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Sourcing.eco Blog

Keep up-to-date with the latest updates in sustainable production and purchasing.
Learn about industry expectations, trade best practices and regulations.

  1. Exploring post-pandemic trends in Global trade

    The coronavirus pandemic, which swept the whole world in early 2020, created a real roller coaster for the global economy. What began as a local Chinese threat, by the end of March turned into a record loss since 2008 for the global market. Not only the most vulnerable segments of the population and the middle class, who lost their jobs and income, but also richer people whose fortunes in a short time decreased by more than a trillion dollars. Despite the development of vaccines, many are still wondering what a recovery might look like.

    The Covid-19 crisis continues to change the realities of our daily lives and the world around us. The path to the normal path becomes more and more difficult to imagine. Companies, governments, and individuals are grappling with transformational change that has set new and unexpected trends in motion in virtually every industry. As the likelihood of reverting to a pre-pandemic state decreases, three key areas affected by the pandemic are the corporate environment, consumer behavior, and company operations. The changes caused by the pandemic have already changed our lives and our shopping habits. Trends such as work and homeschooling, as well as online shopping, are prompting a huge number of people to adapt to the changing world and use modern technology in their daily lives.

     

    Demand for sustainable development in post-pandemic world

     

    Companies and economies are recovering but not going back to normal. The trend says that the recovery is going back to a NEW normal.

    According to economists, governments and businesses are motivated to take the trend into account while estimating the recovery plan. It is becoming mandatory to reduce emissions and make a transition to more sustainable energy sources and sustainable production methods. The past shows that when breaking into nature can have disastrous consequences like pandemics, the stronger the global warming is, the more pandemics and

    Exploring post-pandemic trends in Global trade

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  2. H&M Faces Boycott in China Over Stance on Treatment of Uyghurs

    Swedish group H&M, which owns the second-largest clothing chain in the world, has released an official statement on the situation in China. In it, the company announced that it is working with Chinese colleagues and is doing everything possible to cope with current problems but does not provide any specifics.

    Recall that recently, H&M was at the center of a scandal over its decision to abandon cotton purchases in Xinjiang Uygur Autonomous Region due to allegations of massive, forced labor camps in the region. A report by the Australian Strategic Policy Institute (ASPI) thinks tank, delivered in March, distinguished H&M as one of the recipients of a constrained work program through-colored yarn maker Huafu, which possesses an industrial facility in eastern China's Anhui territory.

     

    Who are the Uyghurs?

     

    The Uyghur minority lives in the Xinjiang Uyghur Autonomous Region of China. They make up 45% of the area's population and 40% are ethnic Han people. In total, about 10 million Uyghurs live in China.

    Since China regained control of the region in 1949, many ethnic Han Chinese have migrated to Xinjiang, which is why the Uyghurs are now worried about the possible crowding out of their own culture.

     

    What is known about the situation of the Uyghurs in China?

     

    Activists who fight for the rights of the Uyghurs say Beijing discriminates against them. One example is their so-called re-education. According to the testimony of journalists and human rights activists, the Uyghurs are being isolated in "educational camps." Some are sent to their hometowns "under arrest."

    According to Reuters, citing UN activists and experts, 1 million Muslim Uighurs are being held in Chinese camps. China denies this and claims that these camps are merely providing vocational training for people.

    The researchers say that activists are in constant fear of possible harassment. In addition to such violations of rights, everyday discrimination is also used against Uighurs, making the minority feel like second-class people. For example, Uighurs may be refused a hotel room.

     

    H&M is determined to overcome the crisis

     

    The company said it does not work with any garment manufacturer in the region and will no longer buy cotton from Xinjiang, which is China's largest manufacturing region. However, the Swedish group admitted that it had “indirect commercial relations with a factory” located in Shangyu, Zhejiang Province (southern China) and owned by Huafu Fashion.

    Recently, against the backdrop of growing tensions between China and the West, angry calls to boycott H&M began to appear on Chinese social media. A few Chinese influencers and celebrities quickly quit teaming up with the organization, while the brand's items vanished from major online stores in China.

