Overcoming 6 Key Challenges in Sustainable Supply Chain Sourcing
Sustainability is imperative across supply chains as companies face increasing consumer, investor, and regulatory expectations, but transforming sourcing practices is rarely simple. Business leaders and managers often face practical hurdles, from limited supplier transparency to balancing cost pressures and navigating complex regulations.
By understanding the most common roadblocks and applying proven solutions, they can make meaningful progress toward building more resilient and eco-conscious supply chains.
Limited Supplier Transparency and Traceability
One of the biggest hurdles in sustainable sourcing is verifying the environmental and ethical practices of suppliers upstream in the supply chain. Many brands self-report their data, which can be inconsistent or incomplete. In fact, a recent survey revealed that only 89% of suppliers reported their carbon footprint in 2022, down from 96% in 2020.
Enterprises must invest in digital traceability tools to map supply chains beyond first-tier vendors. Requesting third-party certifications adds another layer of credibility and assurance. Building collaborative relationships with suppliers also helps foster trust and encourages them to align with shared ecological goals over time.
Complexity of Multi-Tier Supply Chains
Managing sustainability beyond first-tier suppliers is a significant challenge, particularly in large, global supply chains with complex, multi-tiered networks. Many entities have visibility only into their direct suppliers, leaving significant blind spots in the chain. Yet, risks and impacts often lie in these lower tiers.
Businesses should first identify and prioritize suppliers tied to key materials, regions, or compliance risks. Focusing initial efforts here helps drive meaningful progress. From there, they can work with partners to cascade sustainability standards throughout the broader network. Using supplier codes of conduct, training programs, and collaborative improvement initiatives promotes consistent and transparent practices at every level.
Balancing Cost Pressure With Sustainable Choices
Sustainable sourcing often involves higher upfront costs, which makes it difficult to justify these choices in competitive markets. This challenge has only intensified as producer prices rose 4.2% year-over-year in 2023, putting additional pressure on budgets. However, smart brands look beyond initial expenses.
Conducting total cost of ownership analyses helps reveal hidden savings tied to product durability, operational efficiency, and lower compliance risks. They can also explore bulk purchasing and collective buying partnerships to secure better rates on sustainable materials. Approaching sourcing with a long-term, strategic mindset allows companies to balance cost pressures with their ecological goals and drive meaningful value throughout the supply chain.
Supplier Resistance to Change
Suppliers — particularly small and midsized entities — often lack the resources or motivation to embrace sustainable practices, but their role is critical in driving overall supply chain impact. Without support, many of them struggle to meet new eco-friendly expectations. Forward-thinking businesses can offer targeted training programs and practical incentives that simplify adaptation for suppliers.
It also helps to frame sustainability as an opportunity rather than a compliance burden. The market potential is clear, as estimated revenue from circular economy transactions exceeded $330 billion in 2022, which signals strong demand for greener, more innovative solutions. Helping suppliers tap into these opportunities can foster stronger partnerships and accelerate progress toward shared goals.
Limited Availability of Sustainable Materials or Alternatives
Some industries face a core challenge. For example, scalable, consistent, and eco-friendly material options aren’t yet widely available. Building a sustainable materials ecosystem demands more than reducing consumption or advancing technology. It also requires extending product lifecycles and implementing strong recovery mechanisms to close the loop.
For leaders and managers, this means working closely with research and development teams and suppliers to explore innovative material alternatives that align with long-term goals. Joining industry alliances can help drive collective demand further, spur market development, and share best practices across the sector.
Through collaboration and proactive engagement, companies can help accelerate the availability of sustainable material solutions and reduce reliance on unsustainable inputs.
Measuring and Communicating Impact
Many brands find it challenging to measure and communicate the impact of their sourcing decisions. Tracking progress or demonstrating value to stakeholders can be difficult without consistent metrics. One practical approach is integrating training programs into supplier management initiatives, focusing on ethical sourcing, regulatory compliance, and transparent data collection.
Adopting standard reporting frameworks such as the Global Reporting Initiative ensures that sustainability data is consistent, credible, and easy to benchmark. Sharing progress openly — including lessons learned — is essential so customers and partners see the successes and ongoing efforts. Fostering transparency and accountability can strengthen trust and continuously improve sourcing strategies.
Building a More Resilient and Sustainable Supply Chain
Sustainable supply chains demand continuous effort, innovation, and collaboration across every organizational level. Addressing common challenges with practical, forward-thinking strategies lets organizations create more resilient networks that drive long-term value.