suppliers.

Bloomberg BNA's Andrea Vittorio reports the story for subscribers.