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How to build a sustainable supply chain
How to build a sustainable supply chain
Working with suppliers to increase sustainability offers many benefits for businesses. It can reduce your carbon footprint and help you – and your partners – gain a real market advantage. This guide looks at how to find ethical suppliers and materials. You’ll also learn some key principles for successful supply chain collaboration.
As businesses aim for low carbon or net zero emissions, many start by reducing their direct greenhouse gas emissions. This is an important first step. But it’s likely that a large part of your carbon footprint comes from your supply chain.
Beyond these direct emissions, there’s often a lot of embedded carbon in the products, materials or ingredients that businesses use to make products and services. Most transport and distribution networks also produce a range of high-impact emissions.
Benefits of a sustainable supply chain
Most businesses are part of a wider network.
Today, with so much focus on sustainability, it’s increasingly likely that customers will want to assess the sustainability of your business and supply chain. Collaborating with your suppliers to boost sustainability offers a real competitive advantage for everyone involved.
Choosing ethical suppliers and working with them to find low carbon solutions also helps you calculate and verify your overall sustainability. Strong collaboration lets you share the workload, align strategies and gain a clearer picture of the supply chain’s environmental impact.
Embedded carbon in the supply chain
When calculating a carbon footprint, emissions are typically separated into three categories: Scope 1, Scope 2 and Scope 3.
Scope 1 and 2 emissions include electricity and fuel used by your business onsite and by the vehicles it owns.
Scope 3 emissions cover other indirect emissions that don’t come from energy use. Many Scope 3 emissions are related to the supply chain. They include:
- Purchased goods and services
- Business travel and employee commuting
- Transport and distribution
- The use of sold goods
- Waste disposal
- Investment
- Leased assets
Many businesses choose to only include Scope 1 and 2 emissions in their carbon footprints.
But this could mean ignoring the largest part of your footprint – with some organisations reporting that over 80% of their emissions are Scope 3.
Find more information on Scope 3 emissions in our carbon footprinting guide.
10 tips for building a more sustainable supply chain
1. Involve your procurement and finance teams
This is a crucial step. To successfully reduce your footprint, these teams should be completely aligned with your sustainability objectives and targets. They’ll have to begin thinking about a range of new factors when they purchase supplies – not just the lowest cost.
2. Prioritise efforts to create the most impact
Carefully targeting your strategy helps you make more efficient progress. If your business has several suppliers but limited time and resources, focus first on the suppliers that have the largest impact on your carbon footprint.
3. Carefully assess your suppliers
During the selection process, it’s worth investigating the practices, policies and standards of any potential supplier. It’s particularly important to find out whether they have a formal environmental policy or certification.
4. Ensure clear communication
As you work to reduce emissions, it’s likely there will be significant changes to your supply needs. It’s much easier to deliver on your sustainability goals when everyone in your supply network is aware of your strategy.
That’s why it’s important to be open with your suppliers about your sustainability goals and how they can help you meet them. This will also give them a chance to align their own strategy with yours.
5. Collaborate with your supply chain
Collaborating with partners to find sustainable solutions for your materials, products and packaging benefits everyone. You can focus on solutions that use:
- Less embedded carbon
- More recycled content
- Reduced packaging or take-back packaging
It’s also important to help your suppliers with their own sustainability initiatives.
6. Build long-term relationships
Reaching and maintaining net zero or low carbon is an ongoing, long-term project. The process will be easier if you have close relationships with your suppliers.
Open communication and collaboration help you meet short-term sustainability goals, but they’re also crucial in building partnerships that last.
7. Check sustainability claims in your key markets
It’s vital to verify the footprint of your own products, but it’s also important to ensure your suppliers’ products are certified to specific standards.
Another important factor is where you sell your products. For example, your materials might be certified as recyclable – but you should make sure that they are, in fact, widely recycled in your main geographic markets.
