Direct, Indirect, and Green Procurement: A Corporate Guide to Climate-Aligned Sourcing

When it comes to sustainability, procurement plays a pivotal role in how organizations align their operations with climate goals. With ESG-consciousness growing in today’s corporate landscape, and climate regulations tightening, procurement is no longer just limited to price negotiations or vendor management. Today, Procurement decisions are now central to environmental responsibility, supply chain resilience, and brand value. There are different types of procurement and they contribute to a company’s broader goals in different ways.

1. Direct Procurement: The Core of Production

Direct procurement refers to the sourcing of goods and materials that are directly used in a company’s core operations or production process. These include raw materials, components, and parts essential to manufacturing. This can be something as simple as a cement manufacturer sourcing limestone, or an auto company purchasing steel and electronic parts. It can also refer to a food company procuring packaging materials

Direct procurement is crucial as it impacts product quality, pricing, and timelines in the most critical ways. Any delays or sustainability issues in this category can severely affect end products and brand credibility. Today, many manufacturers are embedding sustainability criteria even into direct procurement—such as sourcing low-carbon steel or recycled materials.

2. Indirect Procurement: Enabling Business Operations

Indirect procurement deals with goods and services not directly tied to the core product but necessary for day-to-day operations. This refers to office supplies and equipment, IT services and software, marketing and facility management as well as logistics and utilities.

While this is often overlooked, indirect procurement also has a sizable carbon footprint, especially in high-emission sectors such as energy use, waste management, and outsourced services. Optimizing this category for sustainability can lead to cost savings and emissions reductions.

Photo by Erwan Hesry on Unsplash

3. Green Procurement: Sustainability Embedded by Design

Green procurement, or sustainable procurement, involves choosing products and services that have minimal environmental and social impact across their lifecycle. This can be done through sourcing renewable energy for operations, choosing suppliers with ethical labor practices, procuring recycled or recyclable materials and selecting eco-certified vendors or local suppliers to reduce transport emissions.

Green procurement is crucial for companies aiming to meet net-zero goals, improve ESG scores, and comply with evolving climate regulations. It also builds resilience against future environmental risks and aligns with stakeholder expectations.

According to a 2023 UNEP report, companies that embed sustainability into their procurement decisions are more likely to outperform peers in long-term value creation and risk management.

4. Sustainable Services Procurement

Besides green procurement, another sustainable practice are green services procurement. These focus on contracting vendors and service providers whose operations align with environmental and social governance standards. These can include partnering with carbon-neutral logistics providers, hiring waste management companies with circular economy models, engaging consultants or auditors for ESG performance tracking and using green-certified construction and facility services.

Services are a significant part of a business's footprint. Ensuring that service partners share your climate goals strengthens the entire value chain.

Procurement is at the heart of corporate sustainability and risk mitigation. As regulations like the UAE’s Federal Decree-Law No. 11 of 2024 make emissions measurement and reporting mandatory by law, integrating green, direct, and sustainable procurement is no longer optional—it’s strategic.

At Fitsol, we support businesses in decarbonizing their procurement through smart sourcing, ESG-aligned supplier assessments, and carbon tracking tools. Whether you're sourcing raw materials or digital services, aligning your procurement strategy with climate goals is the smartest move forward.