FSC / Phan Tan Lam

Purchasing guide: What does ethically sourced mean?

Learn how ethically-sourced material procurement prioritises workers’ rights, environmental well-being, and regulatory compliance for a sustainable supply chain.

December 27, 2024

The term “ethically sourced” means products are created with fair labour practices, safe and environmentally responsible work environments, and a sustainable supply chain.

It’s not just the right choice, but a smart business decision. 88 per cent1 of global consumers prioritise purchases from companies with ethical sourcing commitments.

Ethical sourcing practices are vital as businesses operate globally and supply chains become more complex. Large supply chains are harder to oversee, but a committed company with set ethical standards can better source responsible suppliers and materials, like certified lumber, for their business.

Learn more about ethical sourcing, its benefits, and tips for businesses below.

Table of contents

A closer look at the “ethical sourcing” definition
Ethical sourcing vs. sustainable and responsible sourcing
The benefits of ethical sourcing
How to introduce ethically sourced products into a supply chain

A closer look at the “ethical sourcing” definition

Ethical sourcing is one of many key sustainable supply chain initiatives. As a company evaluates supplies for raw materials and goods like rubber, it should examine supplier business practices, including how it treats workers, the environment, and neighbouring communities.

It’s also important to set company expectations from the beginning. Not only is ethical sourcing an initial procurement step, but an ongoing oversight process. Communicating expectations and the plan for reporting and oversight ensures the whole supply chain is on the same page.

Sustainable practices like fair wages, safe working conditions, responsible waste management, and efficient water use all fold into the larger concept of ethical sourcing.

However, there’s a difference between certifications for ethically sourced materials and other ethics- or sustainability-driven certifications and frameworks.

Ethically sourced	Materials and services produced consider the full scope of ethical practices for environmental, social, and governmental (ESG) good for the full product lifecycle.
Fair Trade Certified	A global sustainable sourcing framework for products that meet specific ESG standards.
Sustainably sourced	Materials and services produced with an emphasis on environmental protections and sustainability as part of responsible sourcing.

Overseeing the over 10 million farmers producing the world’s rubber supply isn’t easy. So companies like these partner with the Forest Stewardship Council® to identify ethically sourced raw materials.

FSC®’s chain of custody certification supports sustainable forestry and verifies that forest-based materials are ethically sourced according to pre-established standards at every step of the supply chain.

Certifications like these ease the lift for companies to maintain supply chain compliance while also boosting sustainable product visibility for consumers looking for certified products.

This is especially important for products like timber, where sustainable intensification is in effect to address increasing production and protection needs.

Image explains some factors that can make a supply source unethical with visual icons.

For example, the harvest of forestry products like rubber often contributes to deforestation and may use unethical practices like child labour. To combat this, clothing companies like Timberland and Patagonia have already made the switch to ethically sourced natural rubber.

Ethical sourcing vs. sustainable and responsible sourcing

Ethics and sustainability are important parts of the same “responsible sourcing” umbrella. Responsible sourcing looks at the full ESG picture to ensure a supply chain complies with regulatory requirements, social well-being and workers’ rights, as well as environmentally responsible practices.

Ethical sourcing also weighs Sustainable Development Goals and ESG standards with a tilt toward social and environmental good. Sustainable sourcing can also consider other ESG factors but primarily targets a supply chain’s environmental impacts.

Red flags and icons highlight key signs a supplier isn’t operating ethically.

The benefits of ethical sourcing

Ethically sourced products provide several benefits for suppliers and workers, including individual rights and community protections. The company benefits, too, with improved supply chain processes and consideration of consumer preferences for ethical goods.

Protect environments and resource access

Ethically-sourced materials prioritise environmentally sustainable practices to reduce carbon emissions, water use, and excess waste that can be common in material harvesting and manufacturing.

These careful considerations for resource use and environmental impact mean a healthier environment for everyone. They also protect forests and freshwater ways for local communities and cultures while preserving access to resources for the global good.

Boost consumer appeal and avoid costly legal trouble

Creating an ethical supply chain is a sustainable business practice with economic perks, as well. From the beginning, an ethical supply chain accounts for local, global, and ethical regulations and closely monitors supplier actions.

This protects businesses from costly potential lawsuits and damages from often illegal practices like using child labour or dumping toxic waste into the environment.

Data visualization with the statistic that 88% of consumers prefer ethically-sourced goods, and 83% are willing to pay more for them.

Responsible sourcing also protects the raw materials via sustainable harvests that prevent deforestation. It helps guarantee that there are plenty of materials for current use and future generations. This prevents shortages that could disrupt industrial supply chains and inflate material costs.

Finally, there are economic benefits on the store shelf, too. More than ever, consumers want to purchase ethically sourced goods that align with their own values. 83 per cent of global consumers are even willing to pay extra for ethically produced products.

Improve social and cultural well-being

Workers’ rights and well-being are well-covered benefits of an ethical supply chain, but workers aren’t the only people impacted by material production. The larger community and culture also see the effects, like how the resuspension of toxic dust from Chilean copper mines can travel up to 50km to coat neighbouring villages2.

Ethical sourcing has to account for the Indigenous communities most affected by mining and manufacturing. Excessive water use, pollution, and waste directly impact the ecosystems and natural resources Indigenous Peoples rely on for food and water. Additionally, negative impacts can harm cultural practices, like the deforestation of spiritual forests.

However, ethical sourcing practices protect native ecosystems and Indigenous practices. Further, Indigenous communities are often the best land stewards, and reinvesting in these communities can support resource preservation and renewal for everyone’s benefit.

Maintain regulatory compliance

International, industrial, and local regulations are always evolving to align with modern values and understandings of how the world works.

Many ethical sourcing practices are ahead of the regulation curve, so setting standards early prevents companies from spending heavily to catch up to new regulations.

Keeping up with regulatory changes also maintains business access to critical markets and helps companies avoid legal challenges.

The EU Regulation on Deforestation-free Products (EUDR) and other regulatory bodies are great places to find more information on current regulations and updates over time.

How to introduce ethically sourced products into a supply chain

Overseeing every step of the supply chain to offer ethically sourced products requires clear ethical standards, effective communication, and regular oversight.

As supply chains grow, it’s difficult to monitor the most distant links. However, due diligence from the beginning to partner with ethical suppliers and align expectations can reduce this load.

Certified supply chain experts also help with the tools and knowledge to effectively manage responsible supply chains over the long run.

Of course, organizations like FSC also offer solutions, certifications, and guidance to help companies maintain ethical, compliant supply chains. And certified products benefit from FSC labels so consumers can shop with confidence.

Additional resources

Fair Trade USA provides guidance and certifications for companies around the world that are committed to ethical sourcing in alignment with ESG standards.

The Chartered Institute for Procurement & Supply (CIPS) organization defines standards and best practices for supply chain professionals and provides educational resources and summits for growth.

The Sourcing Industry Group provides education, research, and community resources for sourcing, procurement, and risk professionals.