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Steps to Implement Ethical Sourcing to Spark Positive Change

from  June 12, 2024 | 4 min read

Ethical sourcing is a core pillar of acquiring goods and services in a manner that prioritizes environmental responsibility. As businesses increasingly acknowledge their role in driving transformation, procurement professionals are leading the way by spearheading initiatives that not only align with business goals, but also contributes to the broader welfare.

Grasping the Concept of Ethical Sourcing

Ethical sourcing revolves around selecting suppliers and products based on criteria that extend beyond cost and quality considerations. It involves a dedication to sustainability, fair labor standards, and social accountability. The objective is to ensure that every stage in the supply chain abides by guidelines starting from raw material extraction all the way to delivering the product to consumers.

Crucial elements of sourcing encompass:

  • Environmental Sustainability: Giving preference to suppliers who utilize eco-centric materials to minimize waste generation and reduce their carbon footprint.

  • Fair Labor Standards: Guaranteeing proper treatment of workers, ensuring appropriate wages and maintaining safe working conditions. 

  • Community Engagement: Backing suppliers who make contributions to communities through practices such as local hiring and community development endeavors.

The Business Argument for Ethical Procurement

While the ethical reasons for procurement are evident, there are also business incentives to embrace this strategy. Companies that prioritize ethical sourcing can reap benefits such as:

  • Brand Image: Consumers are increasingly mindful of the practices of the brands they endorse. Businesses recognized for their sourcing can cultivate loyal customer bases.

  • Risk Management: Ethical procurement helps mitigate the risks of supply chain disruptions stemming from labor disputes, regulatory penalties, and adverse publicity linked to poor behaviors.

  • Supplier Creativity: By nurturing partnerships with aligned suppliers, companies can spur innovation and ensure a more resilient supply chain.

  • Employee Involvement: Workers are more likely to feel proud and motivated when working for an organization that shares their values and exhibits a dedication to environmental accountability. Positive morale is always a net good for talent acquisition and employee retention.

Incorporating Ethical Procurement in Your Company

Here are some actions procurement experts can take to ensure that their supply chains uphold environmental responsibility:

  1. Establish Clear Guidelines and Criteria: Develop a policy on sourcing that articulates the company’s pledge to sustainability equitable labor practices and community contributions. Clearly outline expectations for suppliers. Consistently communicate these standards.
  2. Evaluate Suppliers Regularly: It's important to assess suppliers to ensure they follow practices. This can include conducting audits, visiting their facilities, and having them fill out questionnaires about their labor practices, environmental policies, and community involvement. In today’s digital age of procurement, a Supplier Management solution is an ideal way to gather this relevant data into a central repository and manage the lifespan of the supplier relationship to ensure ongoing compliance.
  3. Engage Stakeholders: It's crucial to involve stakeholders including management, employees, and suppliers, in developing and implementing ethical sourcing initiatives. Collaboration and support from all parties are key to achieving success.
  4. Provide Training and Resources: Offer training for procurement teams on sourcing principles and methods. Give them the tools and resources to evaluate suppliers effectively and make informed decisions. Proper supply chain monitoring and compliance software is a great place to start.
  5. Track Progress and Report: Set up metrics to monitor the progress of sourcing efforts. Regularly share updates on these metrics with both external and internal stakeholders to showcase the company’s dedication to advancement.

Ethical sourcing isn't a passing trend, it signifies a shift in how businesses approach procurement. By emphasizing environmental responsibility procurement experts can drive change promoting a more sustainable and fairer world. The advantages of sourcing go beyond obligations as they also boost brand reputation mitigate risks and encourage innovation. As more businesses adopt the ethos of "procure with purpose " they set the stage for a future where ethical values and business success are intertwined seamlessly.

Henrik Leerberg

Vice President, Global Procurement Marketing - Marketing Scanmarket

As Scanmarket's Vice President, Global Procurement Marketing Henrik oversees all marketing activities globally by fueling growth and creating value for both existing and new customers. Henrik has worked in software and electronics businesses throughout his entire career, operating in B2B markets. With more than 25 years of leadership experience from a range of software companies, Henrik has built a solid foundation for a broad business understanding within all aspects from engineering over marketing and sales to administration. Henrik holds degrees in Marketing and Business Administration and in Electrical Engineering.