Why ESG Matters in Health Procurement
Environmental, Social, and Governance (ESG) principles are no longer optional extras in healthcare procurement—they are central to how public bodies, especially the NHS, evaluate suppliers.
Climate change and environmental challenges are key drivers for the adoption of ESG in health procurement, as organisations seek to address global issues and ensure environmental sustainability and resilience.
The NHS alone accounts for around 4–5% of the UK’s total carbon emissions, with roughly two-thirds of its footprint linked to its supply chain. That means every product, service, or logistics provider in the healthcare ecosystem plays a part in shaping the NHS’s environmental impact. With its Net Zero by 2045 commitment now legally backed, sustainability has moved from aspiration to obligation.
At the same time, new regulations such as the Procurement Act 2023 are reshaping procurement priorities. Contracting authorities are now required to “have regard to maximising public benefit,” embedding social and environmental value directly into how public funds are spent. As a response to these challenges, sustainable procurement is becoming a strategic focus, integrating ESG criteria into procurement strategies and policy development. For NHS suppliers, this shift means ESG performance is not just a reputation booster—it’s fast becoming a condition of doing business.
Put simply: ESG is now intrinsic to winning healthcare contracts. There is a growing demand for sustainable procurement and ESG compliance among healthcare buyers and stakeholders. Suppliers who integrate these principles will find themselves not only compliant but increasingly competitive.
What Is ESG and Why It’s Relevant to Procurement
ESG represents a framework for measuring how organisations operate responsibly and sustainably:
- Environmental factors focus on reducing emissions, energy use, waste, and evaluating environmental impact and resource management.
- Social factors look at equality, community benefit, workforce wellbeing, and how organisations manage relationships with employees, suppliers, customers, and communities.
- Governance factors ensure ethical practices, compliance, transparency, leadership, and accountability, forming the foundation that supports environmental and social initiatives.
In procurement, ESG influences how contracts are awarded and managed. Instead of simply evaluating price and quality, buyers now consider how a supplier’s operations support broader societal goals—such as reducing carbon, creating local jobs, or ensuring supply chain ethics.
A comprehensive framework and a structured approach to ESG in procurement are essential for systematically assessing, measuring, and integrating these factors into decision-making processes.
For NHS procurement teams, this approach ensures every contract delivers measurable community value. For suppliers, it’s a chance to differentiate: by embedding ESG into your proposal, you’re demonstrating that your business aligns with the NHS’s mission to improve lives, not just services.
Adopting a holistic approach to ESG integration in procurement strategies ensures that social, economic, and environmental factors are considered together for more effective and resilient sustainability practices.
Key ESG Requirements for NHS and ICS Suppliers
The NHS has set clear expectations for suppliers through its Net Zero Supplier Roadmap and Social Value Model. Meeting these requirements is crucial to remaining eligible for future contracts. As part of ESG compliance, suppliers must identify potential risks and take steps to mitigate risks related to environmental, social, and governance issues.
In terms of social value and community impact, suppliers are expected to demonstrate the significant impact they can have by working with sustainable suppliers and upholding ethical labour practices.
For ethical governance and compliance, suppliers must address key areas such as human rights, labour practices, fair wages, and employee welfare to ensure alignment with NHS standards and broader ESG goals.
1. 10% Mandatory ESG Weighting
Since April 2022, all NHS procurements include at least a 10% evaluation weighting for social value and net-zero commitments. This can be even higher for sustainability-led contracts. Suppliers must therefore show tangible ESG contributions, such as how they will lower carbon emissions or support local employment. In addition, suppliers are expected to align with ESG standards and demonstrate how they are embedding ESG principles into their operations, including supplier assessment and compliance tracking.
Adopting effective ESG strategies, such as integrating circular economy principles and embedding ESG initiatives into core business activities, can help suppliers achieve higher evaluation scores.
2. Carbon Emissions Reduction Plans (CRPs)
From April 2023, any supplier bidding on contracts over £5 million per year must submit a Carbon Reduction Plan aligned to achieving Net Zero by 2050. These Carbon Reduction Plans must address greenhouse gas emissions and outline specific steps to reduce greenhouse gas emissions. From 2024 onward, smaller suppliers are also required to submit proportionate evidence—at minimum, a Net Zero commitment statement and basic emissions data.
