However, it isn’t plain sailing for businesses that are on the path to sustainable sourcing and there are several organizational and operational challenges to overcome.
Sustainable sourcing means selecting suppliers that operate in an ethical, economical and environmentally conscious way. When you break down each of these factors, there is a whole range of things to consider and many complexities to figure out, such as how to best source materials, attract talent and respond to new consumer purchasing habits. Ultimately, FMCG brands are looking to purchase from the most sustainable supplier companies, businesses that avoid contributing to deforestation, exploitation of natural resources, damage to the environment or violations of human rights.
As value chains grow to increase their production capacity, they tend to expand into territories that have lower operational costs and less regulation. While the immediate costs will decrease, the risk level and need to report on their suppliers’ operational practices rises. ESG reporting is a particular challenge for brands, because they are required to achieve transparency across all of their operations based on accurate data. Maersk stated that only 53% of consumer product companies have significant or complete visibility into their own processes and only about 21% have visibility into their supplier processes, posing a significant risk for FMCG companies.
Strategies will vary depending on the products and sustainability goals for each FMCG company. But first we suggest evaluating your supply chain and engaging with your current suppliers to address the biggest environmental and social impacts associated with their operations and products. Then you can tailor your sustainable sourcing strategies to make the largest difference and gain the biggest results. Technology solutions like Cleanchain can also play a key role in identifying, tracking and reporting on this information to gain up-to-date visibility across the entire supply chain.
Once you have implemented your new sustainable sourcing strategies, your business will benefit from the following:
The total impact that sustainable sourcing can have on businesses, society and the environment is incredibly powerful, as it enables companies to align their operations with sustainable development goals, reduce their ecological footprint and contribute to a more equal and sustainable world.
Take a look at some more FMCG sustainability trends here
ADEC Innovations’ environmental, social and governance (ESG) business advances sustainable practices around the world and helps organizations responsibly grow and operate.
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