How To Find Sustainable and Ethical Factories // What is Ethical Manufacturing and Sourcing
The manufacturing industry has long been a major contributor to environmental pollution and resource depletion. However, in recent years, there has been a growing awareness of the need for more sustainable practices. This is due to several factors, including the increasing scarcity of natural resources, the rising costs of energy, and the growing public demand for eco-friendly products.
Sustainable manufacturing is the practice of making products to minimize their environmental impact. This includes using recycled materials, reducing energy consumption, and minimizing waste. There are many benefits to adopting sustainable manufacturing practices. These include:
Reducing environmental pollution: Sustainable manufacturing can help reduce air and water pollution and greenhouse gas emissions.
Conserving natural resources: Using recycled materials and reducing energy consumption, sustainable manufacturing can help conserve precious natural resources.
Saving money: Many sustainable manufacturing practices can save businesses money in the long run. For example, reducing energy consumption can lead to lower energy bills.
Improving brand reputation: Consumers are increasingly concerned about the environmental impact of their products. Businesses that adopt sustainable manufacturing practices can improve their brand reputation and attract more customers.
This blog post will explore how manufacturers can make their operations more sustainable. We will also discuss the benefits of sustainable manufacturing and how businesses can implement sustainable practices.
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What is Sustainable Sourcing and Manufacturing?
Sustainable manufacturing, also known as green manufacturing or eco-friendly production, refers to designing, producing, and distributing products in an environmentally responsible and socially ethical manner. Sustainable manufacturing aims to minimize the negative impact on the environment, conserve resources, and promote social responsibility throughout the production lifecycle. Key principles and practices associated with sustainable manufacturing include:
Resource Efficiency: Sustainable manufacturing seeks to minimize waste, reduce energy consumption, and optimize the use of raw materials and resources.
Environmental Impact: It aims to reduce pollution, emissions, and the release of hazardous substances, as well as promote the use of renewable energy sources.
Product Design: Sustainable manufacturing involves designing products focusing on durability, recyclability, and ease of disassembly and recycling.
Supply Chain Management: Companies engaged in sustainable manufacturing often prioritize responsible sourcing of materials, ethical labor practices, and fair working conditions.
Circular Economy: It supports a circular economy, where products and materials are reused, refurbished, or recycled at the end of their lifecycle to minimize waste.
Life Cycle Assessment (LCA): Sustainable manufacturing evaluates a product's environmental impact throughout its life cycle, from raw material extraction to disposal.
Regulatory Compliance: It adheres to local and international environmental and labor regulations while often exceeding minimum requirements.
Continuous Improvement: Sustainable manufacturing is an ongoing process of improvement and innovation to further reduce environmental and social impacts.
Transparency and Reporting: Many organizations engaged in sustainable manufacturing provide transparency by disclosing their environmental and social performance to stakeholders.
Sustainable manufacturing practices are driven by the growing awareness of environmental and social challenges, consumer demand for eco-friendly products, and the recognition that sustainable practices can lead to cost savings and competitive advantages for businesses. Companies that embrace sustainable manufacturing aim to balance economic goals with environmental and social responsibility to create a more sustainable and equitable future.
What must you do to be an Ethical manufacturer?
Treatment of workers: Forced labor and child labor is prohibited. Employers must not discriminate in their employment or treatment of workers. Workers have a right to form associations and to collective bargaining. Work conditions must follow Health and Safety and Product Safety standards.
Environmental protection: Companies must protect water from pollution and minimize water use. They should also reduce non-renewable energy and emissions and protect forests and biodiversity.
Business Integrity: Businesses must maintain legal and regulatory compliance and establish anti-bribery and corruption policies. They must integrate sustainable sourcing principles into their buying practices and incentives. They must offer a transparent framework for addressing workplace complaints, including protection against retaliation. They must maintain honest record-keeping practices.
What Certifications Apply to Ethical and Sustainable Manufacturers?
What is Fair Trade
Fair Trade certification applies across various industries. In the U.S., a certified company is “an innovative model of responsible business, conscious consumerism, and shared value to eliminate poverty and enable sustainable development for farmers, workers, and their families.”
A Fair-Trade certification may apply to facilities, materials, products, or components. It mandates that businesses uphold fair labor standards in their pay rate, welfare, equality, and environmental health.
Fair Trade USA works in conjunction with Fair Trade International. Once part of the organization, it split from the international body to reduce misleading marketing campaigns. In 2012, it established the Fair-Trade Certified Label.
