What is Sustainable Sourcing: Concept, Benefits & Examples
Oct 13
Table of Contents：
What are the Challenges of Sustainable Sourcing?
Life & Living: Your Partner for Sustainability
Sustainability is no longer optional in supply chains; it is becoming a global standard. Governments are setting stricter requirements, such as the Ecodesign for Sustainable Products Regulation (ESPR), which came into force in 2024, to ensure products are more durable, repairable, and resource-efficient.
At the same time, consumers increasingly expect brands to demonstrate responsibility, with a 71% increase in global online searches for sustainable products over the past few years, according to the World Wildlife Fund (WWF). Retailers and manufacturers that fail to adapt risk losing trust, market share, and compliance readiness.
With this in mind, we will discuss the meaning of sustainable sourcing, explain how it differs from traditional approaches, highlight the benefits for businesses, outline actionable steps for building a responsible sourcing strategy, provide some real-world examples, and address some relevant challenges.
What is Sustainable Sourcing?
Sustainable sourcing is the practice of integrating environmental and ethical considerations into the way companies select and manage their suppliers. This approach is sometimes referred to as sustainable procurement, green purchasing, or social sourcing.
Unlike traditional sourcing, which prioritizes low costs and fast lead times, sustainable sourcing focuses on choosing supply chain partners that hold long-term responsibility for the planet, society, and economy. For instance, a furniture company might choose a supplier that uses responsibly harvested wood, pays its workers fair wages, and donates to local reforestation efforts, over a cheaper alternative with a history of deforestation and poor labor conditions.
Other acts that contribute to sustainable sourcing include, but are not limited to:
Environmental Conservation: using renewable/recyclable resources, avoiding hazardous materials, conserving energy/water, reducing greenhouse gas emissions, reducing waste, etc.
Social Ethics: encouraging diversity/equality, providing safe/sanitary work environments, ensuring reasonable work hours, eliminating any form of forced labor, funding education programs, partnering with nonprofits, etc.
Economical Development: promoting fair trade practices, prioritizing consumer wellbeing, investing in local businesses, combating bribery/money laundering, etc.
Sustainable Sourcing vs Ethical Sourcing vs Supplier Diversity
These three concepts are closely related but not interchangeable. Even though ethical sourcing and supplier diversity can both contribute to a sustainable sourcing strategy, they represent distinct goals within procurement.
Sustainable sourcing takes a broad view, integrating environmental, social, and economic factors into supplier selection and supply chain management.
On the other hand, ethical sourcing is narrower in scope, focusing mainly on ensuring that products are made responsibly by protecting workers’ rights, providing safe working conditions, and avoiding exploitative practices.
Meanwhile, supplier diversity emphasizes creating opportunities for businesses owned by underrepresented groups, like minority-, women-, or veteran-owned companies, serving as part of a corporate social responsibility effort.
What are the Benefits of Sustainable Sourcing?
Ensuring Compliance with International Regulations
Governments worldwide are tightening rules around sustainability, through laws like the US’s Federal Acquisition Regulation (FAR), the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), the UK’s Environment Act 2021 and Modern Slavery Act 2015, Germany’s Supply Chain Due Diligence Act, and France’s Law on the Duty of Vigilance.
These regulations hold companies accountable for their entire supply chain's social and environmental impact, as they require companies to identify business practices that negatively impact the environment or human rights, all while taking action to prevent or end such actions whenever necessary.
Non-compliance can lead to significant fines, legal disputes, or loss of market access. For example, a £90 million fine was imposed on Southern Water in the UK for illegal sewage discharges, according to the UK Environment Agency’s article in 2021.
By adopting sustainable sourcing measures, companies can align with evolving standards, reducing the risk of penalties and ensuring smoother global operations.
Mitigating Risks and Building Supply Chain Resilience
The COVID-19 pandemic and recent geopolitical tensions have shown how fragile supply chains can be. Yet, a 2020 study in The Review of Corporate Finance Studies shows that companies with higher environmental and social ratings saw higher operating profit margins, despite the market crash amid the pandemic.
A 2017 study in The Journal of Finance also shows that companies with high corporate social responsibility (CSR) intensity had 4%-7% higher stock returns than those with lower CSR intensity during the 2008-2009 financial crisis.
Both studies highlight how companies with strong sustainability practices are better at weathering crises and restoring operations, as they are often more transparent, allowing their supply chain partners and stakeholders to proactively plan strategies when faced with resource scarcity, labor strikes, geopolitical change, or other risks.
