Why Integrating Sustainability and Sourcing Is a Win-Win-Win for Brands, Suppliers, and the World

Why Integrating Sustainability and Sourcing Is a Win-Win-Win for Brands, Suppliers, and the World

By: Jay Gaines, Chief Marketing and Content Officer, Worldly

Article key points:

• Competing priorities between sustainability and sourcing teams within brands can create inequity and slow down progress toward environmental and social goals.
• Brands rely heavily on suppliers to meet their sustainability targets, but this is challenging if sourcing decisions are based solely on price and quality without considering environmental and social impacts.
• Disconnection between sourcing and sustainability strategies can lead to hidden risks, such as regulatory non-compliance and loss of consumer trust, as transparency and ethical practices become increasingly important.
• Integrating sustainability into sourcing decisions can mitigate these risks and align with consumer trends, regulatory requirements, and business goals, ultimately enhancing brand reputation and profitability.
• Strategies for integration include forming sustainable sourcing teams, establishing sustainability as a quality measure, incorporating sustainability metrics into supplier evaluations, creating long-term supplier partnerships, and providing financial support for sustainability improvements.

Competing priorities in the supply chain

As brands and retailers set ambitious environmental and social targets for themselves and their supply chain partners, a disconnect often exists in how teams implement these corporate-wide objectives within their organizations. While sustainability teams work to drive environmental and social improvements throughout the supply chain—often by rolling out annual assessments like the Higg Facility Environmental Module (FEM) developed by the global non-profit alliance Cascale—many sourcing teams remain exclusively focused on price and quality metrics in their buying decisions. 

The result is that a brand’s sustainability team is working with its suppliers to do things like move to renewable energy and improve the way they use chemicals and dispose of waste; the brand’s marketing team is trying to leverage these sustainability factors to increase the brand’s reputation as a sustainability leader; and all the while, the sourcing team often continues to push for the highest quality products at the lowest price possible without considering suppliers’ sustainability performance. 

These competing priorities put brands and their suppliers in a difficult position. For one thing, it can create friction and inequity in the system when one arm of a brand is saying, “You have to invest in upgrading your equipment and installing solar panels,” while another side is saying, “You need to deliver this high quality product quickly and at a very low price.” This creates real challenges for suppliers who typically have very thin margins, and slows down progress that brands and suppliers both want to be making toward environmental and social improvements. 

However, some brands and retailers integrate sustainability criteria into their sourcing decisions and collaborate effectively with their supplier partners to drive meaningful progress. At the same time, many suppliers have their own sustainability goals, creating opportunities for deeper alignment and shared impact across the value chain. In this article, I’ll discuss how we see leading brands and suppliers working together to integrate and prioritize sustainability into sourcing decisions, and why it matters. 

Brands rely on suppliers to hit sustainability goals

When responsible brands and retailers examine their environmental and social targets, the greatest opportunities for improvements are typically in their supply chains—not at the brand’s corporate level. This means working with suppliers to increase their renewable energy sources, reduce water consumption, enhance chemical management, create ethical working environments, among many others, are critical factors in a brand’s ability to achieve its goals.

Brands also purchase based on price and quality metrics disconnected from sustainability

No matter how ambitious a brand’s environmental and social goals for its suppliers are, suppliers may struggle to act if their brand customers continue to focus exclusively on price. When brands do so, it becomes harder for suppliers to justify investments in environmental and social improvements. Herein lies the problem for brands that do not tie sustainability deeply into their sourcing practices, while still expecting suppliers to meet aggressive sustainability targets. 

Hidden risks of separating sourcing and sustainability decisions 

When a brand’s sourcing strategy is disconnected from its sustainability and responsible operations strategy, the obvious consequences include slower (or no) progress toward sustainability and resiliency goals: Suppliers that provide sufficient quality at the lowest price will win out over those that charge more to produce more environmentally-and-socially-friendly items. 

There are also some less obvious outcomes that can include a level of hidden risk brands wouldn’t willingly take on, yet often do. These include:

• Unknowingly conducting environmental or social practices that are counter to their publicly stated goals and values
• Working with suppliers whose practices violate regulations, exposing brands to business disruption, compliance failures, penalties, and reputational damage
• Unintended or unwanted supplier churn as the manufacturer can no longer support both the brand’s environmental,price, and product quality requirements 
• Missing out on the ability to market the brand as a leader in environmental and social issues

Lack of transparency creates reputational risk 

Claiming ignorance about supply chain practices is no longer a valid or believable excuse. Brands that get exposed for having detrimental environmental practices or unethical human working conditions within their supply chain don’t get a free pass by saying they had no idea, particularly because so many tools exist today that create visibility into supply chain practices. 

This may be one of the top reasons it makes good business sense to invest in measuring your impact as deep into your supply chain as possible. Because without integrating sustainability considerations into sourcing decisions, brands may inadvertently partner with suppliers whose practices could quickly become the brand’s own public relations crisis.  

Deprioritizing sustainability creates regulatory risk 

As with many things in life, ignorance of the law (or with your compliance with it) is no excuse. The days of a brand saying “We didn’t know!” just doesn’t cut it, when dealing with complex local, regional, and global regulations. Current and emerging regulations are making sustainability measurement and reporting increasingly mandatory for brands and the suppliers they work with. In turn, this means it is increasingly vital for brands to integrate sustainability into their sourcing decisions to avoid fines and penalties. Often, these regulations require businesses to have the necessary data from supply chain partners to meet reporting requirements. This data becomes much harder to collect and verify when sustainability isn’t part of the initial sourcing criteria.