What is Fair Trade International
Fair Trade International enforces workforce standards globally. It ensures workers have access to fair wages and good working conditions, oversees various industries, and upholds environmental, social, and economic standards.
Businesses must pass a FLOCERT audit to gain certification. An auditor will visit the business to check facilities, review paperwork, and talk to employees. Once the company passes, they must still apply and pay fees to earn the trademark seal.
Fair-trade International updates its policies regularly. They gain approval by an assembly or producer votes. The organization is the most established in overseeing global fair-trade standards.
What is the Fair Labor Association (FLA)
The FLA is a non-profit that protects worker’s rights. It started in the 1990s as an anti-sweatshop organization. Today, it sets standards for labor rights, agriculture, and manufacturing. It is among the best certifications for supply chain management.
Certified companies must continually meet the organization’s standards by ensuring worker rights and updating to new standards as needed. Several large apparel companies are FLA-certified, including Patagonia, Adidas, Puma, Under Armour, Nike, and New Balance.
Although many support the FLA, it has been criticized for its lack of effectiveness and accountability as factory workers still deal with long hours and low pay worldwide.
What is the World Fair Trade Organization (WFTO)
The WFTO oversees business models, structures, operations, and supply chains. It enforces the Ten Principles of Fair Trade and follows fair trade tenements, International Labour Organization (ILO) standards, and human rights in general. Businesses must be verified to receive a WFTO certification. The badge shows that the company prioritizes the interests of its communities and producers.
Although the organization does not often provide ethical fashion certifications, it is one of the most reliable in the industry.
The WFTO's members and leaders meet once a year. It is known for implementing new, agreed-upon standards. Its high criteria for improving the environment and reducing climate change have earned it a high score in the International Guide to Fair Trade Labels.
What is the International Labour Organization (ILO)
Unlike some previously mentioned organizations, the ILO does not provide certifications. Instead, it implements ratified labor standards and conventions. ILO-approved businesses uphold an ethical code of conduct based on the organization’s measures.
As part of the United Nations, the ILO gathers government leaders, employers, and workers to establish a standard for labor rules, working conditions, and programs that increase worker opportunities and enforce labor policies. Members of the organization are nation-states, not businesses. Countries can gain membership by accepting the regulations of the ILO constitution.
Although the organization has received criticism for ongoing labor issues, it has many accomplishments under its belt. It recently added Occupational Health and safety as a human rights pillar, the biggest worker’s rights achievement in 25 years.
What is the Ethical Trading Initiative (ETI)
The ETI is also not a certification. Instead, it is a collective of companies, unions, and organizations that set new standards for labor codes. It aims to benefit workers and reduce exploitation.
The organization has developed an ETI Base Code of Conduct inspired by ILO standards. It sets guidelines for the best practices for protecting workers in supply chains. Its alliance includes over 90 sustainable clothing brands and over 10 million workers worldwide.
The ETI has created a sizable network but has received criticism for several issues. Critics questioned the permissive treatment of H&M, a well-known retailer that refuses to pay its thousands of workers reasonably. It has also been called out for less than transparent marketing. Its questionable policies have made some wonder whether it supports workers or big business.
What is the Business Social Compliance Initiative (BSCI)
The BSCI does not provide certification. Instead, it creates reports based on a company’s ethical manufacturing and sourcing practices. It was launched by the Foreign Trade Association (FTA), an organization that sets a legal framework for sustainable trade, and the Business Social Compliance Initiative (BSCI). The BSCI supports over 1,500 FTA members in implementing social responsibility in supply chains.
The organization offers two types of voluntary membership: regular and associate. It conducts biannual audits to ensure its members live up to its high standards. It also encourages businesses to receive the Social Accountability International (SAI) SA800 social management certification.
The BSCI has several accomplishments under its belt. However, critics say it does not force a high enough standard to prevent disasters like the Rana Plaza garment factory collapse.
What is the Social Accountability International (SA8000)
The SA8000 provides manufacturing safety certifications, primarily in textile and garment manufacturing. To become SA8000 certified, factories must meet the organization’s high criteria. Their standards are updated regularly. They conduct biannual third-party audits to ensure companies meet their qualifications.
The organization measures a factory’s ethics in eight categories as follows:
Child labor
Compensation
Working hours
Health and Safety
Forced and compulsory labor
Freedom of association and collective bargaining
Discrimination
Disciplinary practices
The SA8000 has achieved notable accomplishments throughout the years. But it has also been linked to several scandals. The most infamous was a Pakistan factory fire that killed 300 workers weeks after the organization approved the company’s SA8000 certificate.
