Small business guide to sustainable suppliers

A recent study by Deloitte - How consumers are embracing sustainability, found that nearly 1 in 3 consumers claimed to have stopped purchasing certain brands and products because of ethical or sustainability related concerns about them.

Small businesses will continue to come under pressure to adopt sustainable practices and supply chain transparency. This pressure will not only come from consumers but also larger corporations within their supply and value chains, as the environmental performance of small businesses will now also impact their own sustainability metrics.

Supply chains on average can hold between 80-90% of emission reductions for both small and large businesses alike, which is why it is so important for small businesses to start working with their suppliers to make significant changes as soon as possible.

You can look to improve your supply chain by screening and evaluating your suppliers’ environmental credentials, to help you better understand how sustainable their products and services are. You can then use this verification to demonstrate to your customers that you are taking environmental impact seriously, and also better verify the sustainability of your supply chain for your own carbon footprint analysis.

As a small business, you have some advantages over bigger companies; especially if you’re a micro business or start-up. Small businesses can often react quickly to change and are not as tied to historical supplier relationships that place limitations how you do things.

This means you might have greater control when it comes to suppliers and business partners.

But remember, there is a very strong chance that your business is part of the supply chain of another, and you will be under equal scrutiny by companies associated with your business. Therefore, its critical to practice what you preach, and integrate sustainability measures throughout your business and place the same expectation on yourself as you do with your suppliers.

We have developed a checklist to help you identify the things to ask and look for when sourcing and working with suppliers, and determine how to reduce your carbon footprint, while demonstrating you are a forward-thinking supplier to others.

This guide is for small businesses looking to reduce their carbon footprint and associated greenhouse gas emissions by making their supply chain more sustainable.

Here are some of the areas to look for when sourcing and working with suppliers. You do not have to do everything on this list, it can be used as guidance on where to start.

Supplier ethos - Does the (prospective) supplier have the same values as you in relation to climate change? Investigate more about them, and genuinely consider whether you share the same values

Ask for evidence - Of a commitment to climate change and sustainability (similar to what your organisation has undertaken) such as a climate pledge, carbon reduction commitments, measuring their carbon footprint, membership of relevant associations, and other “climate aware” policies applicable to their organisation (e.g. travel policy, paperless policy).

Check policies & ask for case studies – Ask to review their relevant policies. Demonstrating that your suppliers are meeting sustainable goals should not be an afterthought. It ought to be embedded into your suppliers’ approach and ethos.

Verification – Seek confirmation of the supplier’s stated climate credentials. Ask for evidence of carbon reduction, as well as any external or third party validation (e.g. an audit of carbon reduction; green labelling of products or services).

Scope 3 – Be informed on what your suppliers climate actions plans are – for example -if your suppliers are measuring their Scope 3 emissions within their supply chains, find out if are you, as a customer, part of their Scope 3 emission calculations? If they are, there is a good chance that you may already be informed/linked to their climate action plans. See our Jargon Buster to help break down the different Scope definitions, and what falls into each category.

Conditional supply agreements – Some suppliers may not be so advanced in their climate journey. Consider, as an option, granting them a contract as “conditional”, dependent upon the supplier making specific changes over the term of the contract, either in relation to their own internal organisation or in relation to the products or services supplied to you, or both.

Digital and paperless (where possible) – Ensure that your supplier agreement specifies that your dealings with the supplier are paperless. This will cover basic communications such as the exchange of formal legal communications, digital issuing purchase orders, and invoices and payment notifications. Contracts for the provision of services should also be required to be online/digital wherever possible.

Quotation of products and services in carbon equivalents – When tendering suppliers, you could ask them to provide a carbon footprint for their product/service, where possible. This should be a relevant metric for determining who to choose as the supplier (in addition to other considerations such as cost), as well as an ongoing measuring tool in relation to supplier performance. You may even want to specify or require that the successful supplier meet carbon reduction targets in relation to the products or services supplied over the term of the contract. Where carbon equivalents are clearly measured and stated in relation to product and service supply, it will make your own internal carbon calculations easier.

Carbon impact & target – Ask your supplier/prospective supplier if they have measured their carbon footprint, if they set a Paris aligned carbon reduction target, and if so, when do they expect to reach this target. Are they on track?

For further support on your journey, see our other guides, tools and templates:

We are working with the team at Climate Action for Associations (CAFA) to provide small businesses with practical guidance, steps and checklists to support your low carbon journey. CAFA are dedicated to accelerating business and industry climate action. CAFA provide resources, tools, guidance and peer to peer learning to drive greater, and quicker, climate action across whole systems, industries and supply chains.

This Small Business Guide to Sustainable Suppliers is one of many straight-talking small business resources prepared by CAFA that we will be sharing to help you implement climate action in your business.