Sourcing sustainably responsible suppliers is not only good for the environment and society, but also for a company’s business. They help mitigate environmental risks, and contribute to socio-economic development in their local or even larger communities. They also adhere to ethical code of conducts, regulations and standards, and align with the company’s vision, mission, and objectives.

Keeping a shortlist of sustainably responsible suppliers reflects a company’s commitment to the environmental and social policies. That said, a company’s ESG standards are apparent in how its suppliers manage the activities and run the businesses.

How to work with sustainably responsible suppliers?

1. Find them through online platforms and databases that list and certify them based on various criteria
2. Conduct research on the suppliers’ websites, reports, policies, and awards.
3. Have a procurement team with a high awareness of not just quality standard, but also the impacts the suppliers have left to the environmental and social values of the company, such as the impacts the suppliers have left to the environment and the society, on which they build or break their reputation as sustainably responsible suppliers.
4. Once the team have collected a shortlist of potential sustainably responsible suppliers, they need to select one of them based on the environmental performance, social impact, governance, quality, cost, delivery, and innovation, some of which require evidences, such as certifications, audits, or testimonials.
5. A commitment to implement quality, environmental, or possibly health and safety integrated management systems that emphasize on objective, fair, and supervised supplier evaluation on regular basis is important to have an effective evaluation of sustainably responsible suppliers.
6. Negotiating with sustainably responsible suppliers can be different from negotiating with conventional suppliers, as you need to consider not only the price and terms, but also the value and impact of the partnership. Use a collaborative and transparent approach, and explore how the supplier can help you monitor and achieve ESG objectives.

How to deal with them?

1. Dealing with sustainably responsible suppliers should be done differently than merely pitting them against each other for the lowest price offer. A company who values sustainability should have a set of criteria that tolerate a higher than average cost that entails the responsible practices, such as the extraction of sustainable natural resources, incentives, the employment and humane working condition, etc.
2. Managing sustainably responsible suppliers requires regular communication, feedback, and evaluation to ensure that they meet your standards and expectations, and that they continuously improve their sustainability and social responsibility practices. Use contracts, agreements, audits, surveys, or reports to track and review their performance and impact. You can also provide them with support, guidance, and recognition to help them overcome challenges and celebrate successes.
3. Supplier evaluation on regular basis that is fair, objective, and supervised, of which the results are reported to the top management, is an effective way to manage sustainably responsible suppliers for long cooperation. Second party audit to the suppliers also means that a company upholds the quality and environmental standards which it expects its suppliers to similarly uphold.

Sourcing sustainably responsible suppliers can bring many advantages, such as cost savings, quality improvement, innovation opportunities, and reputation enhancement through efficiency in resource use, energy consumption, waste management, and regulatory compliance related to environmental or social issues.

Using higher-quality materials and processes can improve the quality of a company’s output in the form of product or service. Commitment and engagement with sustainable suppliers foster collaboration on new ideas that can foster innovation, and help boost the company’s reputation and brand image. This runs in accordance with the business and management benefit offered by the effective implementation of the quality management system.