Ethical sourcing is crucial to brand image and corporate responsibility. But how much do consumers care? We explore as part of our Ethical Sourcing Series.
Over the last few years, sustainability has been brought to the forefront of consumer thinking in an effort to reduce the impact of global climate change. This change to the way that consumers forge relationships with brands has taken many different shapes. From responsible product packaging and commercial energy efficiency, to route optimisation and a backlash against ‘throw away culture’, brands have had to rethink and strategise in order to compete.
A huge part of how companies can operate sustainably comes down to the importance of ethical sourcing. Ethical sourcing is the process of ensuring all goods that are manufactured are done so using responsible, sustainable and ethical methods.
But while more and more companies strive to promote themselves as ethically responsible, how much does the end consumer actually care?
Ethical Sourcing in the Modern World
The modern shift in consumer buying habits coupled with greater scrutiny of large companies has led to plenty of examples of sourcing policy changes designed to promote a ‘greener’ image. This has been especially true for industries with particularly questionable practices i.e. palm oil use in confectionary and modern slavery within fashion.
A recent study into consumer intent carried out by OpenText suggests that these policy changes are not misplaced. It found that 9 in 10 (88%) of global consumers surveyed would choose to buy from companies with ethical sourcing structures in place over ones that did not.
The same research also concluded that the impact of the COVID-19 pandemic has accelerated consumer consciousness around the topic. In the UK, it found that pre-pandemic, 69% of consumers were likely to prioritise companies with ethical sourcing policies. The figure post-pandemic had risen to 82%.
Although this seems to conclusively answer any questions around how much consumers care, there are other factors at play.
A recent Forbes article highlighted the importance of availability and convenience when it comes to the buying cycle. While 75% of respondents said they prioritised companies that ethically source, only 25% said they do so all of the time.
There is sometimes a despondency between consumers that say they prioritise ethically sourced products and the ones who actually buy them. However, the suggestion is that increasingly buyers are willing to put their money where their mouth is – according to the OpenText report, 83% of global respondents said they’d be willing to pay more for products they could be sure were ethically sourced.
Ethical Sourcing in the Supply Chain
With consumer intent clearly set out and trending in only one direction, it is critical that ethical sourcing is implemented within global supply chains. The implications for failing to do so could have a catastrophic impact on business continuity with 82% of consumers pledging their loyalty to brands with sustainable supply chains.
Beyond brand image and loyalty, profit margins could suffer. As touched on earlier, large numbers of consumers are committed to spending more on ethically sourced products. Some of those surveyed indicated that they would be happy to pay up to 50% more for products – capturing that audience and being able to charge £15 for a product that would otherwise cost £10 is a huge competitive advantage.
There are already some stark examples of where companies have been negatively impacted. For example, Volkswagen was ordered to pay back $11 billion to eco-conscious customers in the US who had been mis-sold cars with falsified emissions data in 2015. This was a scandal that went beyond VW’s supply chain and led to consumers inadvertently harming the planet by driving cars they thought were eco-friendly.
Organisational transparency is key to the success of ethical sourcing. Being totally clear and honest about what your company does to deliver its goods is the only way consumer trust can be built. Get this wrong, and it’s one big step back.
Companies need to ensure their entire supply networks are sustainable, with increasing responsibility being placed solely on their shoulders. Mitigating any greenwashing or poor practice is becoming much easier to do thanks to technologies like A.I. and Blockchain – so there’s no excuse!
Final Thoughts
So to answer the original question, the evidence suggests there is indeed a huge appetite for companies who are transparent about ethical sourcing. Recent studies give us an up to date view of the thoughts and feelings of the modern consumer.
What it also shows us is just how important the issue of ethical sourcing is to companies the world over. Be committed to ethical responsibility and transparent with your customers and you stand to benefit. But simply paying lip service or failing to take the issue seriously enough could spell disaster.
Your personal impact on Ethical Sourcing will be a key topic at this year’s Big Ideas Summit in London. We want to hear your thoughts and opinions now and on the day, helping us understand how we all can make a difference.
You can register for the Big Ideas Summit now byclicking here! But you better be quick, as spots are limited and going fast…!Register now.