    As a result, a boycott of the retailer was declared in China - it was blocked access to all major Chinese platforms, including Tmall, Taobao, JD, and Pinduoduo, and some landlords forced the company to close physical stores as well - according to H&M, about 20 outlets are now closed in the country.

    The wave of consumer boycotts in China coincided with an agreed set of sanctions imposed by the UK, Canada, the European Union, and the United States last week for what they say is a violation of hum

    H&M Faces Boycott in China Over Stance on Treatment of Uyghurs

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  3. Consumer expectations toward retail brand sustainability

    What is a sustainable brand?

     

    Concerns about climate change, toxicity, and waste have begun to influence consumer behavior around the world. The share of those looking for environmental protection from brands is increasing, and this is pushing companies with a wide variety of products to produce and consume more sustainably.

    A global survey of 20,000 customers by food brand giant Unilever found that one in three (33%) people choose brands they believe are good for the environment.

    Corporate Social Responsibility or «CSR» is more than just a way for brands to stand out. Sustainable branding is becoming an expectation for today's consumers. Companies that combine their mission and purpose with sustainable values ​​and support environmental and social goals in ways related to their business can greatly influence the public's willingness to buy, invest and work for them.

    The Sustainable Brands conference outlined the main characteristics that a roadmap for any green company should include:

    • System-wide brand influence.
    • Net positive products and services.
    • Goals beyond profit.
    • Regenerative operations (recycled materials and environmentally friendly processes).
    • Transparent and proactive governance.

     

    What problems exist

     

    A study by McKinsey Fashion on Climate study shows that the fashion industry accounts for 4% of global emissions, of which 70% comes from mining, «especially energy-intensive manufacturing, preparation, and processing of raw materials».

    Intending to reduce the negative impact of the industry on the environment, 32 major global fashion and textile companies, from H&M and Gap to Burberry and Chanel, have signed Fashion Pact.

    The initiative, led by parent company Gucci and French elite house Kering, aims to achieve zero carbon footprint by 2050 and invites the industry to offer «regenerative» approaches to agriculture, including eliminating batch-based intensive farming sources.

    To protect the oceans, the pact calls for a reduction in the use of single-use plastics

    Consumer expectations toward retail brand sustainability

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  4. Consumers Are Driving Brands Toward Sustainability

    Generation Y (or Millennials born between 1981 and 1996) and Generation Z (born after 1996) represent an ever-growing consumer power in the global economy. In the US, the purchasing power of Gen Z has already exceeded $ 500 billion. Millennials make up about a quarter of the world's population, and statistics show that the purchasing power of Generations Y and Z is high and growing.

    For years, millennials have been a central stage for brands and marketers. But for some time now, the new group has been gearing up to take its share of Gen Z's consumer attention. These are the consumers that companies want to conquer. This audience is expected to overtake millennials, who make up 32% of the world's population. And as Gen Z enters the workforce and their purchasing power increases, they will undoubtedly be a key target for brands to achieve customer appeal.

     

    Ecology trend

     

    Climate changes are caused by changes in the earth's atmosphere, processes occurring in other parts of the Earth, such as oceans, glaciers, as well as, already in our time, the effects associated with human activities. Poor ecology is pushing Gen Z and millennials to new consumption patterns that consider the ethics and sustainability of what we consume. While sustainability considerations are not yet a major buying driver, it is expected that sustainable brands will continue to gain market share as the purchasing power of these generations grows.

    It is clear that both consumers and brands are trying to reduce their impact on the planet, and as we approach the critical mass of consumption, we can expect sustainability issues to grow in importance.

    Consumers are concerned about the quality of the ingredients used in the production of goods, the conditions in which the goods are produced, as well as the processing and recycling of packaging. This trend is confirmed by many large companies. For example, the British company Lush was one of the first to understand the importance of minimizing packaging waste and for many years has been producing cans for products only from recycled materials. L'Oreal plans to phase out single-use plastic by 2025. The brand has already launched the Source Essentielle hair care line, where shampoo bottles can be refilled - just go to the L'Oreal Professionnel salon. And there are many such examples in various areas of business.

