The Future of Ethical Sourcing

This report examines the widening agenda of ethical sourcing using a survey of those who work in retail. Retailers with comprehensive ethical sourcing policies in place, addressing environmental as well as labour sourcing concerns, are in the best position to cover rising production costs. All retailers must respond now to keep up with competitors who already have a key advantage.



Report Highlights
The scope of ethical sourcing is changing. It now focuses on minimising the exploitation of all resources in the supply chain, not just the traditionally accepted agenda of improving labour conditions. Environmental sourcing concerns are set to become even more important over the next five years. Ethical sourcing is expected to increase production costs by between 5% -10%. With consumers willing to pay a premium for a benefit that offsets guilt about other forms of environmental damage, retailers who embrace the full ethical agenda can offset increased production costs with higher price points. An ethical sourcing policy is only as strong as its weakest link and every aspect of a retailer's ethical sourcing programme requires investment.


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VERDICT VIEW 2
CATALYST 2
Consumers are increasingly concerned about ethical standards throughout retailers’ supply chains, and retailers need answers to the following questions: 2
SUMMARY 2
ANALYSIS 4
Introduction – The Survey and the Widening Agenda of Ethical Sourcing 4
Methodology 4
How Important is Corporate Social Responsibility (CSR)? 6
Components of CSR and Their Importance 7
Sector Basis 9
Labour Issues in the Supply Chain 11
Change in the Importance of Labour Issues Going Forward 12
Ethical Sourcing 14
Drivers of an Ethical Sourcing Policy 15
Role of Consumers 17
The Value Clothing Sector 17
The Cost of Ethical Sourcing 18
Ways to Further Improve Sourcing and Cut Costs 20
Environmental Issues in the Supply Chain 21
Importance of Environmental Issues 21
Change in the Importance of Environmental Issues Going Forward 22
Labour vs Environmental – The Changing Balance 24
A Class Leader – Marks & Spencer 26
Conclusion 28

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Table 1: The importance of CSR issues (sum – as above) 2007 8


Figure 1: Traditional understanding of ethical sourcing pre-2007 6
Figure 2: The importance of CSR 2007 7
Figure 3: The importance of CSR issues 2007 8
Figure 4: The importance of CSR issues among those working in clothing & footwear 2007 10
Figure 5: The importance of CSR issues among those working in food & grocery 2007 11
Figure 6: The importance of labour issues (to all survey respondents) 2007 12
Figure 7: How do you believe the importance of each of the following labour issues will change in the next five years? (to all survey respondents) 2012 on 2007 13
Figure 8: Labour issues ranked by importance now and in five years 2007 and 2012 14
Figure 9: Drivers of an ethical sourcing policy (to all survey respondents) 2007 16
Figure 10: How consumers drive ethical sourcing 18
Figure 11: Key cost components of ethical sourcing 19
Figure 12: To what extent do you expect ethical sourcing to drive up production costs? 2007 20
Figure 13: The importance of environmental issues (to all survey respondents) 2007 22
Figure 14: How do you believe the importance of each of the following environmental issues will change in the next five years? (to all survey respondents) 2012 on 2007 23
Figure 15: Environmental issues ranked by importance now and in five years 2007 and 2012 24
Figure 16: Average importance of labour and environmental issues 2007 and 2012 25
Figure 17: Evolution of ethical sourcing up to 2007 26
Figure 18: Marks & Spencer's Plan A – five main commitment areas 2007 27


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