Businesses report benefits of responsible sourcing

11th May 2017


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Author

Vincent Zielonka

Firms with strong supply chain policies for forest products are enjoying tangible benefits, including improved brand reputation and employee engagement, a study by WWF found.

The campaign group surveyed more than 50 retailers from 20 countries, and conducted in-depth interviews with several leading firms as part of its work to understand the business case for responsible forest management and trade.

More than 200 companies have made public commitments to eliminate deforestation from their supply chains, 80 of which are in the retail sector, WWF noted in its report. Although this was an encouraging development, it said progress had been too slow and the focus of commitments too narrow. It also found that most pledges were not time-bound and two-thirds were not reported publicly.

More than 80% of companies surveyed by WWF reported positive impacts on risk management and brand reputation. Around 60% of retailers claimed that sustainability commitments had a positive impact on employee engagement.

Interviews with retailers suggested that those with public commitments had improved levels of customer retention, especially in business to business sales, and reduced volatility in raw material prices.

Higher cost was the only negative impact reported. Establishing responsible sourcing had an upfront set-up cost, requiring employee time and capital investment, WWF found. In addition, retailers reported a 5-10% average increase in prices for certified furniture.

However, interviews with retailers revealed that the cost of implementing responsible sourcing could be reduced if it was integrated into upgrading supply chain management. For example, Bunnings, Australia’s largest home improvement retailer, consolidated its supply chain when it moved to responsible sourcing, reducing the number of suppliers and the complexity that came with it. Other retailers said they had recouped additional costs through preferential purchasing and longer-term contracts.

The WWF report includes case studies of how retailers had benefitted from sustainable sourcing. Migros, one of the largest retailers in Switzerland, reported that sales of sustainable products increased by more than 30% between 2012 and 2015, while Bunnings said moving to a smaller number of suppliers had reduced supply chain risks because relationships were more stable and long term.

Alistair Monument, WWF forest practice lead, said that retailers had great potential to drive transformation due to their large supply chains and influence on consumer choices.

‘Companies with genuinely responsible timber sourcing strategies, based on clear commitments and public reporting, have an opportunity to stand out from the crowd,’ he said. ‘This is particularly important for retailers, who operate in a highly competitive public-facing space where maintaining a competitive edge and a positive reputation is crucial.’

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