    Successful green products do not have to look or feel any different than green versions but bringing these products to market in more sustainable ways will undoubtedly become a more important direction for consumers.

     

    Buyers' opinion

     

    First Insight's 2019 report, The State of Consumer Spending: Gen Z Shoppers Demand Sustainable Retail, finds that 62 percent of Gen Z who will start shipping this year prefer to buy from sustainable brands.

    Also, the majority of Gen Z (54%) say they are willing to spend an extra 10% or more on green products, with 50% of millennials saying the same. This compares with 34% of Gen X and 23% of baby boomers. It can be concluded that with each generation, the desire for sustainability is increasing.

    Deloitte's Global Millennium Generation Survey 2020 shows young consumers are concerned about climate change and unequal wealth distribution. In a survey, 65% of millennials and 57% of Gen Z said they had increased their recycling efforts, and half of 50% and 41% of Gen Z had reduced or stopped their fast fashion consumption.

    It is also important that consumers are willing to pay more for products that are manufactured with sustainability in mind. According to an Accenture survey, more than half of consumers said they would pay more for green products that are intended for reuse or recycling.

    According to a Nielsen study, consumers across all regions, income levels, and categories are willing to pay more for green products. The level of potential willingness of consumers to pay more for the products of companies that are responsible for society and the environment is more than 80%. At the same time, in developing countries, Millennials and Generation Z are willing to pay the highest prices.

    Consumers Are Driving Brands Toward Sustainability

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  5. Consumers are willing to pay more if they know the reasons

    Today, the world is experiencing a growing trend of responsible consumption, which implies a conscious decision to choose products and services that have a lower negative impact on the environment and society. The formation and development of the category of responsible consumers today have a significant impact on the activities of companies around the world.

    At the same time, sustainable production and consumption is an independent goal among the main 17 "Goals for achieving sustainable development", adopted in September 2015 at the UN Summit on Sustainable Development, thus emphasizing their critical role in addressing the environmental, economic, and social problems.

    In terms of growth, the market for eco-products can be characterized as young, not mature, the real capacity of which is far from potential. At the same time, Western countries have at least thirty years of experience in this market. The activities of all market participants are regulated, the legislation is debugged not only at the national but also at the international level.

     

    Production of environmental goods

     

    The production process for organic products is designed to minimize environmental and social impacts while still making them economically viable. The reason green products tend to be more expensive has to do with the implications for the supply chain. It is not easy to manufacture products with minimal environmental impact, and the additional costs come with a higher degree of complexity. Kearney’s research shows that organic products are on average 75-85% more expensive, with the level of mark-up highly dependent on the product category.

    It is important to note, however, that an analysis of the average cost of goods shows that 10 to 30% of costs are spent on the first stage of the value chain. These costs include:

    • Product markups. Surcharges for the actual higher cost of producing organic materials, including more expensive labor, lower yields, more space to raise animals, and longer animal raising times
    • Certification allowances. Markups resulting from approval and certification documentation, e.g., for organic or fair trade
    • Volume markups. Mark-ups caused by small quantities of organic food compared to non-organic food and the need to store them separately (reduced economies of scale)

    Why eco products are more expensive

    Other costs associated with the sale of goods are 10-15%. As for the fees of wholesalers and retailers of goods, they range from 60-65%. Most often, these costs include marketing as well as additional certification, but in most cases, these costs increase the seller's margins.

    Based on the above facts and other considerations, it takes additional time and money to produce an environmentally friendly product. From the sourcing of raw materials to the delivery of the final product, almost all steps in the process of producing organic products are more expensive than traditional products.

     

    Consumers are willing to pay more if they know the reasons

     

    According to a Nielsen study, consumers across all regions, income levels, and categories are willing to pay more for green products. The level of potential willingness of consumers to pay more for the products of companies that are responsible for society and the environment is more than 80%. At the same time, in developing countries, Millennials (ages 22 to 35) and generation Z (ages 16 to 21) are willing to pay the highest prices.

