How to Ensure Your Business Has an Ethical Supply Chain
Ensuring an ethical supply chain has become a critical priority for businesses across industries. Companies are increasingly recognising that their responsibilities extend beyond their immediate operations to encompass the practices of their suppliers and partners.
In today's world, where consumers and investors are increasingly scrutinising corporate behaviour, having a transparent and responsible supply chain is no longer optional — it's a business imperative
Investing in an ethical supply chain can yield long-term benefits for businesses. These include enhanced brand reputation, improved risk management and increased customer loyalty.
It can also lead to operational efficiencies and cost savings through better resource management and reduced waste.
The market for ethical supply chain solutions is experiencing significant growth.
According to Growth Market Reports, the global sustainable supply chain finance market size was US$1.3bn in 2023 and is projected to reach US$3.3bn by 2032, expanding at a CAGR of 17.4% during 2024–2032.
How to develop a code of conduct
To establish an ethical supply chain, businesses must first develop a comprehensive code of conduct which outlines their expectations for suppliers. This code should address issues such as labour practices, environmental sustainability and anti-corruption measures.
Companies must then implement rigorous vetting processes to assess potential suppliers against these standards before entering into partnerships.
Ongoing monitoring and auditing of suppliers are essential to maintain ethical standards throughout the supply chain. This can involve regular site visits, third-party audits and using technology to track supplier performance.
Companies should also invest in training to help suppliers improve their practices and meet ethical standards.
What the biggest corporations do
Several major corporations have implemented noteworthy ethical supply chain initiatives.
Microsoft has committed to becoming carbon negative by 2030 and has extended this goal to its supply chain. The company requires its suppliers to disclose their greenhouse gas emissions and set reduction targets.
Salesforce has implemented a supplier code of conduct that covers areas such as human rights, environmental sustainability, and ethical business practices. The company conducts regular assessments of its suppliers to ensure compliance.
Intel has focused on responsible sourcing of minerals in its supply chain. The company has implemented a due diligence programme to ensure that minerals used in its products are not sourced from conflict-affected areas.
Johnson & Johnson has developed a set of standards for suppliers that outlines expectations for ethical business conduct, labour practices and environmental responsibility. Like Salesforce, the company conducts regular audits of its suppliers to verify compliance.
And Nike has made significant efforts to improve labour conditions in its supply chain. The company publishes a list of its contract factories and conducts regular audits to assess working conditions and environmental performance.
The role of technology
Technology plays a crucial role in managing ethical supply chains. Blockchain solutions can provide transparency and traceability throughout the supply chain, while artificial intelligence and machine learning can help identify potential risks and anomalies.
When things go wrong
Of course, when things go wrong, companies must be prepared to address issues. This involves having clear procedures for investigating and remediating problems, as well as mechanisms for suppliers to report concerns without fear of retaliation.
And don’t be afraid to put your hand up when there is a problem. In fact, acting quickly can put you in a better light.
Communicating with stakeholders is vital, demonstrating your company’s commitment to ethical supply chain practices and building trust with consumers, investors and regulators.
Make sure you check out the latest edition of Business Chief and also sign up to our global conference series - Sustainability LIVE
Business Chief is a BizClik brand
