Is sourcing locally better for ethical businesses?

There’s no doubt that ethical consumerism has become important to the British public in the past few years. In the age of the internet, it is so easy to find and share information. Companies not meeting the ethical standards buyers expect are increasingly being found out and called out. With environmentalism becoming a hot topic, and the COVID-19 crisis highlighting the fragility of smaller local businesses, a consciousness has arisen both in Millennials and Generation X.

In fact, in 2019 UK ethical spending grew more than ever, reaching £14 billion market worth.

As a result, many businesses are striving to source their products in an ethical way. One debate that has raged for the past few years is whether it is always best for ethical businesses to source locally, or, can buying products overseas be the more sustainable choice?

Naturally, this is not a straightforward issue. Let’s look at one example to see why.

If you are in the fabulous position of making chocolate products then obviously you’ll have to source the cocoa from abroad as it’s not something we grow in the UK. Your next stage is to turn the cocoa into chocolate, but do you ship the cocoa here and produce it locally, or do you have it produced near to where the cocoa has been sourced?

Both financially and ethically, it is likely that having it made where you are purchasing the cocoa beans is the best choice. It’s often going to be cheaper to produce and you are potentially creating jobs in a less wealthy country.

However, it is also worth considering the working conditions of those producing your chocolate. So here we meet the first potential obstacle in ethical businesses buying internationally.


Working Conditions

In the UK we have tight restrictions on working hours, conditions and pay. If you are at all concerned that these restrictions are not being enforced, then it’s not too difficult to check up on this by visiting the factory. If left dissatisfied then you have the power to enforce change. After all, it’s the law.

Yet, if your products are being made abroad you may find the working conditions are not meeting the standards deemed acceptable in the UK. Here you have less influence as there are often fewer, or even no laws protecting the welfare of employees. Little does it matter, because, as the owner of your business the buck stops with you!

As made apparent with a number of large brands who’ve made headlines for items being made in sweatshops, customers won’t be persuaded that outsourcing production no longer makes it your responsibility. Losing customers for this reason can be damaging to big brands but devastating for smaller so-called ethical businesses.

So, can this be solved by visiting the factories where your product is produced abroad?

Perhaps. Consider though that this will come at an expense and it won’t be something you can do casually every few years. Being thousands of miles away from suppliers gives them the luxury to BS you. It’s a beautiful, if somewhat saviour-like, idea to ride in on a white horse and enforce real change that will see low-paid worker’s conditions, pay and hours improve. Yet, the reality is you’ll be flying in and out a few times per year on a very un-eco-friendly aeroplane and you’ll have little way of knowing if any changes you impose are reversed the moment your feet hit home soil. Apologies for the pessimism. We’re not saying don’t do it, we’re just saying it’s not simple.

Naturally, you’ll want your chocolate to be affordable and we know it’s costly to produce chocolate in the UK and cheaper to do so abroad. Yet, if you’re ensuring your suppliers abroad are meeting the ethical standards of the UK then that’s going to drive the price right back up. Perhaps the best way would be to employ a middle person who is positioned close to the supplier and can oversee operations and best work practices. Ethical businesses will also insist on reports that supply evidence of this. Or, you’re going to have to do this yourself and, let’s be realistic, if you’re demanding that workers be paid a reasonable amount, then you will find the cost of production will increase for you.

Realistically, sourcing locally or sourcing ethically abroad will result in you paying more. Here, we call it ‘trade’. When working ethically with overseas suppliers, this is called ‘fair trade’. It’s why we often pay more for chocolate with a fair-trade certification.

Working conditions are not the only obstacle we meet when working out whether it’s better for ethical businesses to source products locally or internationally though. Let’s explore some others.

Quality

There are lots of familiar phrases that associate the UK with quality – ‘best of British, ‘British quality’, ‘produced in the UK’. These reflect the trust we have in UK production. Take the argument over importing chicken from the US. We know food standards there are not in line with ours and there’s no doubt that even if chlorinated chicken comes to our supermarkets, many will refuse to purchase it.  So, it’s often quality that leads many UK businesses to source products locally.

However, we are not always the best choice. With technology, for instance, it’s worth looking at China, Japan and other countries that have a better reputation for producing these products. Where an industry is thriving you can also be fairly sure that they are at the forefront of innovation and so global suppliers may be able to keep you ahead in terms of quality and newer products too.

If you’re making oven-ready meals then you can’t get much better than British cheddar. Yet, Switzerland is known to produce the best gruyere if that’s your cheese of choice.

So, forgetting expense for a moment, you may find yourself having to weigh up quality vs carbon footprint.

Hassle

There are far fancier words and many subcategories within this, but ‘hassle’ seems the most straightforward way to express these.

When you buy from abroad you are likely to run into a number of issues including communication problems, tax, differing laws and quality control. Even on the slick machine that is Amazon, we are hesitant to pay shipping costs not just because of the money but because if the item delivered is faulty it’s a far bigger undertaking to return it. This applies to businesses sourcing products made abroad too.

You’re also going to have to invest some time learning about the restrictions and taxes you’ll have to adhere to when buying internationally. This is no small task and it’s risky, especially when there are language barriers. It’s not something you can afford to get wrong and you’ll likely pay more for an accountant or advisor who understands the legal and financial requirements of foreign markets.

Carbon Footprint

Whilst it is assumed that items shipped from other countries are going to be less environmentally friendly, it’s not as simple as how far they’ve come. Let’s look at fruit to highlight some other factors.

Avocados have a hugely disappointing environmental effect because of the amount of water they take to produce. Whilst bananas are largely sourced from afar, they are usually shipped, not flown, which is less harmful to the environment. Soft fruits such as berries may come from nearer, yet because they are so fragile they demand a lot of packaging and often refrigeration.

Therefore, it is not only the distance products are travelling but how. As well as the carbon footprint needed to produce the products and the means to ensure quality is maintained during transportation.

Let’s consider the Amazon versus the high street argument over environmental impact. Whilst some will argue that lorries delivering thousands of products per day to customer’s doors are producing a high carbon footprint, how does that compare to all those customers driving to the shops and back instead?

What most of this comes down to is thorough research. Ethical businesses must scrutinise every choice they make, especially when it comes to how and where products are made. It’s time-consuming and challenging. Yet, if you’re not doing it then someone else will.

According to a survey conducted by GlobalData in 2020, 45% of shoppers are now actively seeking products that are better for the environment. Another 2020 survey, carried out by Accenture, revealed that 60% of consumers were making more ethically sourced purchases.

Is it more ethical to source your products locally? Unfortunately, there’s no clear answer. Whilst some customers may trust British-made items more, companies who are engaging with NGOs and creating opportunities abroad for people in poverty are having some real success.

Our advice is, whatever you choose to do, make sure you say why and make this information transparent to your customers. Being an ethical business is not about box-ticking, it’s about scrutinising your options until you can make a choice that you can confidently explain to your customers because they really do care.

For decades, businesses have operated much like the Wizard of Oz, urging us to ‘pay no attention to the man behind the curtain’, but the world is becoming more curious. The next generation of consumers are pulling back the curtain, checking over the cogs in the machine and they won’t be fooled by smoke and mirrors.