8. Manage supply chain risks
Once you’ve identified your main materials and inputs, it’s worth thinking about potential problems, like:
- Hazardous materials
- Issues in manufacture
- Issues with end-of-life disposal
- Impacts on biodiversity
- How your supplier sources these raw materials
- Risks of interruption of supply (like severe weather events)
9. Revise your supplier selection process
Finding the right suppliers can be a complex process – and even more so when you factor in sustainability.
That’s why it’s useful to build sustainability into a systematic selection process. This will make it easier to identify suppliers that meet your company’s sustainability and ethical requirements, as well as its technical needs.
10. Think about the true cost of purchases
Often, the money you spend on materials will far exceed their basic price.
When assessing costs, it’s crucial to think about the Total Acquisition Costs for purchasing any item. These can include transport, handling, storage and end-of-life disposal costs.
Sustainable solutions can help you save money in these areas while also reducing your footprint.
Choosing sustainable suppliers and materials: what to consider
One effective way to increase supply chain sustainability is to think carefully about which suppliers and materials you choose to use.
If want to identify and improve on carbon-intensive parts of your supply chain, here are some key considerations:
First, think about how much you depend on plastics, metal, paper, chemicals and agricultural products – which can all produce carbon emissions, both in use and when you dispose of them.
It might be worth rethinking your processes and partnerships. Consider how you can achieve the same business outcomes with more sustainable materials.
Your materials may also produce avoidable emissions in the ways they’re produced. Investigate supplier production processes to find out which materials:
- Need lots of energy or water
- Come with embedded carbon
- Create pollution
- Deplete natural resources
- Impact biodiversity
- Require large-scale transport and distribution
- Are sensitive to climate change
Once you’ve identified the materials that increase your footprint, you can start thinking about more sustainable options. Look for materials that are:
- Less carbon-intensive
- Reusable
- Offered on a product-as-a-service basis
This does not always mean you’ll need to switch suppliers. It’s often possible to work together with your supply chain to develop more sustainable alternatives.
Choosing ethical suppliers and materials is typically the first step. But you can further improve sustainability by thinking about how your business uses purchased materials.
You can consider more sustainable solutions for managing:
- Energy and resource requirements
- Maintenance
- Handling or training requirements
- Health and safety
- Special storage conditions
- Packaging
Materials often continue to have an impact after you’ve used them. If you want to reduce this impact, it's good practice to choose materials that are:
- Widely recycled
- Reusable
- Biodegradable or compostabl
- Carbon intensive to handle and store
Some suppliers even offer take-back programmes. This is when your business gives the materials back to the supplier to be reintroduced into their manufacturing process.
A truly sustainable supply chain is made up of partners that follow strong principles of fairness in everything they do. This includes the practices they use within their own businesses.
When choosing your suppliers, it's important to be aware of:
- Employment conditions
- Potential use of child labour
- Health and safety practices
It’s easier to gain the benefits of a sustainable supply chain if all partners can demonstrate recognised environmental credentials.
That’s why it’s worth finding out whether your suppliers’ sustainability efforts have been validated by a third party. Widely recognised certifications include:
- ISO 14001, 9001, 50001 and 14046
- Fair Trade
- Certified B Corp
- Scottish Business Pledge
If you need help, our research service provides support with finding suppliers and supply chain mapping.
Principles of successful supply chain collaboration
A sustainable supply chain is a shared effort. Your suppliers will play a central role in the success of your overall strategy. That’s why – whether you’re working with new or existing suppliers – it's good practice to build and nurture ongoing collaborative relationships.
Here are some key principles for sustainable supply chain collaboration:
- Trust, openness and regular feedback between your business and its suppliers is essential.
- Shared goals and joint planning offer mutual benefits. These practices can improve quality management, innovation, and environmental impact.
- Consider offering incentives for sustainable supply chain partners. Some businesses reward suppliers for good performance, which encourages further collaboration and improvements. Your business may even want to create contracts with suppliers based on these incentives.
- Fair prices for supplies and sharing in value also make ongoing collaboration more appealing.
- Don’t think only of cost – think of value.
Contact us
If you’re interested in finding out more about the topic of this guide or any other aspect of making your business more sustainable, our sustainability team are here to help.