In 2024, as the UK continues to navigate its post-Brexit economic landscape and adapt to global challenges like climate change, sustainability has become a driving force in business decision-making. For procurement professionals, ethical sourcing—also known as sustainable sourcing—has shifted from a “nice-to-have” to an essential strategy.
More than ever, procurement is not only about securing the best price, but also about ensuring that suppliers operate in environmentally responsible, socially equitable, and ethically sound ways. Ethical procurement involves selecting suppliers and sourcing products that are produced with a commitment to sustainability and social responsibility. As consumers, investors, and governments alike demand more transparency and accountability from businesses, ethical sourcing is no longer optional; it’s a business imperative.
In this blog, we will explore why ethical procurement is crucial for businesses in the UK in 2024, the benefits of sustainable sourcing, and the steps procurement teams can take to ensure their sourcing strategies align with ethical principles.
The Growing Demand for Ethical Sourcing
1. Consumer Expectations: UK consumers are increasingly making purchasing decisions based on ethical considerations. According to a 2023 survey by the Ethical Consumer, 60% of UK consumers now consider the ethical practices of a company when making a purchase, with the environment and human rights being primary concerns. This growing trend has prompted companies to rethink how they source products and services, shifting towards suppliers who align with ethical standards. Businesses that are perceived as ethical and environmentally responsible gain a competitive edge in today’s marketplace. The demand for fair-trade goods, products made from sustainable materials, and those produced with minimal environmental impact is higher than ever. For procurement professionals, this means the pressure is on to source products that not only meet quality and price criteria but also support sustainability, fair labour practices, and responsible environmental stewardship.
2. Regulatory Pressure: Sustainability is also being shaped by regulations, which are tightening year after year. In 2024, UK businesses are facing increasingly stringent requirements on sustainability disclosures and ethical practices. The UK Modern Slavery Act, for example, requires businesses with a turnover of £36 million or more to disclose their efforts to tackle modern slavery within their supply chains. In addition, the UK government has set ambitious goals for reducing carbon emissions, which will directly impact procurement strategies. The UK’s National Procurement Policy Statement, introduced in 2021, stresses that procurement should drive value for money while promoting social value and environmental sustainability. This shift in policy further underscores the importance of sustainable sourcing for businesses in both the private and public sectors. Compliance with these regulations is not just a legal requirement—it’s a fundamental part of demonstrating corporate responsibility and future-proofing the business.
3. Investor Expectations: Environmental, social, and governance (ESG) criteria are now a major factor in investment decisions. ESG-focused investors are looking for companies that show a commitment to sustainable sourcing, ethical business practices, and social responsibility. Firms that fail to meet these expectations may find themselves at a disadvantage in attracting investment. In 2024, procurement is no longer just a cost-centre; it’s a key function for ensuring that a company’s entire value chain meets the expectations of socially conscious investors. Companies with strong, transparent supply chains and a proven commitment to sustainable sourcing are likely to be better positioned to secure funding and maintain investor confidence.
4. Employee and Talent Attraction: Today’s workforce is increasingly aligned with values such as sustainability, social justice, and environmental stewardship. Millennials and Generation Z, in particular, are driving this change, with a growing number of young professionals seeking employers who reflect their ethical beliefs. Research shows that a significant percentage of young employees want to work for companies that prioritise sustainability and ethical practices. By adopting ethical procurement strategies, companies can enhance their reputation as employers of choice and attract top talent who are committed to making a positive impact through their work. This, in turn, fosters greater employee satisfaction, retention, and productivity.
The Benefits of Ethical Procurement
1. Building a Positive Brand Image: An organisation that prioritises ethical sourcing is seen as a responsible corporate citizen, which can significantly enhance its reputation. Customers, investors, and employees are more likely to engage with and support a company that demonstrates a commitment to environmental sustainability and social responsibility. In the UK, several brands have already taken significant steps towards responsible sourcing. For instance, companies like Marks & Spencer and John Lewis have committed to sourcing products that adhere to strict ethical standards, ensuring fair wages for workers and reducing environmental impact. By promoting these efforts, businesses not only contribute positively to society but also strengthen their brand image and loyalty.
2. Reducing Supply Chain Risks: Ethical sourcing helps mitigate risks related to unethical business practices, such as child labour, unsafe working conditions, and environmental degradation. By ensuring that suppliers adhere to social and environmental standards, procurement teams can minimise the risk of scandals or disruptions caused by unethical practices in the supply chain. Additionally, companies with ethical supply chains are less likely to face penalties or legal challenges related to non-compliance with sustainability regulations. This reduces both reputational and financial risks, helping businesses operate more smoothly and avoid costly litigation or compliance issues.