By 2030, the NHS will no longer purchase from suppliers that fail to meet its Net Zero requirements. In practice, that means every supplier must have credible data on emissions, including tracking and reporting their carbon footprint, and progress towards reduction targets.
3. Social Value and Community Impact
NHS and Integrated Care Systems (ICSs) assess suppliers on how they create community benefit. This could include job creation, skills development, health equity, or diversity and inclusion initiatives. Demonstrating alignment with local priorities—such as tackling health inequalities or supporting apprenticeships—can significantly strengthen your bid.
Employee engagement is also a key factor, as high levels of employee involvement in sustainability and social value initiatives can enhance workplace well-being and contribute to greater social impact.
When designing social value initiatives, it is important to consider the broader community to ensure that the benefits extend beyond the organization and positively affect wider society.
Strong social value initiatives not only support organizational goals but can also lead to improved customer satisfaction by delivering better products, services, and community outcomes.
4. Ethical Governance, Labour Practices, and Compliance
Suppliers must meet modern slavery, equality, and data governance requirements. The NHS conducts due diligence checks on all suppliers, with the Procurement Act 2023 allowing exclusion of companies with poor ethical or environmental records. These checks increasingly consider corporate social responsibility and corporate responsibility, ensuring suppliers align with ESG principles, ethical practices, and sustainable operations.
In short, suppliers must be ready to show not only what they deliver but how they deliver it—ethically, sustainably, and transparently. Transparent reporting is essential for demonstrating compliance and building trust with stakeholders.
How to Build Sustainable Procurement Initiatives and an ESG Procurement Strategy
Embedding ESG into procurement isn’t just about checking boxes—it’s about integrating sustainability and ethics into your operational DNA. Developing a comprehensive sustainable procurement strategy and adopting ESG principles are essential steps for organizations aiming to drive long-term value and meet stakeholder expectations. Here’s how to start:
- Assess your current procurement processes to identify gaps and opportunities for sustainable procurement. Procurement professionals should evaluate supplier practices, environmental impact, and social responsibility.
- Set clear ESG goals and align them with your sustainable procurement initiatives. This includes embedding sustainability criteria into procurement processes and decision-making.
- Engage key stakeholders and other stakeholders—including management, procurement, sustainability, and compliance teams—in the development and implementation of sustainable procurement initiatives to ensure alignment and support.
- Provide training and resources for procurement professionals to help them adopt ESG principles and implement best practices in sustainable procurement.
When monitoring and reporting, procurement leaders play a crucial role in tracking progress and ensuring compliance. Improving transparency in ESG reporting and supplier collaboration is vital to build trust and meet regulatory standards.
By implementing ESG and environmental strategies, organizations can improve sustainability, embed sustainability into procurement, and create resilient, responsible supply chains.
Assess Your Baseline
Audit your current environmental and social performance, including assessing environmental factors and energy consumption. Identify where emissions arise, what your diversity data looks like, and where governance gaps may exist.
Set Measurable Goals
Define clear targets for emissions reduction, waste reduction, waste management, workforce inclusion, or ethical sourcing. Align them with NHS milestones—for example, matching its Net Zero by 2045 pathway.
Develop a Carbon Reduction Plan
Even if you’re not yet required to, start early. A board-approved CRP signals maturity and readiness for major tenders. Incorporating circular economy principles and sustainable sourcing into your Carbon Reduction Plan supports a transition to a circular economy, helping reduce waste, promote resource efficiency, and align with broader sustainability goals.
Engage Your Supply Chain
NHS sustainability expectations cascade down to every tier of suppliers. Communicate your ESG goals to partners, gather their data, and encourage improvement. When engaging your supply chain, prioritize selecting sustainable suppliers by evaluating their environmental, social, and governance (ESG) standards, and encourage the use of recycled materials in products and packaging. Managing supply chain disruptions is also crucial to ensure resilience and alignment with ESG objectives.
Monitor and Report Progress
Collect and report ESG data consistently. Buyers value transparency and will often reward suppliers who can show ongoing improvement. ESG reporting is essential for buyers and stakeholders, as it demonstrates a company’s commitment to disclosing environmental, social, and governance data and builds trust.
