Innovating For A Responsible Supply Chain

As companies set bold sustainability goals and work to create more responsible products and services, many are hitting a major roadblock: viable supplier options. Companies cannot do it alone and are realizing their success is largely dependent on suppliers who are oftentimes unable to meet demands. In other cases, responsible suppliers simply don't exist. Not to be slowed down, many values-based companies are reinventing the traditional supplier relationship – from that of a vendor to a partner. The results are unexpected, innovative models and solutions that are mutually-beneficial and can have large-scale societal impacts.

Earlier this year, we reported on Chipotle's decision to stand by its "Food with Integrity" values, by pulling pork from its menus instead of swapping in conventional offerings upon discovering a violation of its animal welfare policy. Such decisions have significant financial implications and others in the organic food category are responding. Last week, The Wall Street Journal** reported on the growing trend of new approaches taken to cope with shortages in the supply chain. For example, companies like Nature's Path Foods have opted to purchase their own farms in order to have greater control, while others, such as Pete and Gerry's Organic Eggs, have supported organic suppliers by guaranteeing bank loans or directly financing farming equipment. Some companies are going so far as to make long-term purchasing commitments in order to eliminate the risk suppliers take on when transitioning to organic methods.

The changing supplier paradigm goes well beyond the grocery aisle, with many brands innovating solutions to provide more responsible options. Patagonia recently announced an investment as a result of its $20 Million & Change venture fund to support values-based startups. The retailer has committed to a more than $1 million investment in the biochemical companyBeyond Surface Technologies. The funds will support efforts to explore more sustainable technologies in fabrics. And in 2013, we saw H&M commit to become the sole client of three factories in order to better oversee production and standards.

As companies strive to meet their CSR commitments and create more responsible products, the traditional company-supplier relationship will sometimes no longer suffice. As the demand for responsible raw materials increases, there is no question we will continue to see new models, partnerships and solutions across industries.

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