Improving Brand Reputation and Consumer Trust
Driven by the availability of online information, modern consumers are highly attentive to how and where products are made. A report by NielsenIQ found that 66% of consumers are willing to pay more for products from sustainable brands, with 58% of them focusing on environmental impact, and 56% of them considering the company’s dedication to social values.
As companies demonstrate a commitment to responsible sourcing, they can improve their brand reputation and attract these socially conscious consumers. This helps build deeper customer trust and also fosters a strong brand loyalty, which can even lead to opportunities for premium pricing.
Nevertheless, companies still have to consider consumer affordability when it comes to premium pricing strategies. While PwC's 2024 report suggests that consumers are willing to pay an average of 9.7% more for sustainable products, this willingness drastically decreases when the premium reaches 10%-25%, as seen in McKinsey's 2015 report.
Enabling Long-Term Cost Savings and Operational Efficiency
Although sustainable sourcing may require initial investment, it often leads to cost reductions over time, as well as improved efficiency. The World Economic Forum reports that sustainable sourcing can reduce costs by 9-16% while boosting revenue by 5-20%. This is achieved through practices such as reducing material waste, optimizing logistics, and lowering energy consumption throughout the supply chain.
Moreover, smarter resource allocation and transparent supplier collaboration also make the procurement process smoother, leading to better earnings as companies experience fewer delays and a more predictable flow of goods.
Attracting Like-Minded Investors and Employees
According to Grand View Research, the global Environment, Social, Governance (ESG) investment market was valued at $25.10 trillion in 2023. This figure is expected to reach $29.71 trillion by 2030 at a Compound Annual Growth Rate (CAGR) of 18.8% during the 2024 to 2030 forecast period, reflecting how financial markets are placing a higher value on corporate sustainability. This is because companies with strong sustainable practices are often thought to be less risky, as we discussed earlier.
Likewise, employees want to work for organizations that align with their values. A Cone Communications survey found 67% of employees prefer to work for socially responsible companies. This is especially true for younger generations, such as Millennials, who make up the majority of the workforce (36% in the US) in 2025. The same survey also revealed that 64% of Millennials may reject a job offer if the company lacks CSR policies, while 83% would be more loyal to an employer that supports their social and environmental contribution efforts, demonstrating sustainable sourcing as a powerful tool for recruitment and retention.
How to Implement a Sustainable Sourcing Strategy?
Implementing a sustainable sourcing strategy requires clear policies, supplier collaboration, and continuous improvement. Here are 4 key steps businesses can take to build a strong framework:
1. Assess Current Business Practices
Start by mapping your supply chain to understand where your materials come from and how they are produced. With tools like global life cycle assessments (LCA), review the environmental impact, labor conditions, and resource efficiency at every step, from raw material origins to final product delivery, and even product use on the consumer end.
This helps reveal sustainability gaps to provide a baseline for future improvements. It also allows you to trace the material origins, reducing risks of illegal, unethical, or environmentally harmful sourcing.
2. Define Your Policy and Goals
The next step is to establish a formal sustainable sourcing policy that defines what responsible procurement means for your organization, along with measurable goals. Goals might include reducing carbon emissions, sourcing more recycled materials, or improving labor standards.
Just make sure to align these goals to global frameworks like ISO 20400 or the UN Sustainable Development Goals. This sets a standard for suppliers and your internal team, ensuring consistency across your operations while showing commitment to all stakeholders.
3. Collaborate and Engage with Suppliers
Sustainability cannot be achieved alone, so engaging suppliers is vital to building long-term improvements in sourcing practices. This may involve providing training, sharing best practices, or even co-investing in sustainable technologies. Many businesses also create incentives, such as preferential contracts, to reward suppliers who align with sustainability goals.
This collaborative approach ensures that the supply chain evolves as a collective effort, rather than a top-down mandate. As such, you can build stronger, more resilient relationships and encourage continuous improvement with your supply chain partners.
4. Monitor, Measure, and Report Progress
Sustainability is an ongoing process. Implement systems to track supplier performance and measure progress against your goals. You should also conduct regular audits with trusted third parties to verify these performances and improve credibility.
What’s more, it is important to report the results to stakeholders, including customers, investors, and employees, to build trust, as transparent reports that highlight both achievements and areas for improvement demonstrate accountability.
For deeper guidance on sustainable sourcing strategies, businesses can refer to the Sustainable Sourcing Guideline by WWF, which offers practical tips for self-assessment, sustainability effort disclosure, and other important aspects of building a responsible procurement framework.
Real-Life Sustainable Sourcing Examples
Now, let’s explore how global companies like Dell, Cotton On, illycaffè, and Live & Living implement sustainable sourcing strategies to reduce environmental impact, support communities, and maintain a circular economy.
