Avin Agarwal Emphasizes The Importance Of Ethical Sourcing In FMCG

Avin Agarwal Emphasizes The Importance Of Ethical Sourcing In FMCG

He believes that the increasing attention paid to ESG norms makes corporations contract only with suppliers that meet high social and environmental standards.

FPJ Web DeskUpdated: Monday, July 01, 2024, 01:19 PM IST
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Ethical sourcing has emerged as the new dawn, and it is changing the face of the Fast-Moving Consumer Goods (FMCG) industry. Avin Agarwal, director of Haldiram’s says “Ethical sourcing is no longer an abstract concept. It is a core obligation that businesses globally have to meet.”

He believes that the increasing attention paid to ESG norms makes corporations contract only with suppliers that meet high social and environmental standards. With the sustainability agenda at the forefront, consumers and brands are willing to reduce the effects of climate change. It is crucial for the practice of ethical sourcing that such sustainability efforts are in place.   

Understanding Ethical Sourcing 

Ethical sourcing entails buying goods in a way that does not harm people, animals, or natural resources. It guarantees that the materials used in the production of products have been procured with the right amount of consideration for the environment. This encompasses issues such as adherence to labour rights, environmental conservation, and protection of human rights in the company’s supply chain.   

Now, let’s discuss in more detail how ethical sourcing is beneficial to your FMCG brand.   

Brand Identity 

Supply chain transparency and accountability give the public assurance that the company is socially and environmentally responsible. This seems to fit the current generation, their desire for authenticity, and the general ethical standing of the business. By being conscious of ethical sourcing, brands can protect their image and prove they are relevant to their customers. 

Customer Loyalty 

Ethical sourcing is one of the key strategies that not only appeals to new consumers but also retains the old ones. Consumers are more selective about the social and environmental footprint their purchases leave behind. They are also inclined to use brands that are in harmony with their beliefs and have a credible demonstration of sustainable standards. Ethical sourcing helps in creating long-term relationships between the customers and the companies since the latter is viewed as socially responsible organisations that are not only in business to provide goods and services.   

Fair Labour Practices 

The enforcement of fair practices in labour enhances the welfare and freedom of workers and, hence, benefits society. Respecting human rights allows business- and industry actors to have a positive influence on workers and societies in their value chains. Adequate labour relations for the people involve guaranteeing the rights of the employees to be respected, work in a healthy environment, receive a decent payment for their work, and be allowed reasonable working hours. Focusing on these practices reduces the chances of engaging in practices like child labour and forced labour, which are unlawful and can lead to huge losses in terms of legal suits and a tarnished organisation image.   

Environmental Impact 

Ethical sourcing also involves reducing the impact of production processes on the natural environment. This means that sustainable materials should be used in the production of clothing and that waste and pollution should be minimised. For instance, a cosmetics company may ensure that they source their raw materials in an environmentally friendly manner and make sure that the product’s packaging is also friendly to the environment. Thus, by adopting these practices, the business can assist in preserving the environment and fulfilling consumers’ requirements for sustainability.  

Competitive Advantage 

The concept of ethical sourcing can be advantageous in certain ways, especially with regard to acquiring a competitive advantage. There are more conscious customers and customers who give back to society, and the same is expected from the organisations they invest in. This is reflected in their expectation of clear information about the origin of products. The above expectations can be met, and the following is proof that firms can operate and prosper in increasing industry competition. Thus, synchronizing procurement and supply chain strategies with other business goals and missions is very important to capitalize on this competitive edge.   

As such, there is an increasing need to re-imagine business models, practices, and structures to incorporate sustainability and the robustness of supply chains, especially where food commodities such as palm oil are involved. Even though the journey of global retailers towards end-to-end sustainable supply chains is quite visible, similar progress in markets such as India cannot be missed. 

Being ethical is not an option. It is a necessity in business operations because ethical sourcing is a strategic decision. Therefore, FMCG companies should ensure that ethical practices are a priority in the industry to improve consumer trust as well as ensure they do not cause harm to society and the environment. With more openness and a focus on constant progress, the sector can pursue ethical best practices and initiate meaningful change.

Disclaimer: This is a syndicated feed. The article is not edited by the FPJ editorial team.

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