What is the Worldwide Responsible Accredited Production (WRAP)
WRAP offers certification for factories and manufacturing facilities. It has certified over 2000 factories representing more than two million workers in the shoe and apparel industry. It is the largest ethical fashion certification organization in the world.
Factories that wish to be certified must pay a fee, apply, and pass an audit. They must show they comply with their 12 Principles. They receive a platinum, gold, or silver certification determined by their score.
WRAP advertises a zero-tolerance policy for unfair labor. However, many of the factories they certify have been found to engage in worker harassment, child labor, and unfair wages. These activities have led to questions about the organization’s transparency.
What is Sedex Members Ethical Trade Audit (SMETA)
Sedex does not provide certification. Instead, it offers auditing services and an online database to help businesses keep track of labor practice information. The data is stored as a report by SMETA (Sedex Members Ethical Trade Audit).
The organization developed in response to “audit fatigue” in the manufacturing industry. Instead of conducting several disruptive audits each year, companies can create a single audit published online to benefit clients and prospective clients. However, the information is not available to consumers. It’s only accessible to members and suppliers.
Audit reports are created based on a self-evaluation form and an in-person audit.
What is the Forest Stewardship Council (FCS)
FSC’s “Forest Stewardship Council” represents a crucial initiative in sustainable forest management. This globally recognized certification system is a beacon for environmentally conscious practices within the forestry industry. At its core, FSC certification ensures that the wood and wood products we use daily, ranging from construction materials to paper and furniture, originate from forests managed sustainably and responsibly.
To attain FSC certification, forests must adhere to stringent standards encompassing environmental considerations, social responsibility, and economic viability. These standards encompass responsible logging practices, biodiversity conservation, and equitable treatment of workers and local communities connected to the forest. In essence, FSC certification is a robust assurance that the production of wood-based products aligns with ethical and ecological values. It is no wonder that businesses and consumers actively seek out FSC-certified goods, underlining their commitment to promoting responsible sourcing, forest conservation, and the well-being of our planet.
What is ZQ Merino
ZQ Merino sets high standards for merino wool production and regenerative agriculture. The certification is for non-GMO sheep farmers who meet the top standards in sustainability, material quality, social responsibility, transparency, and animal treatment. It is limited to merino wool, and other wool producers are not eligible.
The organization runs third-party audits to ensure companies uphold the following:
Sheep may roam freely
No shipping of live animals
No mulesing- a practice of sheering chunks of flesh from the animal’s hindquarters to boost wool production
Satisfactory worker safety, health, and economic stability
Superior wool quality
Land stewardship
Environmental sustainability
Some farms may also receive random veterinary audits.
What are ISO 9001 and ISO 140001
ISO 9001 sets the standard for quality management. It indicates that a company consistently provides dependable products and services, improving its reputation, credibility, and profitability in international markets.
ISO 14001 certifies businesses for successful environmental management and practices. It enforces plans and policies that set guidelines for how businesses interact with the environment. It oversees waste and chemical management and workplace safety.
How Reliable are Certifications?
Certifications are relatively reliable, but there’s always a risk involved. History has shown us that organizations may let things slide to the point where disasters happen after a business is certified. To ensure the manufacturer you work with is sustainable and ethical, you may have to take matters into your own hands.
Here’s an example of the DIY detective work you can do to ensure your manufacturer is playing by the rules.
Hire an External Auditing Company: Most certification organizations do their auditing. But you can hire an external auditing company to ensure a manufacturer is up to snuff. The auditor will provide reports on the company’s factory conditions, worker treatment, and environmental practices.
Question Their Supply Chain: Your suppliers may tell you they are ethical, but are they ethical? Are they using sustainably sourced materials? You can answer these questions by asking for detailed information about their suppliers. Transparency tools and databases may also be helpful.
Visit The Factory: Many companies source products from overseas. But if you are close enough to your supplier or take a business trip to the region, you may visit them. Your visit will provide insight into how they treat their workers, their environmental standards, and more.
Take a Hands-on Approach: Work with your suppliers to ensure they follow sustainability standards. Share the best practices for sustainability. Offer training or invest in more efficient equipment. Engage in conversations that will help them reach their sustainability goals.
