Smaller companies are responsible for around half of all greenhouse gas emissions opens in new window from UK businesses, so every start-up has a role to play in helping to tackle climate change. This guide outlines how to find green and sustainable suppliers.
The facts about the impact of climate change are stark. The United Nation’s landmark report in 2021 opens in new window warned of more extreme weather to come, and important targets for keeping the rise in global temperatures well below 2oC are set to be broken without big cuts in carbon emissions.
Businesses are increasingly looking to play their part in tackling climate change. As well as it being a moral issue, there are governmental requirements opens in new window and customers are demanding it from the companies opens in new window they spend their money with.
Developing a green supply chain is critical, and focusing on sustainability at the start of your business journey can bring advantages. Taking steps such as sourcing products locally and using green packaging not only benefits the environment but can help your business too. A company’s reputation can be boosted, more customers can be attracted and costs can be saved.
Help ensure your business decisions make a positive impact on the environment with our free Introducing environmental decision making course opens in new window. As part of our Learn with Start Up Loans opens in new window partnership with The Open University, our online course is free to join, delivered by experts and includes a free statement of participation on completion.
Benefits of having a green supply chain
Building a green supply chain has many business benefits, such as:
Competitive advantage and brand reputation
Green businesses can gain an advantage over competitors and attract customers keen to buy from environmentally responsible organisations. A survey by SAP in 2021 opens in new window found that 83% of UK adults were more likely to buy from a brand that sources from local suppliers, with the same proportion willing to compromise for ethically sourced products.
Having strong green credentials may also generate positive publicity for your business in the media, which may help to improve your reputation and attract more customers.
A green and sustainable supply chain may lead to significant cost savings. For example, sourcing locally can reduce transport costs and improve operational efficiency due to greater predictability around delivery times.
Access to funding
Going green can widen businesses’ opportunities to access finance. Many investors and finance lenders are taking steps to integrate sustainability issues into their investing criteria opens in new window, and several funding schemes are targeted at ethical companies.
Types of green supplier
There are various types of green suppliers that start-ups can consider. They include:
Food and drink suppliers
For restaurants and other food and drink businesses, actions such as sourcing from local suppliers and using organic and Fairtrade produce are good ways to go green.
Many customers are demanding it. According to Paymentsense’s Restaurant Insights 2020 study opens in new window, 66% of consumers believe the ethical behaviour of a business matters when eating out, and 36% rate restaurants stating when local produce is available as a key consideration.
If you are looking for green and ethical products to resell, there are specialist wholesalers and distributors that provide sustainable products.
Materials that you use to make and deliver your products and run your business can be eco-friendly. Examples are:
- sustainable, compostable and recycled packaging
- organic, natural and vegan fabrics
- recycled and reclaimed wood
- rechargeable batteries
- recycled stationery
- energy saving light bulbs
- environmentally friendly cleaning products
- low emission and electric vehicles
Where to find green suppliers
There are various ways to track down suppliers, such as:
Accreditation schemes can help you identify green and ethical products and services. International standards include ISO 14001 opens in new window for organisations with an effective environmental management system and SA 8000 opens in new window, which recognises workplaces with ethical labour practices. Accreditation bodies include Investors in the Environment opens in new window and World Fair Trade Association opens in new window.
Trade associations and business groups
Many trade associations provide lists of businesses with sustainable practices. You can find potential suppliers via business groups such as the Federation of Small Businesses opens in new window and the British Chambers of Commerce opens in new window.
You can use online directories to identify green suppliers. An example is the World Fair Trade Association opens in new window.
You can meet potential suppliers in person by attending trade shows. Many exhibitions and events focus specifically on sustainable, ethical and green businesses.
Speak to fellow business owners and other contacts for their green supplier recommendations, and ask your connections on social media platforms such as LinkedIn and Facebook. You can also look for groups on social media websites where entrepreneurs share contacts.
Using a sourcing agent can be an effective way to find ethical and green suppliers that you might struggle to identify yourself.
How to evaluate a supplier
Before you sign a contract with a new supplier, you should evaluate its environmental performance. Ways to do that include:
Find information about the supplier’s environmental policies and practices. You could look at the company’s annual reports, mission statements and corporate social responsibility pages on its website.
Check if the company has been audited by an industry standards body for standards such as ISO 14001 opens in new window or is an accredited member of an ethical scheme, such as World Fair Trade Association opens in new window, Better Cotton opens in new window, Worldwide Responsible Accredited Production opens in new window, Green Mark opens in new window and Green Accord opens in new window.
Check that products provided by the supplier have a label or logo that identifies them as environmentally friendly. There are a wide range of schemes in operation worldwide with various criteria. You should decide which one is right for you and your customers. Examples include EU Ecolabel opens in new window, Soil Association opens in new window, EU organic logo opens in new window and Global Ecolabelling Network opens in new window.
Request to speak to some of the potential supplier’s existing customers or look for them on LinkedIn. Ask them to verify the supplier’s green credentials.
Compliance with the law
Check that the supplier has not been prosecuted for breaking any environmental regulations.
If the products or materials you intend to purchase will be shipped in packaging, make sure that the packaging is as sustainable as possible and kept to the absolute minimum.
Check how energy efficient the supplier is, such as how much power and water is used to make the products.
If you decide to do business with the supplier, seek legal advice and draw up a service level agreement that covers areas such as the responsibilities of both parties, the service that the supplier must deliver, metrics for how service levels will be measured and delivery schedules. You can also include the supplier meeting your expectations on green and ethical practices.
What to look out for
‘Greenwashing’ is the act of making false or misleading claims about the environmental benefits or sustainability of a product or service. When selecting your suppliers, this is something to bear in mind as they might not be as green as they claim.
Red flags to look out for include:
- Vague or unclear terms such as ‘green’, ‘eco’ and ‘all natural’ without adequate explanation or evidence to back up the claim.
- Descriptions that could be misleading. For example, ‘100% recycled’ does not mean the same as ‘100% recyclable’.
- Use of logos or labels that are not associated with an official accreditation organisation.
- Claims that don’t comply with sector-specific laws. For example, bread labelled ‘organic sourdough’ would be misleading if at least 95% of the ingredients were not organic.
If you use a supplier that is making false claims, you could get into trouble yourself. The Competitions and Market Authority (CMA)Opens in a new window is reviewing different consumer sectors for evidence of greenwashing.
The CMA’s green claims checklistOpens in a new window is a helpful resource for checking the validity of environmental-related claims.
Thinking of starting a sustainable business? Check out our free online courses in partnership with The Open University on environmental decision-making and how organisations impact the environment.
Our free Learn with Start Up Loans coursesOpens in a new window include:
- Financial methods in environmental decisionsOpens in a new window
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Plus free courses on finance and accounting, marketing, project management, management and leadership.
This article and the content provided therein is exclusively for informative purposes. Nothing in this article or in its contents is intended to provide advice of any kind (including legal, financial, tax or other professional advice) and should not be relied on as such. You should get professional or specialist advice before doing anything on the basis of the content contained in this article.