ChatGPT & AI in
Procurement Course

Free Preview Lesson

Written by Marijn Overvest | Reviewed by Sjoed Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Ethical and Sustainable Sourcing Everything You Should Know

Key takeaways

  • Ethical and sustainable sourcing means obtaining goods produced responsibly and minimizing harm to people and the environment.
  • It defends human rights and the environment by addressing climate change and promoting responsible practices.
  • It reflects a shared commitment to creating socially responsible and sustainability-oriented cultures across all industries. 

In an era where businesses and stakeholders are becoming more conscious of their social and environmental impact, ethical and sustainable sourcing has become an increasingly indispensable asset of modern procurement.

Ethics and sustainability in business represent more than just trends, they reflect a collective commitment to fostering equitable and environmentally responsible cultures across the global business landscape.

In this article, we will explore the principles of ethical and sustainable sourcing, the various challenges and solutions, as well as the benefits it brings to procurement and sourcing operations overall. 

I have created a free-to-download editable Sustainable Procurement Policy templateIt’s a PowerPoint file, together with an Excel filethat can help you with your ethical and sustainability goals. I even created a video where I’ll explain how you can use this template.

What is Ethical and Sustainable Sourcing?

Ethical and sustainable sourcing refers to the practice of incorporating social responsibility and environmental sustainability within procurement and supply chain operations. While they are equally important, there are some key distinctions between ethical sourcing and sustainable sourcing.

1. Ethical Sourcing

Ethical sourcing refers to the process of acquiring products that are manufactured, selected, and procured with ethical and social responsibility in mind.

It ensures that all products and services are manufactured and obtained through methods that honor human rights, social responsibility, and ethical business practices.

2. Sustainable Sourcing

Also referred to as eco-friendly sourcing, sustainable sourcing is the process of selecting products, materials, and services through socially and environmentally responsible business ways.

It encompasses reducing environmental impact, minimizing use of non-renewable resources, and protecting biodiversity.

The Significance of Ethical and Sustainable Sourcing

Ethical and sustainable sourcing is an important aspect of protecting human rights and the environment. In a modern business landscape, it plays a crucial role in promoting responsible practices and sustainable alternatives while fostering economic growth and organizational success.

At its core, sustainable sourcing enables businesses to reduce the environmental impact of their business operations. Consistent efforts need to be made to mitigate climate change, and sustainable sourcing helps to achieve that by promoting resource conservation and reduction of greenhouse gas emissions.

Ethical sourcing highlights social responsibility through fair labor practices and the protection of human rights throughout the supply chain. Businesses that implement ethical sourcing practices are able to contribute to community development while upholding human rights and labor equity.

Moreover, businesses that prioritize ethical and sustainable sourcing practices often have a positive brand image. This creates investment appeal in the market, as stakeholders and customers value brands whose products and services align with socially and environmentally responsible values.

Principles of Ethical and Sustainable Sourcing

Ethical and sustainable sourcing integrates environmentally sustainable and ethical business practices into procurement processes and supply chain operations. Some core principles of ethical and sustainable sourcing include:

1. Environmental responsibility

One of the core principles of ethical and sustainable sourcing is minimizing environmental impact in order to protect ecosystems and mitigate climate change. Key practices include energy conservation, reduced resource consumption, and minimizing pollution.

2. Fair labor practices

This entails creating safe working conditions, upholding labor rights, and providing fair wages to all workers. Ethical sourcing emphasizes fair treatment of all workers involved in the procurement process, regardless of their position in the supply chain.

3. Supply chain transparency

In ethical and sustainable sourcing, transparency is crucial in building trust and promoting accountability. It involves full traceability and disclosure of information on all operations, from production processes to supply chain activities.

4. Local community engagement

Local community support focuses on creating a positive impact on communities where sourcing processes take place. It highlights the importance of ensuring that business operations are carried out responsibly and with the welfare of local communities in mind.

Companies who Embraced Ethical and Sustainable Sourcing

In a business landscape where social and environmental awareness are increasingly emphasized, more companies are acknowledging the significance of sourcing products and materials through ethical and sustainable ways.

These organizations aim to showcase their commitment to implementing business practices that uphold the wellbeing of both people and the planet through various initiatives and community programs, making consistent efforts toward social responsibility.