Ethical and Sustainable Sourcing in Vietnam
Vietnam is a primary global source of various goods. Companies prefer sourcing raw materials from Vietnam because it has low overhead costs. These savings are passed on to their clients, helping increase profitability.
The country produces a wide range of products but is most well known as a provider of:
Clothing
Furniture
Electronics
Automotive parts
Machinery and equipment
Like the rest of the world, Vietnam has updated its practices to reach environmental goals. They undergo third-party audits and inspections to ensure they follow eco-friendly regulations, fair labor practices, and ethical business management. They partner with responsible manufacturers to reach their sustainability and social responsibility goals.
Vietnam stands out for its environmental efforts. It is committed to labor standards that follow the Congressive and Progressive Agreement for Transpacific Partnership (CPTPP) and the European Union-Vietnam Free Trade Agreement (EVFTA). Its strategic location near supplier markets and its effective management of the COVID pandemic has allowed the world to decrease reliance on China.
The country still struggles with pollution, greenhouse gas emissions, and water shortages. But it has made considerable headway in the past few years. In 2023, Panasonic Vietnam was honored as a TOP Sustainable Enterprise. It was one of six enterprises to receive an award for Minimizing Carbon Footprint.
The Government of Vietnam has recently partnered with the U.S. Agency for International Development’s Sustainable Forest Management (SFM) Activity. The United States supports Vietnam’s efforts to protect forest areas without interfering with economic growth. The partnership has helped Vietnam reduce carbon emissions caused by poor agricultural management, deforestation, and degradation.
What are the Benefits of Sustainable and Ethical Sourcing?
Improves the Company’s Reputation: Many consumers and companies are concerned about the environment. They prefer to work with a company that follows ethical and sustainable practices. They should follow environmental and fair trade recommendations in business operations and the partners they choose to work with.
Fewer Supply Chain Disruptions: Supply chains worldwide face shortages. Sustainable and ethical manufacturers will seek alternate transportation methods that save money on fuel costs and reduce traffic congestion. They will minimize costs to keep prices stable. Their Fair-Trade practices will keep employees safe and happy. Workers are less likely to quit or need time off work for medical reasons.
Increases Competitiveness: Consumers and businesses want to work with companies that live up to sustainable standards. Businesses that don’t partner with the right firms may fall behind the competition.
Vendor Rationalization: Many businesses are attempting to reduce their supply base to deal with fewer suppliers and maintain better relationships with top providers. Companies can eliminate firms that don’t follow sustainable guidelines to streamline their processes and increase reliability.
Attract New Consumers and Expand into New Markets: Companies that weren’t previously onboard with sustainable and ethical sourcing may find an increase in consumers and business opportunities when they make the switch. It increases brand loyalty. It helps companies expand in existing markets and reach new markets.
Lower Costs: When companies save energy, they save money. Your manufacturer may lower their costs and pass these savings on to you.
Drives Innovation: A switch to sustainability introduces new design frames that change how companies use resources in processes and products. It also changes company approaches to drive innovation. Businesses should partner with an innovative supply chain to become leaders in their field.
Final Thoughts
The world is becoming a more sustainable place. Companies who want to get ahead must do more than follow sustainable and environmental practices. They must find factories that follow those practices as well.
Looking for sustainable certifications and working with companies hands-on will ensure you have partnered with the right provider. You will benefit from improved profitability, streamlined operations, and a favorable reputation in your industry. How will you get on board with the environmental movement?
Cosmo Sourcing // Your Trusted Partner In Vietnam
If you want to source from Vietnam, contact the Cosmo Sourcing team; we have been helping clients source from Vietnam since 2014. Cosmo Sourcing has the skills and the team to find you the best supplier possible. We are also established in China and are among the only companies that can find suppliers in China and Vietnam and pick the one you think is best.
Our Vietnam Sourcing services allow you to access new manufacturers that you would not be able to in China and avoid Tariffs. Our services are designed to do everything to take your idea, turn it into a product, and ship it to the final destination. Cosmo can do everything from creating a product spec sheet to validating, sourcing, ordering, evaluating samples, arranging inspections, finding freight forwarders, quality assurance, negotiations, and shipping. We aim to handle every single step of your business in Vietnam for you.
If you start a new business, finding products and suppliers for your products is one of many things you need to handle. Our services are designed to handle every part of your business in China and Vietnam so you can focus on the rest of growing your own business.
We have helped clients from Fortune 500 companies, brick-and-mortar stores, FBA sellers, and brand-new businesses. So don’t hesitate to contact us and let us know how we can help you.