Question

Q4. What is ethical sourcing? How the unethical sourcing can bring serious concerns for the famous companies like ‘Nespresso’?   (Answer with reference to ethical sourcing article).                                                                                                                                                            3 Marks

Answer 1

Ethical sourcing is the organisation's process in which the company ensures that the products that they are using are obtained in a sustainable and responsible manner, workers which are involved in making of those products are safe and treated fairly and the envirormental and social impacts are also taken into account for the same.

Unethical sourcing would be considered as serious concerns for the companies because of the following reasons:

1. Goodwill: By not following the ethical sourcing activities, the goodwill and the relationship shared with the stakeholders are adversely affected. One doesn't want to engage with a firm having unethical sources to get their goods and thus, the company's long term benefits and working and hindered because of it.

2. Cost structure: By following an unethical sourcing technique, the company can also seen not having the advantage of the cost structure. Good quality of products and resources from the suppliers helps is reducing the cost structure of the company as the process is sustainable and qualitative as well. On the other hand, using unethical activities wouldn't give the same benefit.

3. Risk Exposure: At last, the risk exposure is very high with the unethical sourcing activities. There are many laws regarding the activities in which you are obtaining the products from your suppliers. If the law came to know that unethical sources are used to obtain products, the degree of risk would become higher for your organisation.