What is an ethical supply chain? An ethical supply chain is a supply chain designed with ethical considerations in mind, based on environmental, social, and governance criteria, catering to a wider group of stakeholders.  

In an ethical supply chain the flow of goods and services is meant to impact positively people and the environment it operates in, ensuring that production processes uphold the highest standards of ethics and sustainability and reflects values such as: fairness, transparency and accountability.  

Ethical supply chains become increasingly important to stakeholders, such as investors, consumers and regulators and carry many advantages: 

  • Minimising risk 
  • Remaining relevant in business 
  • Increase stakeholders’ satisfaction  
  • Showcase your sustainability approach 

Challenges associated with implementing ethical supply chains include the complexity of monitoring suppliers across diverse regions, maintaining consistency, avoiding cost inflation, and meeting reporting obligations. Solutions entail leveraging technology, fostering long-term relationships based on ethical principles, and integrating ethical considerations into corporate strategies. 

How can my company build an ethical supply chain? 

Each individual situation might slightly vary; however, we recommend following these steps: 

  1. Familiarise yourself with supply chain legislation in the operating countries. 
  1. Conduct thorough audits with the objective to assess suppliers’ labour practices, their environmental impact, and adherence to ethical standards and regulatory requirements. 
  1. Quantify your practices and consider obtaining certifications that align with international standards. 
  1. If you don’t report on your sustainability practices your reporting think of gathering all data and start disclosing your own efforts, supply chain practices and progress towards ethical and sustainable goals in annual or sustainability reports. 
  1. Engage with all stakeholders, including employees, suppliers, communities, and customers.  

In essence, although debates persist regarding whether ethical supply chains are a moral imperative, stakeholders and corporate leaders increasingly recognise them as indispensable strategic assets. They enhance a company’s reputation, ensure adherence to regulations, and align with evolving consumer and societal expectations.