Brief synopsis: In their simplest forms, Responsible Sourcing requires meeting or complying with accepted levels of ethical or responsible practices in areas such as human rights or pollution whereas Sustainable Sourcing goes beyond compliance to engage and improve the conditions of sustainability that can include areas such as livelihoods or climate-smart practices.

Responsible Sourcing or Ethical Sourcing can be claimed when a company and its supply chains work to mitigate risk and avoid harm by meeting established (published or transparent) principles and specific compliance criteria.

Alan Jope, Unilever’s CEO, believes this is a basic requirement for business, noting that “Behaving with integrity, day in and day out, is a non-negotiable”. But operationalizing the concept of integrity takes a few steps to ensure clarity and the effectiveness of the concept. Responsible Sourcing thus typically engages at three levels:

  1. Prevention – engaging clear practices, knowing suppliers, and actively pursuing a culture of integrity to diminish risks of poor practices or violations
  2. Detection – ensuring a transparent working system to detect violations with active data-driven assessment 
  3. Response – confirming adequate policies and tools to effectively investigate and take swift action whenever necessary. 

Smart firms also use data at every level to learn and to continually improve as a way to prevent or mitigate future violations.

A company must often also know who its suppliers are and engage reasonable systems to track and assess their compliance and non-compliance. Areas of compliance should cover at least the following topic areas (not an exhaustive list):

1. Human & Workplace Rights 

  1. The prohibition of all forms of forced labor
  2. Elimination of the worst forms of child labor, including minimum working age and certain working condition requirements for children
  3. Non-discrimination in employment
  4. Freedom of association and the right to collective bargaining
  5. Work Hours and Wages
  6. Conditions that promote Health and Safety
  7. Product Safety (for producers and consumers)

2. Environmental Protection

  1. Safeguarding water sources from pollution and minimizing water use
  2. Waste management
  3. Reducing non-renewable Energy & Emissions 
  4. Forest and biodiversity protection

3. Business Integrity

  1. Ensure legal and regulatory compliance including clear and monitored corruption and bribery policies
  2. Integrate responsible sourcing principles into buying practices and incentives
  3. Available grievance mechanisms that protect revealers against retaliation
  4. Transparent record-keeping 

There are, of course, many more factors that can be considered – ranging from culturally appropriate engagement and gender inclusion-opportunity to fostering resilience of communities and climate-smart practices. Most of those tend to be part of Sustainable Sourcing approaches noted below.

Responsible Sourcing must be able to demonstrate that the product or service is sourced from responsibly managed resources and responsible suppliers that meet the criteria. To be credible, these criteria should align with global best practice as defined within relevant international norms and accords such as the ILO or the GHG Protocol.

The demonstration of responsibility must include reasonable levels of assurance to demonstrate some functional form of data monitoring and verification that minimizes the risk of misrepresentation or fraud. Such assurance balances the need to keep costs realistic, with the need for credible data and due diligence.  Multiple sources of data may be integrated to achieve this balance, including assessments completed by suppliers themselves, e-verification of uploaded documents and other information, map overlays (such as deforestation maps) and some field audits.

This would typically start with traceability or knowing who the suppliers are. Opaque supply chains, where some suppliers are unknown, prevent claims of responsible sourcing. Where supply chains include small farmers, alternatives to tracking each farmer are available. For example, a vetted producer organization, such as a cooperative, may serve as complying when it can demonstrate that it tracks and manages member compliance and non-compliance with globally accepted responsible practices that a company clearly and explicitly espouses i.e. no forced or child labor or no banned herbicides or pesticides. Similarly, if farmers carry certification to an accepted standard, that can serve as a trust proxy for knowing the farmer.

For more, see Appendix 1:

Sustainable Sourcing: Includes and goes beyond the Responsible Sourcing approach of applying compliance criteria. One distinction of Sustainable Sourcing is that it is less transactional and more engaged toward a common purpose. It not only seeks to avoid harm but also to engage in improving the performance of the supply chain and its members on key social, environmental and economic factors related to improving the lives of people and the planet. To paraphrase the philosopher-economist Kate Raworth: this is not just doing less harm but doing more good.

This can be achieved by starting with a certain level of “knowing” the members and producers and the conditions in fields, processing plants, and affiliated functions (inputs, transport, etc.). In some cases, it can be achieved with other means or by proxy as with certification to certain standards. But regardless of the approach, to source sustainably requires determining or measuring the key Social, Economic, and Environmental effects and impacts in the supply chain. See Appendix 2 for more.

To ensure both Responsible and Sustainable Sourcing, traceability is typically necessary in order to be in a position to ensure that claims and reporting are reliable. However, in some instances this may be entrusted to other entities (e.g. importers, co-ops, or certification bodies) that possess this traceability information and can credibly report on the responsible and sustainable criteria of their members or suppliers. Certifications can be reviewed to be considered compliant as can other reporting entities with less formal assurance systems.

For some companies, we calculate a risk profile, based on four factors, to assess the likelihood of supply chain fails. This numeric score can then be used to stimulate continuous improvement and drive sustainability performance forward in a neutral and logical manner.

A brief representation of the distinctions, moving from the beginnings of Responsible Sourcing toward Sustainable Sourcing, can have overlaps but generally includes a company being:

  • AWARE of sourcing issues that prevent or improve good practices
  • TRACING supply chain products or suppliers
  • COMMITTED tangibly to suppliers and sustainable sourcing practices
  • Monitoring PERFORMANCE on sustainability factors in supply chains
  • Actively engaged to understand the true IMPACT of its sourcing or programs

Fig. 1. Factors that signal progress from Responsible toward Sustainable

Appendix 1:

OECD  https://www.oecd.org/corruption-integrity/explore/topics/business-integrity.html

International Chamber of Commerce https://iccwbo.org/content/uploads/sites/3/2017/12/icc-business-integrity-compendium2017-web.pdf

International Labor Organization Declaration on Fundamental Principles and Rights at Work https://www.ilo.org/declaration/lang–en/index.htm

ABInBev https://www.ab-inbev.com/content/dam/universaltemplate/ab-inbev/Better%20World/Our%20Policies/Responsible%20Soucing%20Policy%20%20%20(10.10)_EN.pdf

Firmenich  https://www.firmenich.com/company/about-us/policies-position-statements

Unilever https://www.unilever.com/planet-and-society/responsible-business/business-integrity/

 

Appendix 2:

Various themes can be relevant and the most common include the following categories:

1. Social

  1. Gender and Youth Engagement
  2. Food Security
  3. Education
  4. Living Conditions

2. Environmental

  1. Conservation
  2. Resource Management and regenerative practices
  3. Biodiversity
  4. Climate Change

3. Economic

  1. Productivity
  2. Profitability
  3. Risk & Resilience
  4. Business Development

COSA develops metrics fully for all applications. For the basic suite of sustainability indicators see both:

COSA’s Performance Monitoring Master List
COSA’s expanded set of Impact Assessment Indicators