A lack of sustainable sourcing impacts consumer trust and brand loyalty

As consumer awareness grows, sustainability is becoming a more influential factor in purchasing decisions, especially in premium and purpose-driven brands. Even in non-premium brands, consumers are starting to pay attention to product impact and supply chain sustainability, even if they’re not yet at the point where they’ll specifically pay extra for it.

Brands that aren’t at the forefront of measuring, improving, labeling, and marketing their products’ environmental and social impact risk losing consumer trust and loyalty as these factors become more important over time. 

The business case for sustainable sourcing

There is often a clear intersection between doing “the right thing” and doing what “makes sense for the business,” and integrating sustainability and sourcing decisions is a prime example. With emerging regulations and increasing consumer awareness, having clear visibility into supply chain practices is crucial for risk management and future profitability. The hidden risks we outlined above can only be mitigated by creating visibility into your supply chain, which in turn means brands have to make measuring environmental and social impact an equally strong priority in their purchasing decisions. 

When businesses incorporate sustainability into their sourcing decisions, they can realize benefits such as: 

• Market Differentiation: Sustainability-linked sourcing allows brands to command higher prices and earn consumer trust.
• Regulatory Preparedness: Companies that preemptively integrate sustainability avoid costly compliance risks.
• Operational Resilience: Sustainable suppliers are often more efficient and adaptable to disruptions.

This is not purely theoretical either. At Worldly, we see examples every day that demonstrate how our brand customers are winning commercially, socially, and environmentally by integrating their social and environmental goals with their supply chain partners—and achieving results they can be proud of. 

Some examples include: 

• VF Corporation combined its sustainability team and sourcing team under one department to ensure these priorities work hand-in-hand rather than compete. 
• Target includes completing the Higg Index self-assessment as part of its suppliers’ annual scorecards that directly influence purchasing decisions.
• Pearl iZumi created its “Pedal to Zero” program to quantify the carbon footprint of each product it sells. This highly visible metric helps the brand prioritize sourcing lower-impact materials and suppliers.
• Hydroflask established a training and support program led by the brand’s Asia-based team, ensuring their suppliers had on-the-ground support to complete their Higg FEM. This period of improved collaboration and more diligent data collection helped Hydro Flask’s suppliers improve their Higg FEM scores by 94 percent.
• OVS earned the top spot as in the Fashion Transparency Index among the world’s 250 largest fashion brands.

Strategies for integrating sourcing and sustainability 

Understanding the importance of integrating sustainability and sourcing is one thing; achieving it is another. We can look at brand leaders in the social and environmental sustainability space for concrete strategies other brands can adopt. Your brand may not be able to implement all of these strategies, but consider which of these make sense for your situation.  

Create “sustainable sourcing” teams rather than separate departments: Leading responsible brands have discovered the benefit of combining sustainability and sourcing teams to ensure that environmental and social impact is a core part of their supplier evaluation process, rather than an afterthought. 

Establish sustainability as a measure of quality (that shoppers will pay for) when evaluating suppliers: In many cases, sustainability best practices go hand-in-hand with quality products. Db, for example, creates outdoor and travel products meant to last a lifetime, and in doing so, reduces the amount of waste in landfills. Premium brands like Patagonia have also demonstrated that building a brand around a genuine commitment to sustainability can enable premium pricing while fostering deep customer loyalty.

Incorporate sustainability metrics into supplier scorecards and evaluation criteria: When brands score suppliers on their efforts and progress on environmental and social impact—like greenhouse gas emissions, renewable energy use, ethical labor practices, water efficiency, and others—alongside traditional measures like capability, quality, and price, sustainability becomes a higher priority for suppliers while brands reward them for their achievements with contracts. 

Create long-term supplier partnerships with clear commitments: It can be difficult for suppliers to make investments in sustainability to meet the requirements of a brand they aren’t sure will be a customer next month, next year, or beyond. When brands give suppliers long-term or high-volume commitments, the suppliers can more realistically invest in sustainable practices. 

Provide financial support for sustainability improvements: Some brands find their supplier partners are eager to invest in increased sustainability, but don’t have the resources to transition to renewable energy, just as one example. With financial support from their brand partners, suppliers can achieve brands’ and their own environmental and social benchmarks. This helps the suppliers, benefits brands by allowing them to meet their own goals and regulatory requirements, and moves the needle on sustainability for the sake of people and the planet. 

Financial support related to completing assessments: Much of the workload to complete environmental and social assessments such as the Higg FEM, developed by the non-profit global alliance Cascale, falls on suppliers and their facilities. Brands can help ease the burden by contributing to the cost of sustainability assessments, offering co-funding, technical assistance, or preferred supplier status to incentivize participation.  

Reduce risk and increase value by tying sourcing to sustainability

For brands that truly want to reduce business risk, create transparent supply chains, achieve maximum efficiency, and operate responsibly around the globe, the path forward is clear: 

Purchasing and sourcing decisions must include considerations about environmental and social impact.

Ending the historic conflict of interest between a brand’s sourcing priorities and sustainability priorities will reduce risk in all the ways mentioned above, and open up even more opportunities for brands to leverage their environmental and social responsibility as an asset and value-add. 

Key benefits of incorporating responsibility into sourcing practices include: 

• Enhanced brand reputation and consumer loyalty
• Lower supply chain risks and improved regulatory compliance
• Stronger supplier relationships and long-term stability
• Higher likelihood of achieving sustainability goals

In practice, leading brands do this by integrating responsible purchasing practices into procurement by requiring suppliers to disclose sustainability metrics at the RFP stage, adjusting contract terms based on sustainability performance, and collaborating with suppliers on development programs. 

If you’re ready to take action today and begin integrating sustainability into all aspects of your business and supply chain, contact Worldly to see how we can help.