3. Promoting Innovation and Competitive Advantage: Ethical procurement opens the door to innovative business models and partnerships that support sustainability. For instance, companies that embrace sustainable sourcing can collaborate with suppliers to create eco-friendly products or develop closed-loop systems, where products are designed to be recycled or repurposed at the end of their lifecycle. Moreover, businesses that are early adopters of sustainable practices often gain a competitive edge. As more companies move towards ethical procurement, early movers can establish themselves as leaders in the space, building a reputation for being forward-thinking and responsible.
4. Cost Savings Through Efficiency: Sustainable sourcing can also result in long-term cost savings. For instance, companies that source materials from responsible suppliers often find that these suppliers offer higher-quality, more durable products that reduce maintenance or replacement costs. Additionally, sustainable sourcing strategies can encourage the use of local suppliers, reducing transportation costs and carbon emissions. In the long run, ethical procurement can contribute to a more resilient and cost-efficient supply chain by identifying areas where waste can be minimised and efficiency maximised.
Steps for Implementing Ethical Procurement
To integrate ethical sourcing into procurement processes, there are several steps that procurement teams can take. These steps will ensure that procurement activities align with the company’s sustainability goals and ethical commitments.
1. Establish Clear Ethical Procurement Policies: The first step in adopting ethical procurement is to create a clear and comprehensive procurement policy that outlines the organisation’s commitment to ethical sourcing. This policy should define the ethical criteria that suppliers must meet, including standards for labour practices, environmental responsibility, and sustainability. In addition, the policy should outline how procurement teams will assess suppliers, measure compliance, and address any violations of ethical standards. Establishing clear guidelines ensures that all stakeholders are aligned and that procurement activities are conducted in a transparent and consistent manner.
2. Evaluate Suppliers Based on ESG Criteria: When selecting suppliers, procurement professionals should assess them based on environmental, social, and governance (ESG) criteria. This may include evaluating the supplier’s carbon emissions, waste management practices, labour conditions, and overall commitment to social responsibility. In some cases, suppliers may need to provide evidence of their adherence to ethical standards, such as certifications from third-party sustainability organisations or regular audits of their supply chain. Procurement teams can also consider the supplier’s track record in addressing issues such as modern slavery, human rights violations, and environmental impact.
3. Collaborate with Suppliers on Ethical Initiatives: Building strong, transparent relationships with suppliers is key to ensuring ethical sourcing. Procurement professionals should work closely with suppliers to help them meet sustainability and ethical standards. This may include offering training, sharing best practices, or collaborating on projects that reduce environmental impact or promote fair labour practices. Additionally, procurement teams should encourage suppliers to be transparent about their supply chains, particularly when it comes to sourcing raw materials or managing subcontractors. By fostering open communication and collaboration, businesses can build more resilient and ethical supply chains.
4. Monitor and Report on Ethical Sourcing Performance: To ensure that ethical sourcing efforts are effective, it’s important to regularly monitor and report on performance. Procurement teams should track key metrics such as the percentage of suppliers that meet ethical criteria, the number of suppliers participating in sustainability initiatives, and the environmental impact of sourced products. Regular reporting ensures transparency and accountability, allowing organisations to assess the effectiveness of their ethical sourcing strategy and make necessary adjustments.
5. Leverage Technology for Better Transparency: In 2024, technology plays an increasingly important role in ethical sourcing. Digital platforms and software solutions can help procurement teams track supplier performance, manage compliance with sustainability regulations, and ensure transparency throughout the supply chain. Tools such as supplier management software, blockchain for tracking supply chain data, and sustainability platforms can help streamline the process of monitoring suppliers and ensuring that ethical standards are met.
Conclusion
Ethical procurement is more than just a trend—it’s a business imperative that will shape the future of supply chains in the UK and beyond. In 2024, companies that embrace ethical sourcing not only reduce their environmental impact and enhance their reputation but also drive innovation, reduce risks, and create long-term value for both their organisation and society.
For procurement teams, adopting ethical sourcing strategies is essential to building a responsible and sustainable future. By setting clear ethical standards, collaborating with suppliers, and leveraging technology, businesses can take meaningful steps toward creating supply chains that are both economically and ethically sound.
