Report: In supply chains, ethics matter

Consumers increasingly want the companies they buy from to demonstrate social and environmental responsibility—and they want them to be transparent about their sourcing and supply chain initiatives. That’s according to a study from Canadian technology firm OpenText, which polled 3,000 U.S. consumers about the extent to which environmentally sustainable and socially responsible business practices matter to the U.S. public and influence their purchasing behavior.

It turns out, those practices matter quite a bit. The research found that almost half (45%) of U.S. consumers would never buy from a brand again if it was accused of working with unethical suppliers—those that fail to ensure that workers are paid a fair wage, that work environments are clean and safe, and that social and environmental aspects of production are considered, for example. Instead, they would look to find an alternative brand that engages in responsible sourcing.

The survey findings also showed that the pandemic has made consumers more mindful of the impact of their purchases: post-pandemic, 82% of consumers said they plan to prioritize buying from companies that make it clear they have ethical sourcing strategies in place; this compares with 72% who said that, pre-pandemic, they prioritized buying from companies with such strategies in place. The survey found there is a strong business case for developing ethical supply chains, as well. Nearly 40% of U.S. consumers surveyed said they judge a brand based on its actions and on the actions of its suppliers. Consumers place such value on buying from ethical brands, the survey found,  that more than three quarters (78%) said they are willing to pay more if they can be sure a product has been ethically sourced or produced.

What’s more, purchasing ethically sourced or produced items matters to 73% of U.S. consumers, though nearly one in five (17%) admit that it has only started to matter to them in the last year or so. The majority (79%) of U.S. consumers are even willing to compromise convenience, such as accepting a slower delivery, if they can be sure that an item has been ethically sourced or produced. Nearly half (48%) agree they would only opt for this sometimes or for certain items, but almost a third (31%) are always willing to make this compromise.

Supply chain visibility is the key to meeting those demands, according to OpenText.

“Creating an ethical supply chain requires having visibility into every supplier,” Lou Blatt, the company’s senior vice president and CMO, said in a statement. “The ethically minded consumer is exercising more control over their buying power. Brands can no longer claim they act responsibly if they have no visibility into their operations or those of their suppliers.”

Other survey findings include: Nearly 60% of US consumers say government should introduce regulation that holds businesses more accountable for responsible sourcing; 52% said they prioritize buying from brands that embed some aspect of the circular economy in their processes (for example, reducing waste and placing a greater focus on reusing and recycling materials); and 77% said that knowing where a product has originated from or where parts are sourced is important to their buying decision.