Rather than a liability, suppliers are becoming an asset to brands and are being treated accordingly.
For instance, by 2017, retail giant Walmart has committed to buy 70% of the goods it sells in the U.S. from sustainable sources. This comes on the heels of the Arkansas-based retailer’s 2005 promise, “to sell products that sustain people and the environment,” and its creation of a Sustainability Index to measure that progress against. As of last year, over 1,300 Walmart suppliers participated in the program with another 1,400 expected to join either this year or next. Quite obviously, the opportunity for a supplier to have their products sold at America’s largest retailer is a huge one and its great to see a company as big as Walmart use their size and reach to create such a large-scale incentive with sustainability at its heart.
In terms of a more direct reward to suppliers, German athletic and footwear giant PUMA has partnered with BNP Paribas Bank to create an innovative financing program that helps suppliers in emerging countries gain access to vitally needed capital. This first-of-its-kind program offers tiered pricing to short-term working capital to incentivize ambitious adoption of higher standards across a range of areas, including both environmental and social. PUMA monitors each participant to ensure compliance and integrity in what will hopefully become a more widely adopted business model for an industry that can be easily scandalized due to its suppliers’ actions.
Lars Sørensen, PUMA’s Chief Operating Officer had this to say, “This is the first program in our industry, which takes into consideration a supplier’s score in PUMA’s environmental and sustainability rating as a bonus or malus on related fees. Thus our supplier’s investments in sustainability are rewarded, which is an additional incentive for them to improve their environmental and social standards.”
And it should be no surprise to anyone familiar with Patagonia that the clothing and lifestyle brand goes out of their way to use only “Traceable Down” lining in their popular range of jackets and outdoor wear. Patagonia audits farms along every point in its supply chain to ensure that rigorous standards of animal welfare and protection are maintained, and has even partnered with an independent third party to help with the work.
Similarly, the brand also recently partnered with Bolt, a “biofabrication” company that replaces silk harvested from spiders to cruelty-free silk made using fermented yeast cells combined with sugar and salt to produce fabric proteins. Given the amount of resources and attendant carbon pollution required to develop and procure animal-based resources, this is a terrific step forward for more sustainably-minded supply solutions.
Beyond the obvious environmental benefits to people and ecosystems everywhere, some other more business-based benefits include creating a strategic alignment between suppliers and retailers that serves both of their interests. Retailers want to be able to sell responsibly sourced and manufactured products that consumers can feel good about buying. And to stay competitive, suppliers need to be able to offer those types of products to an increasingly sophisticated customer base that demands them. This commitment to higher sets of standards not only helps mitigate risk of swift and damaging consumer activism in an age of omnipresent social media, but it also helps build a brand’s reputation and identity to create the kind of loyalty and sales they dream of. Just look at Patagonia, for example, which has built a burgeoning empire on its principled manner of supply and production, and generously shares their insights to improve practices industry-wide.
Image via Flickr courtesy of user *SHERWOOD* at https://flic.kr/p/5qnWEK