Is Ethical Sourcing the Key to Commercial Success?

Ethical sourcing has become a hot topic when it comes to business sustainability. But is it the key to commercial success? We investigate.

Ethical sourcing and wider sustainable practises in procurement are an increasingly important way for businesses to safeguard both the environment and their operations. It is an integral part for any business looking to improve resilience and future proof their model. 

Why? Because the modern customer cares about the environment. So much so that they are increasingly willing to forgo cheaper alternatives, should they be detrimental to the environment. 

Sustainable sourcing comes with plenty of benefits that stretch much further than simply matching the wants of consumers. But is it the key to future commercial success? 

The Value of Sustainability 

By now most of us understand the environmental value of ensuring supply chains are sustainable, but how does that improve business performance? Sustainable sourcing is both cost effective and great at helping companies to better understand their chains. 

It helps increase brand credibility and grow a sense of customer loyalty through aligning company values with those of the consumer and reduces product liability at the same time. 

While sustainable procurement involves proactively measuring and managing the environmental impact of each link in the chain, ethical sourcing goes deeper into the societal and humanitarian impact.

This means not just considering the environmental impacts (the ‘green’ side) of business activities, but also the social impacts (the “people” side) and their financial implications.

The value in sustainable procurement comes as it allows businesses that aim to reduce or eliminate harm to people and the planet, both now and in the future, to improve their public image while increasing sales.

Do Consumers Actually Care? 

The shift in consumer behaviour over the last few years has been well documented. Major brands like Patagonia have built business models on their sustainable credentials and seen huge success.

Around 88% of global consumers are thought to prefer buying from companies with robust ethical sourcing policies in place. This suggests that not only are consumers savvier to the impact their purchases have, but that they’re willing to sacrifice value in the process. 

If consumers genuinely care like we’re led to believe, ethical procurement is not only key to commercial success, it’s vital to business continuity.

What Happens When You Get it Wrong?

In our hyper-connected world, bad PR can be hugely damaging to businesses. Social media users are often rightly calling our companies with poor practises such as not paying a living wage or using suppliers with track records for polluting. 

Issues like modern slavery have become so prominent that the UK government even created a database of supply chain modern slavery statements. This aims to help overall visibility and promote ethical values. 

An increase in both regulations and consumer awareness has put ethical sourcing firmly on the boardroom table. For customer facing companies taking a proactive approach to improving the visibility of your business practises and accountability of your suppliers is critical to protecting your brand’s reputation.

Final Thoughts 

So, is ethical sourcing (and wider sustainability) the key to commercial success? While there are many factors that go into making a successful business, sustainability is one of the most important issues facing companies today. 

In a lot of industries, it is the key to continuity. Already, well established businesses planning for the next five years need to have sustainability at the forefront of their planning. Papering over any cracks in your environmental credentials are sure to be found out, dampening profit margins further down the line. 

What do you think? Is ethical sourcing the key to commercial success? Or are there other more important factors at play? Let us know in the comments.