Dell: Resource Circularity for Electronics
According to the World Health Organization (WHO), 62 million tonnes of e-waste were generated globally in 2022, of which 22.3% was formally recycled.
To address this, Dell has pioneered modular components such as screw-in USB-C ports and customer-replaceable batteries that use up to 80% less cobalt. These innovations extend product life, reduce dependence on scarce minerals, and make recycling easier.
Dell also incorporates sustainable materials like low-emissions aluminum, bioplastics, and recovered metals into its AI PCs, helping customers lower their carbon footprint while meeting regulatory requirements.
Cotton On: Social Responsibility in Everyday Wear
Australian retailer Cotton On has made a public commitment to becoming carbon neutral and ensuring that 100% of its products contain sustainable attributes by 2030 in its inaugural Good Report.
Their plans include sustainable sourcing of materials, such as certified recycled polyester and nylon for their products, as well as responsibly managed wood for packaging, to phase out single-use plastics. By 2023, the company had already achieved 84% of its goal to wash all denim using water-saving processes, reducing waste and chemical use.
Furthermore, Cotton On has expanded its Africa Cotton Programme into Mozambique. Not only does this secure a supply of sustainably grown cotton, but it also empowers smallholder farmers and generates income for women entrepreneurs. This program has even funded over 1,280 new school placements in South Africa, contributing to local education.
illycaffè: Regenerative Agriculture for Coffee
In 2023, the brand launched the first regenagri-certified Arabica coffee, as it focuses on improving soil health, reducing chemical use, and promoting biodiversity while producing the beans. Brazilian farms adopting these practices have even won the Ernesto Illy International Coffee Award for 2 years in a row, proving that sustainability and excellence go hand in hand.
Plus, illycaffè is dedicated to paying fair wages and premium prices for these sustainably grown beans, all while educating more coffee farmers about regenerative agriculture through its Università del Caffè, creating systemic change across the supply chain.
Life & Living: Sustainability in Houseware
As a B Corp-certified ODM/OEM, Life & Living integrates sustainable materials into global houseware supply chains. The company currently offers 11+ verified recycled material options, with more in development. This has allowed them to produce a line of 100% recycled stainless steel cutlery for a major Asian airline.
They’ve also helped a European heritage cookware brand shift a classic line from virgin material to recycled materials, demonstrating how sustainable sourcing is scalable across industries.
Beyond product design, Life & Living has signed a memorandum of understanding with SGS to adopt the S-Carbon digital carbon management platform, enabling the company to track and reduce emissions across Scope 1 and 2, with plans to expand into Scope 3 as a part of their ongoing sustainability efforts.
What are the Challenges of Sustainable Sourcing?
A major challenge is the limited availability of green materials, which are often in high demand and short supply. Companies may need to pay a premium or explore alternatives, such as recycled options instead of raw ones, to bridge the gap.
Another barrier is the lack of knowledge or expertise within procurement teams. Fortunately, training programs, data analysis tools, and third-party certifications can help build confidence in evaluating suppliers’ sustainability performance.
Resistance from suppliers also slows progress, as some may be unwilling or unable to adopt new practices. Businesses can overcome this by engaging suppliers through education, incentives, and collaboration programs that show the long-term value of sustainability.
Additionally, high upfront costs for audits, certifications, or new technologies can deter companies from pursuing sustainable sourcing. However, these investments typically pay off through stronger compliance, efficiency gains, and improved brand reputation.
Given these challenges, working with an experienced expert like Life & Living helps companies navigate complex supply chains, access sustainable material options, and ensure that sourcing strategies deliver real impact without sacrificing quality or scalability.
Life & Living: Your Partner for Sustainability
Life & Living offers comprehensive supply chain services, including market analysis, design support, engineering, quality control, and international shipping, with a focus on housewares, from drinkware to tableware, cookware, storage solutions, and even supplies for pets, babies, and children.
As a B Corp and integrated supply chain partner, we will connect you with a network of vetted factories that meet strict sustainable sourcing standards through our proprietary evaluation system, while offering over 11 certified recycled material options during product development.
We also understand that traceability can be a challenge in recycled production. That’s why Life & Living can issue Global Recycled Standard (GRS) and Recycled Claim Standard (RCS) Transaction Certificates to ensure transparency and credibility for your supply chain.
With proven expertise in sustainable sourcing, Life & Living is ready to be your trusted partner in creating responsible, market-ready houseware products. Contact us today to bring your next sustainable product vision to life.