There are lots of reasons why it makes good business sense to source ethically. For example, some companies have found that the increased communication with suppliers entailed in implementing an ethical sourcing strategy can help build trust among suppliers and so increase efficiency in their supply chain. Larger public companies can also attract investment, as ethically motivated investors grow in number.
For many small businesses, the primary business motivation for sourcing ethically is as a source of market differentiation with their customers. There are many signs that ‘conscientious consumers' are growing in number, prompting many small companies to market themselves and/or their products as ‘ethical' or ‘fairly traded'.
If you are thinking of doing this, it is important that you are very clear about what statements you make to consumers. Be careful not to make claims that cannot be backed up by evidence, as you could be criticised for misleading your customers.
How you prioritise your efforts will depend on the size of your business, how much experience you already have, what industry you are in and how complex your supply chain is. As a rule of thumb, any company starting out in ethical trade, whatever its size, should at least:
- develop a code of labour practice based on all the relevant conventions of the International Labour Organisation (we encourage companies to adopt the ETI Base Code);
- get management and staff buy-in;
- make sure you have adequate skills and resources for the job;
- find out as much as possible about your suppliers and assess conditions in their workplaces;
- communicate regularly with your suppliers and work with them to make sure they improve over time; and
- make sure your buying practices (eg, lead times, pricing) don't constrain suppliers' ability to comply with your code.