Here are some examples of companies that implemented ethical and sustainable sourcing practices, embracing a business culture of environmental awareness and social responsibility:

1. Ben & Jerry’s 

Ben & Jerry’s is known for its commitment to ethical sourcing of ingredients and fair trade practices through various social responsibility initiatives. The American ice cream manufacturer is well-known for its strong partnerships with local farmers and its support of the improvement of their working conditions.

Furthermore, Ben & Jerry’s has developed a responsible dairy farming system that allows joint housing for calf and cow, thereby securing the welfare of cows and creating an effective and ethical sourcing strategy through ethical trade practices.

2. The Body Shop

British cosmetics company The Body Shop, is well-known for its dedication to social responsibility and sustainability throughout its supply chain operations. Their sustainability efforts include environmentally responsible sourcing of natural ingredients, recycled paper packaging, and handcrafted shea butter.

The Body Shop also emphasizes its commitment to upholding human rights through promoting fair trade prices and terms, local community projects, safe working conditions, and ethical employment free from child labor and exploitation.

Furthermore, The Body Shop’s Community Fair Trade program is verified by ECOCERT, which involves independent verification and regular auditing on operations throughout the supply chain and the business itself.

3. New Belgium Brewing

New Belgium Brewing, and employee-owned U.S. brewery, is known for its unique shareholding structure and commitment to environmental responsibility. They have showcased their commitment to ethical and sustainable sourcing through responsible brewing and sourcing practices.

The brewery is able to ethically source their ingredients, such as organic malt and hops, by working with sustainable suppliers who share their commitment to ethical and sustainable sourcing practices.

Being an employee-owned company, New Belgium’s employees are actively involved in decision-making and contribute to the success of the company’s operations. Furthermore, the brewery emphasizes sustainability in its brewing operations through the use of renewable energy sources, water conservation, and waste reduction.

Conclusion

In conclusion, ethical and sustainable sourcing has become increasingly crucial in modern procurement. Its significance highlights not only trends and best practices but the protection of human rights and environmental conservation. Ethical and sustainable sourcing reflects a shared commitment to creating socially responsible and sustainability-oriented cultures across all industries.

Despite the numerous challenges businesses may face in adopting ethical and sustainable sourcing practices, there are much greater solutions that can aid companies in overcoming the roadblocks to social and environmental responsibility. Awareness, transparency, supply chain visibility, third-party audits, and more are key among the solutions that help companies implement ethical and sustainable sourcing practices.

This modern era of emphasized awareness surrounding social and environmental issues, it is imperative that businesses across the global enterprise adopt ethical and sustainable sourcing practices. It is a path toward socially responsible and sustainable procurement that benefits both people and the planet.

Frequentlyasked questions

What is ethical and sustainable sourcing?

Ethical and sustainable sourcing refers to the practice of incorporating social responsibility and environmental sustainability within procurement and supply chain operations.

Why is ethical and sustainable sourcing important?

Ethical and sustainable sourcing is an important aspect of protecting human rights and the environment. In a modern business landscape, it plays a crucial role in promoting responsible practices and sustainable alternatives while fostering economic growth and organizational success.

What are the key principles of ethical and sustainable sourcing?

Some core principles of ethical and sustainable sourcing include environmental responsibility, fair labor practices, supply chain transparency, and local community engagement.

About the author

My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

Marijn Overvest Procurement Tactics

Popular Procurement Courses

At Procurement Tactics, we educate Procurement Professionals to close better deals, secure supply and advance their career. Our courses are online and self-paced.

View all courses →

Negotiation Course

Negotiation Course for Procurement

Learn from industry experts who negotiated billion $ deals

Negotiation Course

ChatGPT & AI in Procurement Course

Unleash the power of ChatGPT & AI within procurement

Negotiation Course

Mini-MBA for Procurement Managers

Enhance your expertise to make valuable strategic contributions

Related Articles

Explore all articles →

Strawberry Prices – Historical Graph [Realtime Updates]

Strawberry Prices – Historical Graph [Realtime Updates]

Strawberry Prices – Historical GraphPopular questions about strawberry prices: Why are strawberry prices fluctuating? Which variables impact the price of strawberries? Where do strawberries come from? What is the future price of strawberries? Strawberry Prices...

read more

75 ChatGPT Prompts
to 10X Your Productivity in Procurement