    Kearney estimates that about 70 percent of all consumers will pay 10 percent more for green products, another 15 percent will pay 30 percent more, and another 15 percent will pay even higher markups. Consequently, a 10 percent markup is likely to be well received in the mass market and could significantly increase the adoption of organic products.

    Markup tollernace for people who are willing ro pay moreAmount of people willing to pay more for green products
     

     

    It is important to note, however, that if customers want to shop in an environmentally friendly way, many cannot afford or simply do not want to spend much more. This creates a gap between the stated intention of consumers to act sustainably and their actual behavior.

     

    How to create more affordable prices

     

    The solution to the problem is to adjust pricing at the end of the value chain, shifting the corporate thinking and accounting logic from relative to fixed margins. This will allow for sustainable production in the form of a fixed cost premium rather than multiplying it throughout the value chain.

    If brand owners, wholesalers, and retailers add a fixed margin (their absolute cash return) and switch to a sustainability markup, the final price will often be in the consumer's acceptable range, namely the markup of 10%.

    An added benefit will be the benefits of sustainable production, namely government incentives, such as tax breaks, can help promote green products and expand their production, and save resources in production.

     

    How to promote eco products

     

    Having carried out the production of eco-products, it is necessary to correctly plan marketing support and communication with the consumer. When promoting eco-friendly products, many marketing professionals see saving the planet as enough argument for the shopper. But comfort, safety, aesthetics, accessibility, status, pleasure are equally important.

    According to the American Marketing Association, "green marketing is the marketing of products that are considered environmentally friendly." Green marketing involves a wide range of activities, including product modifications, manufacturing process changes, packaging changes, and advertising changes. Green marketing aims to meet the needs and desires of customers without harming the environment or with minimal harm to it.

    Terms such as phosphate-free, recyclable, reusable, ozone-friendly, and environmentally friendly are some of the things consumers most often associate with green marketing.

    Eco-certification plays an important role in this. It testifies to the seriousness and progressiveness of the company, its ability to maintain the environmental characteristics of products at a consistently high level, and strengthens the company's image in the eyes of the consumer.

    Eco-labeling is a tool that allows you to assess the environmental friendliness of a product based on a multi-criteria assessment system and convey this information to the consumer in the most convenient legal form. In a highly competitive environment, a product with a corresponding mark receives additional cost-effective conditions. The concept of eco-labeling is governed by the ISO 14020-25 series of international standards "Eco-labels and declarations", including specially developed guidelines and procedures for use.

    Around the world, environmental labels and ecolabels help the buyer, without being an expert, to choose an environmentally preferred product. They play an important role in the development of ecological production and consumption, enable the producer and the consumer to speak the same language, and also contribute to the development of the market for eco-products, creating favorable conditions for their promotion on the market. Today, there are a huge number of different environmental signs and ecolabels, the schemes of which are systematized in international ISO standards and reduced to three types - I, II, and III.

    It may seem to the manufacturer that the transition to green marketing is costly, but, in the long term, such a transition is beneficial and irreplaceable. Companies that are better versed in environmental issues have already or are transitioning to green marketing. More and more business people are realizing the link between environmental responsibility and more efficient and profitable business practices.

     

    Conclusion

     

    Market conditions and customer preferences affect product sales and a firm's profits. With so many options available in the market for shoppers, it is difficult for marketers to maintain brand loyalty. Brand loyalty i

    Consumers are willing to pay more if they know the reasons

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  6. Eco-labeling and how suppliers benefit from it in the global competition

    In 2015, the UN adopted the 2030 Agenda for Sustainable Development and selected 17 Sustainable Development Goals (SDGs), which have become a benchmark for the entire world community. They link three elements of sustainable development - economic growth, social challenges, and environmental protection.

    The International Standards Organisation (ISO) has classified the existing environmental labels into three typologies – Type I, II, and III - and has specified the preferential principles and procedures for each one of them. The picture below outlines this taxonomy and gives some examples of ecolabels:

    Types of eclobales

    What are they and how exactly do they contribute to solving global problems?

