Understanding Sustainable Supply Chain Terminology
Welcome to Part 3 of our Sustainability Glossary Series! In this edition, we delve into the essential terms related to sustainable supply chains. Whether you’re new to sustainability or refining your supply chain practices, this glossary is your guide to key concepts in this area.
1. Ethical Sourcing
Definition: Ethical sourcing refers to procuring materials and products in a way that respects human rights, labor laws, and environmental sustainability. It ensures that supply chain practices are fair, responsible, and transparent.
Why It Matters:
Businesses that adopt ethical sourcing build trust with customers and stakeholders, protect their reputations, and comply with global standards. For SMEs, prioritizing ethical suppliers can also open doors to new markets and partnerships.
Learn More:
- The Ethical Trading Initiative provides guidance and resources on responsible sourcing.
- Fair Trade International offers insights into certifications and practices for ethically sourced goods.
2. Sustainable Procurement
Definition: Sustainable procurement is the process of purchasing goods and services that minimize negative impacts on the environment and society throughout their lifecycle.
Why It Matters:
By integrating sustainability into procurement decisions, businesses can reduce waste, lower greenhouse gas emissions, and promote eco-friendly practices across their supply chains. SMEs can also leverage sustainable procurement to differentiate themselves in competitive markets.
Learn More:
- The EU Green Public Procurement (GPP) framework offers best practices and tools for sustainable purchasing.
- The Sustainable Procurement Guide by ISO 20400 provides international standards for procurement professionals.
3. Traceability
Definition: Traceability refers to the ability to track the journey of a product, material, or component through the supply chain to ensure transparency and accountability.
Why It Matters:
Traceability helps businesses verify claims like “sustainably sourced” or “organic,” enhances trust with customers, and ensures compliance with regulations. For SMEs, it’s a tool to stand out in markets demanding ethical and sustainable transparency.
Learn More:
- GS1 provides global standards for supply chain traceability.
- blockchain technology can improve traceability and transparency. It creates a secure, unchangeable record of transactions, helping businesses track goods, verify their origin, and share accurate data with supply chain partners in real time.
4. Circular Supply Chains
Definition: Circular supply chains focus on reusing, recycling, and repurposing materials instead of discarding them, aiming to create a closed-loop system with minimal waste.
Why It Matters:
Circularity reduces dependency on finite resources, lowers waste management costs, and aligns businesses with the principles of a circular economy. SMEs adopting circular supply chain models often experience increased efficiency and customer loyalty.
Learn More:
- The Ellen MacArthur Foundation offers frameworks and case studies on circular economy practices.
- Cradle to Cradle Certified provides certification programs for sustainable product design.
5. Carbon Footprint of Supply Chains
Definition: The carbon footprint of supply chains encompasses all greenhouse gas emissions generated across sourcing, production, transportation, and disposal stages of a product’s lifecycle.
Why It Matters:
Supply chain emissions (Scope 3) often make up the largest share of a business’s carbon footprint. Measuring and reducing these emissions is essential for meeting climate targets and complying with regulations like the EU Corporate Sustainability Reporting Directive (CSRD).
Learn More:
- The Carbon Trust offers tools for calculating and managing supply chain emissions.
- CDP Supply Chain provides frameworks for assessing and reporting Scope 3 emissions.
6. Supply Chain Resilience
Definition: Supply chain resilience is the capacity of a supply chain to adapt to and recover from disruptions, such as climate-related events, resource shortages, or geopolitical challenges.
Why It Matters:
Building resilience ensures operational continuity and minimizes risks. SMEs that invest in resilient supply chains can better weather crises and adapt to changing market demands.
Learn More:
- The World Economic Forum provides insights into creating resilient supply chains.
- Resilience360 offers risk management tools for supply chain professionals.
7. Supplier Code of Conduct
Definition: A supplier code of conduct outlines the ethical, environmental, and social standards that suppliers must adhere to when conducting business with a company.
Why It Matters:
Establishing clear guidelines for suppliers helps ensure alignment with sustainability goals, minimizes reputational risks, and fosters strong, long-term partnerships. For SMEs, a supplier code of conduct can streamline supplier evaluation processes and demonstrate commitment to sustainability.
Learn More:
- The Business Social Compliance Initiative (BSCI) provides frameworks for creating supplier codes of conduct.
- The UN Global Compact offers templates and resources for responsible supply chain practices.
Conclusion: Building Sustainable Supply Chains
Sustainable supply chains are integral to a business’s overall sustainability strategy. By embracing principles like ethical sourcing, circularity, and resilience, companies—including SMEs—can drive meaningful change while boosting efficiency, competitiveness, and customer trust.
These terms are just the beginning. As we continue our Sustainability Glossary Series, we’ll explore more topics to help businesses navigate the complexities of sustainability. Did you find these definitions helpful? Share this post with your network and let us know which sustainability-related topics you’d like us to cover next!
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