Increasingly savvy consumers have a greater interest and understanding in where businesses source the products they purchase. In your community, it’s likely common to find products labelled ‘Fair Trade’, ‘organic’ and ‘locally-sourced’. These buzzwords are increasingly found on labels and packaging and in restaurants and cafes around the country. Purchasing ethical products reflects a growing trend in individuals wanting quality but also having a social conscience in wanting to know where products have come from and how they were made, grown or manufactured.

Products are now made cheaper than ever before and are more readily available. It’s then important to consider these issues when sourcing or manufacturing products. Being conscious of the ethics behind your products can firstly make sure your business is legally compliant and operating in a socially responsible way, and secondly, as a way of increasing your customer base. This article discusses some of the issues to consider when sourcing ethical products and how it can be done to benefit your business.

What are Ethical Products?

Understanding what exactly are ethical products will greatly assist in making critical business decisions about how you operate and where you will source your materials or products. Ethical consumerism is the term given to the practice of purchasing products based on their minimal harmful impact to society. It means that when you buy or manufacture products, you are considering at all times how you can reduce harm to the environment and people. Such as, producing food that is grown free from chemicals and pesticides or hiring workers to manufacture products and guaranteeing them fair pay and safe working conditions. Ensuring that what you sell or produce meets all of these criteria at every stage in the supply chain will mean that you are selling or producing an ethical product.

For example, ethics plays a huge part in the fashion industry regarding how companies source materials and fabrics and the treatment of workers who make the garments. In 2013, more than 1,130 garment workers lost their lives in the Rana Plaza building collapse in Bangladesh. This factory was the location where workers made clothes for over a dozen well-known international clothing brands. To prevent disasters like this from happening again, the not-for-profit organisations Fashion Revolution and Ethical Consumer have created a Fashion Transparency Index (FTI). The FTI ranks some of the largest clothing distributors in the world on a scale as to how well they communicate to consumers where and how the products they purchase were created.

Among the top-rated companies this year for transparency were H&M and Levi Strauss, meaning that they have been making significant efforts in making information about their supply chains publicly available. Among the lowest scorers were Chanel, Hermes and Prada. There have been a number of clothing brands popping up in recent years that focus on ethical and sustainable products, which goes to show that this is a growing market, and some of the big corporate brands are not doing enough to address the desires of the consumer.

In 2014, Fairtrade Australia conducted a national study of shoppers that showed 8 in 10 shoppers would ‘be more likely to purchase a product that supports someone in need over one that did not have a charitable aspect – as long as the price and quality between the two were similar.’ It seems a business that can marry a quality product and a morally sound business model that also focuses on positive social change produces a winning combination time and time again.

How Do You Source Them?

Naturally the type of business you operate will affect the kind of ethical products you wish to source for your business. For example, if opening a coffee shop in Surry Hills, you might consider sourcing Fairtrade coffee beans. To do this, you can liaise with Fairtrade Australia to become a licensee or buy from a licensee of these products. Similarly, if you wish to operate an online fashion retailer, you can make sure that the garments you are distributing have been purchased from a brand that makes ethically sourced clothing. For example, you can contact Ethical Clothing Australia for a list of accredited brands to ensure their supply chains are ‘transparent and legally compliant.’

If your business is the type that doesn’t create or sell products, you can still operate an ethical business even if you are providing services. You might consider sourcing office products from ethical manufacturers, partnering with businesses that have transparent business models and limiting the harmful impact your business may have on the environment or society as a whole.

Why Should You Do It?

Apart from ensuring your business model positively impacts the world, ethically sourcing goods is a commercially sound approach to increase your reputation and customer base. Social entrepreneurship as a business model has grown by over 37% in Australia over the last five years and is a huge growth area for investment. There is clearly increasing revenue to be made in this sector. Even if you aren’t operating a business with a direct causal link with social change, making sure you sell products that minimise social harm will facilitate creating a trustworthy brand.

Key Takeaways

As a business owner or a consumer, it’s important that ethically sourced products are a part of your agenda. If you run an ethical and socially conscious business, you will be more likely to build a reputable and valued brand. As a consumer, buying from businesses who ethically source their products can limit your harmful impact on the community and encourage other businesses and consumers to do the same.

If you have questions about ethically sourced products, how to approach creating an ethical and responsible business model, or any of the legal issues around this, get in touch with our lawyers on 1300 544 755.

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