RISK, COMPLIANCE

Why an ethical sourcing strategy is key to mitigating and driving commercial success

For those in the corporate world 2020 has whipped up the perfect storm. Not only is most of the globe in the grips of recession, but the pandemic that led us here has generated some formidable challenges. Set against a background of growing economic, social and environmental instability, the art of doing business has rarely felt more fragile.

Once upon a time a consumer's shopping habits were defined by price point and convenience. But appetites have changed. Today there is a strong demains for ethically and sustainably sourced products. With consumers much more informed than before - and ethical consumerism is booming. From Fairtrade food products to cruelty-free make-up, sustainable fashion and eco-friendly travel companies, sustainability sells. In particular, the food and beverage sector has faced increasing pressure from consumers to provide transparency on the sources and operations related to their products.

Governments are also paying attention. In 2018, Australia's Modern Slavery Act was passed by both houses of parliament and similarly, governments globally have either passed similar legislation to drive supply chain transparency and business accountability or are soon to do so. From January 2021, the new SME Payment Times legislation comes into effect and businesses who fail to comply may be subject to significant financial penalties.

With Covid-19 squeezing already tight budgets it might feel like an inopportune time to refocus corporate efforts and redirect spend. But with the spotlight on responsible sourcing by both government and consumers, businesses have little choice but to start exploring their own ethical procurement strategy.