Integrate ESG into Tender Responses
When writing bids, avoid generic claims. Use specific, quantifiable examples—such as “We will transition 50% of our delivery fleet to electric vehicles by 2026, reducing annual emissions by X tonnes.” Demonstrate your ESG practices by clearly addressing relevant ESG factors, such as environmental impact, social responsibility, and governance standards, and explain how these influence your operations and decision-making.
Adopt a structured approach to presenting ESG information in your tender responses, ensuring your commitments are systematic, measurable, and aligned with procurement requirements.
By embedding these practices, you turn ESG from an obligation into a differentiator.
ESG Due Diligence in Healthcare Tenders
In NHS procurement, ESG due diligence now plays a decisive role. Suppliers must provide evidence of compliance and positive impact before contract award.
What Buyers Check:
- Carbon Reduction Plans and proof of emissions reporting
- Modern Slavery Statements and ethical sourcing audits
- Health & Safety, Equality, and Data Protection policies
- Track record: previous delivery of social value commitments
Failure to meet these checks can disqualify a bid outright. NHS buyers increasingly use tools such as the Evergreen Sustainable Supplier Assessment to verify ESG claims and track supplier improvement over time.
The takeaway? Treat ESG commitments as contractual obligations. If you make promises in your bid, be ready to deliver and evidence them throughout the contract lifecycle. Schedule a free demo
ESG Data: What Buyers Expect and How to Present It
Accurate, credible data is the foundation of effective ESG performance. NHS buyers look for transparency and comparability, not perfection.
Key Data Points to Include:
- Scope 1, 2 and 3 carbon emissions
- Targets and timelines for emission reductions
- Social impact metrics (local jobs, apprenticeships, wellbeing programmes)
- Governance indicators (policy adherence, training, audits)
Ensure your data is consistent, verifiable, and aligned with recognised frameworks such as ISO 14001 or the NHS Evergreen tool. Visual dashboards or concise tables can make data easier to interpret in tender submissions—showing professionalism and confidence in your reporting.
ESG Benefits: Why It’s More Than Compliance
Strong ESG performance is more than a procurement requirement—it’s a competitive advantage.
- Higher Bid Scores: ESG criteria often account for 10–15% of total evaluation weighting, making it a key differentiator.
- Reputation and Trust: Aligning with NHS sustainability goals and environmental sustainability frameworks builds credibility and can lead to long-term partnerships.
- Innovation: ESG drives new solutions—low-carbon products, circular supply chains, or community health programmes—that meet both environmental and patient needs while supporting sustainable practices.
- Risk Reduction: Transparent governance and ethical sourcing protect against exclusion, legal risk, and reputational damage.
- Sustainable Growth: Integrating ESG supports sustainable growth by promoting resource efficiency, reducing environmental impact, and aligning with circular economy principles.
Suppliers who proactively align with ESG are not only more likely to win contracts but also better equipped to retain them through ongoing performance monitoring and commitment to environmental sustainability and sustainable practices.
Solving Health Procurement Challenges Through ESG
ESG provides a practical framework for tackling some of the health system’s biggest challenges—rising costs, inequalities, and climate impacts.
- Environmental: Adopting environmentally sustainable practices and measures to reduce greenhouse gas emissions, such as reducing waste and energy use, improves cost efficiency and resilience.
- Social: Investing in workforce diversity and community wellbeing strengthens local economies and healthcare access.
- Governance: Transparent, ethical operations ensure accountability and trust across complex supply chains.
In essence, adopting ESG principles helps suppliers and buyers collaborate more strategically—delivering contracts that add measurable social and environmental value, improve sustainability, and address health procurement challenges alongside financial performance.
Make ESG a Priority in Your Next Health Tender
ESG is now a defining feature of healthcare procurement. From carbon reporting to community benefit, NHS buyers expect suppliers to demonstrate leadership, not just compliance.
By embedding ESG into your procurement strategy today, your business will be well positioned to meet future requirements and stand out in a competitive market.
Ready to integrate ESG into your tenders?
Explore how HCI Contracts can help you stay compliant, strengthen your strategy, and win more sustainable healthcare contracts.