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Sustainability in business: how to evaluate suppliers’ commitment

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This guide outlines how to guage your suppliers and vendors genuine commitment to sustainability in business.

To operate a fully sustainable business, your vendors and suppliers must commit to it as well. However, it can be difficult to uncover their practices for sustainability in business. In larger companies, sustainability in business is often synonymous with environmental, social, and governance (ESG) programs for sustainability in business. As a general rule, the public uses the word sustainability, while investors and capital markets use ESG.

How to evaluate sustainability in business

Smaller companies may not have formal ESG policies and programs for sustainability in business. Here are three ways you can evaluate a business’s commitment to sustainability in business even if they do not have an ESG program.

1. They Use Environmentally Sustainable Practices

When most people think of sustainability in business, they think of “green” practices as sustainability. So how can a company do business in ways that reduce waste, use of fossil fuels, and harsh chemicals? For example, you may be looking for wholesale women’s apparel. Unfortunately, it can be difficult to find manufacturers in the garment industry committed to eco-friendly products and practices for sustainability in business. However, some wholesale platforms provide filters to help small businesses find specialty lines like eco-friendly clothing.

If you’re running a restaurant, the challenge is finding energy-efficient appliances. Brands like Vulcan provide commercial kitchen appliances with the government’s Energy Star Certification. Equipment with this certification is designed to be less costly to operate and more environmentally friendly.

It’s also important to pay attention to research industry standards and regulations. Those benchmarks will help you identify best practices for sustainability in business. It may also show you if the potential vendor has any “red flag” practices.

Shows like “Undercover Boss” make it look fun and sexy to travel your supply line to see how your business sources its goods. While it is beneficial to understand your entire supply chain, the cost of travel and time is immense. Fortunately, you can still research much of this information online or through vendor interviews and virtual visits.

Claiming to be green is popular, but it’s important to check into the truth behind these assertions of sustainability in business. Make sure you avoid working with vendors who make false or misleading environmental statements that have little truth in practice. Claims like this are examples of “greenwashing.”

2. They Embrace Socially Responsible Programs

The social category of ESG refers to how a company supports its community, both locally and worldwide. There are several ways you can assess a company’s social sustainability in business.

You can start by considering prospective vendors’ pay scales. Compare those expenses to industry standards and against expectations of a living wage. For example, in the United States, many food industry businesses, like Starbucks, are voluntarily increasing employee wages, aiming for a living wage. For international supply chains, compare employee pay based on the cost of living in that country.

Consider the employee benefits a potential vendor offers its workers. Companies like Starbucks and McDonald’s promote educational assistance programs that offer financial incentives for employees earning a degree or furthering their education. In addition, some companies provide medical and retirement benefits that exceed minimum legal requirements.

Diversity, equity, and inclusion (DE&I) programs and training also fall under a business’s social responsibility. For example, look at whether your potential partner focuses on hiring racial minorities, women, people with disabilities, or those released from prison. Find out what their internal training practices are for DE&I issues. Some businesses focus on company wide training on topics like harassment and racial sensitivity. In one situation, training was offered only after black customers were harassed because an employee found them suspicious.

Another way a business might support its local community is to encourage employees to volunteer. Some businesses will allow employees to do volunteer work during regular business hours, with pay. Companies might promote service at soup kitchens on Thanksgiving, Christmas, and New Year’s Day. In addition, they may have programs that support homeless shelters during winter and other extreme weather.

One last idea is to look at your vendor’s philanthropic efforts for sustainability in business. A glance at their charitable giving will show how they choose to support their community financially. Consider it a bonus if a company supports causes dear to you. In contrast, if they support an issue you oppose, that knowledge may also help you determine the viability of your partnership.

3. They Record Sustainability Practices in Governance Documents

Governance is the final area of a strong ESG program for sustainability in business. Governance refers to the processes, procedures, and controls a business uses to support its program.

Larger companies often formalize these items into documents with trackable measures. In addition, the United Nations and NASDAQ have requirements for larger and publicly traded companies to have formal ESG programs. Most of the time, the documents are available publicly, but if you want to verify a vendor’s position on sustainability in business, you can also ask to see them.

Some businesses may also have ISO (International Organization for Standardization) certifications and processes. These standards outline minimum standards for quality practices across the globe. Third-party organizations audit business practices for compliance with these standards. You can check to see whether your potential business partner has any of these rigorous certifications as proof of their commitment to sustainability.

While some smaller businesses may not have a formalized ESG program, their mission statements and annual reports may provide insights into their commitment to sustainability in business. Plus, learning about their environmental and social practices will help you understand if they support your focus on sustainability.

A final recommendation is to look for sustainability certifications such as Green Business Certification, Fair Trade Certified, USDA Organic Certification, or the EPA’s Lead-Safe Certification. Taking the time to apply for and earn these certifications shows a business’s commitment to sustainability.

Conclusion

It can be challenging to run a sustainable business, but the rewards are undeniable. While sustainability in business and social responsibility initiatives demand time and financial commitment, companies can see a return on that investment far exceeding the expense.

Taking time to explore your current and prospective business partners’ commitment to sustainability in business is a worthwhile endeavor. And selecting vendors whose business practices match your values helps you honor the planet and your community.

 

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