ESG Governance in Operations: Linking Ethical Procurement with Sustainable Performance from an operations Management Perspective

Abstract

Environmental, Social, and Governance (ESG) factors are becoming an increasing part of organizational strategy; but the area of governance on the operational level is under-researched. Procurement is an essential organizational process, and it is one of the main processes according to which ESG governance could be implemented into actual sustainability results. This theoretical article explores the influence of ESG governance systems on ethical procurement practices and its impacts on the environmental, social, and economic performance. This research makes a contribution to the field of operations management by defining ESG governance as operational infrastructure that turns sustainability promises into procurement and supply chain performance outcomes. Specifically, the study emphasizes the ways in which ESG-linked mechanisms of good governance affect the patterns of operational decisions in procurement and supplier management and eventually influence the performance of the production and supply system. By conceptualizing ethical procurement as an operational capability rather than an activity focused on compliance, the framework provides important insights to guide the design and management of sustainable production systems. Moreover, the proposed model offers a basis for future empirical research in the area of operation and production management.