     

    Eco-labeling is a graphical display of a set of environmental information about a product or service, meaning that the product has a lower impact on the environment than similar products and/or is produced using environmentally optimal technologies. Eco-labeling can also be defined as an environmental marketing tool. Strict eco-certification standards motivate manufacturers to make their production more environmentally friendly and provide consumers with a simple and understandable tool for choosing products.

    Environmental labels exist in all countries of the world. The most reliable of these are type I eco-labels (ISO 14024). They consider the entire life cycle of a product: from the extraction of raw materials to packaging processing. Most of these eco-labels around the world are united in the Global Eco-Labeling Association (GEN).

    To obtain an eco-certificate, companies must:

    • Carefully use natural resources and reduce waste, use recycling water supply systems and return possible waste and rejects into the production cycle. This is the transition to sustainable consumption and production patterns (SDG 12).
    • Monitor electricity consumption. It is a contribution to the fight against climate change (SDG 13).
    • Use wood products from sustainable forest management (SDG 14).
    • Recultivate land in the development of quarries for the extraction of mineral raw materials. It is a contribution to the conservation of ecosystems and biodiversity (SDG 15).

     

    What is the scale?

     

    According to the global Ecolabel Index, eco-labels are now used in 25 industries in 199 countries. At the moment, there are over 400 different eco-certificates.

    On the one hand, the coverage of various industries by eco-standardization is a positive trend: more and more manufacturers are getting the opportunity to “green” their activities. On the other hand, the growth in the number of similar documents and eco-labels in one industry can confuse, especially among ordinary buyers.

    The demand for eco-products has increased not only at the level of ordinary buyers, but also at the state level. Today, many countries have developed the practice of "green" public procurement: the presence of an ecolabel is a significant advantage for tenderers. But there is also another side of the coin. As a result of the increasing demand for eco-products, unscrupulous manufacturers began to unreasonably declare the environmental friendliness of th

    Eco-labeling and how suppliers benefit from it in the global competition

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  7. Sustainable investments

     

    What is Sustainable or ESG Investments?

     

    Responsible investments, or ESG investments, allow you to take into account environmental, social, and governance factors in the investment decision-making process. When making investment decisions, economic agents focus not only on the steady growth of the company’s financial performance but also on non-financial information related to the principles of these firm's activities in the areas of environmental protection and social responsibility.

     

    What ESG factors do investors care about?

     

    In modern conditions (interest in climate change, the COVID-19 pandemic, the fight against corruption, the fight for gender equality, and so on), the practice of applying socially responsible investment c

    Sustainable investments

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    Why Sourcing.eco

     

    Welcome to Sourcing.Eco and congratulations on taking steps towards a more sustainable future of international trade and production. Sourcing.eco is the first sourcing sustainability platform that connects factories, traders, and importers, enabling them to share data that benefits each ecosystem actor while incentivizing sustainability practices in production and purchasing behavior.

     

    The name of the platform speaks of itself as the intention to be the world’s largest one-stop solution for ecological and sustainable sourcing for international buyers and direct i

    Why Sourcing.eco

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  10. Supplier License Lookup: Global Sourcing in Coronavirus (Duplicated)

    “Of course, change requires change. Until there is a felt need for change, it is only an event not a pattern”

    -Dave Ulrich

     

    2020 has been a hard year for both Businesses and Individuals. And Global Sourcing is one of those Businesses. This pandemic has affected all aspects of our lives. The way we interact, the way we meet, the way we purchase, and especially the way we travel. It has not just changed but we can say it has stopped us from traveling to another country, even to another city. This is a very alarming condition for businesses that have to deal with international suppliers. Coronavirus made it very difficult for a business to choose authentic and trustworthy suppliers.

    COVID-19 has shown us the risks of Sole Sourcing. During this pandemic relying on one supplier may result in unfavorable outcomes due to the restriction imposed by

    Supplier License Lookup: Global Sourcing in Coronavirus (Duplicated)

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