Responsible sourcing is the incorporation of social, environmental and ethical considerations into purchasing decisions. It is a process or framework designed to generate more positive sustainability impacts from the supply chain. These impacts could be at the company level (e.g. fair treatment of employees; law-abiding and non-corrupt operations etc.) and/or at the product level (e.g. carbon/water/waste impact of a product manufacturing process etc.). The aim is to improve these impacts through supplier and product selection, engagement, measurement and continuous improvement.
In terms of supplier and product selection, responsible sourcing is typically integrated through Supplier Sustainability Appraisal Questionnaires, which ask suppliers about a range of sustainability impacts and compliance issues. Best practice standards e.g. FSC/PEFC for timber products (e.g. paper/cardboard) provide useful reference points to guide product purchasing decisions. Questionnaire scores should be factored into purchasing decisions, and also form a benchmark for improvement over time e.g. target an average supplier sustainability score increase of X% over X years.
Lack of supply chain alignment with your sustainability ambitions does not mean you should change supplier, but rather highlights an opportunity for engagement. For example, when working with one of our clients we found that only 12% of their core suppliers had credible carbon targets and less than half measured their carbon footprint. With limited suppliers able to offer the services the client needed, changing suppliers was not an option. The solution, and our recommendation, was therefore targeted engagement activities to educate, inspire and enable carbon footprint measurement in the supply chain.
Having a truly sustainable supply chain is not possible or practical for most companies. Everything has a sustainability impact – for example even certified sustainably sourced timber still has an carbon impact. What is important is for companies to understand their most significant supply chain impacts and have a way of measuring and tracking improvement. At a simple level this could be a gradual reduction of impact (e.g. embodied carbon) or increase in proportion of certified products (e.g. % timber purchased with FSC/PEFC certification).
Where responsible sourcing gets complicated is when companies buy many different products, each with their own social/environmental impacts, which is a challenge for many organisations. For these complex supply chains, producing a heat map of product sustainability impacts is vital because it enables companies to understand at a product level, the collective sustainability impacts of their supply chain. Selection, engagement and measurement can then be focussed on the key areas in terms of spend and sustainability impact. To make this simple for procurement and purchasing decision makers, providing a single unified framework for different products can be helpful. For example, for a restaurant and events company we narrowed down the c.5,000 food products purchased into 7 key foods/product types with significant spend and sustainability impacts, and for each defined minimum, medium and best practice standards to align with. These standards were designed to be largely achievable through their existing supply chain. This simple framework made it easy for chefs and purchasing decision makers to instantly shift their spend to more responsible products.
If you need any assistance with developing and implementing a responsible sourcing framework as part of your wider ESG/Sustainability Strategy or as a stand-alone project, contact Rawstone Consulting here.