Ethical Supply Chain Program: Risk-Proofing Your Supply Chain

by Todd Merton, Head of Business Development, Ethical Supply Chain Program

Sourcing risks have become more visible and consequential with the increase of geopolitical tensions, rapid demand shifts, and climate-related
disruptions. Businesses that fail to manage these risks face operational delays, reputational damage, and revenue impact. Companies can navigate this complex landscape by partnering with a third-party organization such as the Ethical Supply Chain Program (ESCP), which shares key strategies for reducing sourcing vulnerabilities and building a more resilient, responsible supply chain.

Natural disasters, unexpected tariffs, pandemics, and political instability risk halting operations for companies with a single supplier or a small group of suppliers in one region. Businesses can mitigate risks by diversifying their supplier networks across multiple geographies and tiers, forming relationships with alternative vendors, and considering nearshoring and reshoring to shorten supply chains and reduce exposure to international risks.

Diversification works if alternative suppliers have dependable, proven track records in ethics, compliance, and consistency. To reduce risks tied to product recalls, safety issues, and audit issues, businesses must vet partners by examining pricing; capacity; and environmental, social, and governance (ESG) factors. 

Vetting a list of global suppliers isn’t always feasible for smaller businesses. Organizations like the ESCP help to reduce onboarding risks, ensure partners meet expectations, and provide access to pre-qualified suppliers with audited ethical and operational standards. Collaboration across the value chain reduces sourcing risks influenced by logistics providers, regulatory changes, customer preferences, and competitors. 

Agility doesn’t come from digital dashboards — it comes from people. Teams that are empowered to make decisions, adapt to change, and collaborate across functions are a major asset for pivoting strategies, reallocating resources, and finding alternative suppliers.

This means breaking down silos between procurement, logistics, compliance, and finance while fostering a culture where communication is fast, transparent, and solution-orientated. Cross-functional teams should run regular scenario-planning exercises and have clearly defined protocols for responding to supply chain shocks.

Consumers, investors, and governments hold businesses accountable for the practices of their entire supply chains. This is particularly evident in the recent increase of due diligence legislation across Europe and the Americas, which includes new requirements ranging from access to effective grievance mechanisms to regular reporting on the human impact of business operations. 

Integrating ethical and environmental standards into sourcing strategies reduces risk and future-proofs their operations against regulatory changes and public scrutiny. Emphasizing responsible sourcing helps businesses stay aligned with global legislative advancements in sustainability and fairness.

Mitigating sourcing risks isn’t just about preparing for the worst — it’s about creating a flexible, transparent, and ethical supply chain that performs better every day. 

Forward-thinking businesses should diversify wisely, choose partners with care, lean into agility, and work with networks that share their values. To learn more about legislative changes that will impact businesses and to find suppliers in new geographies, contact membership@ethicalsupplychain.org to book a call with the team. 

A version of this feature first appeared in The Toy Book‘s 2025 Specialty Toys & Gifts Issue. Click here to read the full issue!

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