Sourcing for Sustainability: How to Build a Transparent Supply Chain

Industry leaders in sustainability share their top tips for creating and maintaining supply chain transparency to win over customers.

Consumers aren’t satisfied with green slogans—they want hard proof. In PwC’s 2024 Voice of the Consumer survey, shoppers said they’d pay 9.7% more for products that can prove ethical and sustainable origins, even as inflation pinches their wallets. 

At the same time, Europe’s new Corporate Sustainability Due Diligence Directive kicks off in July 2027, forcing large companies (those with a net turnover of over €450 million) to map and mitigate human rights and environmental risks across their entire supply chain. 

Supply chain transparency is no longer just a competitive advantage—it’s how you stay compliant globally and drive revenue for your organization. Ahead, you’ll learn how to improve supply chain transparency and keep goods flowing when disruptions hit.

What is supply chain transparency?

Supply chain transparency is when companies have reliable data on where and how their goods are produced, and communicate that information to both internal and external stakeholders, including customers.

It involves documenting:

• Where an item is made
• How it was produced 
• Under which social and environmental conditions it was produced

Traceability must extend all the way back to the raw materials that initiate every product’s life cycle. Canadian Indigenous-owned brand Cheekbone Beauty, for example, considers every element of their product. 

“To us, supply chain transparency means [knowing and communicating] what goes into our products, where we source our ingredients and products, and possible production and lead times,” says Jenn Harper, founder and CEO of Cheekbone Beauty. “This applies not only to the products themselves, but also to our packaging and even the ink used in printing.” 

Historical context and modern application

While it could be easy to dismiss the push to trace the provenance of goods as a relatively new phenomenon, its roots go back more than a century, when journalist Upton Sinclair published his book The Jungle in 1906. 

Although it was published as fiction, The Jungle exposed real-life horrific details about Chicago’s meatpacking industry at the turn of the century, eventually leading to the Food and Drug Act and the Meat Inspection Act. Both pieces of legislation were—and are—government-mandated calls for more supply chain transparency.

Since then, industry-wide initiatives have continually pushed brands toward greater accountability. As regulations tighten globally, organizations are investing in technology to stay compliant. 

According to KPMG, 50% of supply-chain organizations deployed AI and advanced analytics in 2024 to enable predictive risk scoring and automated compliance reporting. Embedding predictive tools directly into risk management workflows enables teams to act before disruptions escalate.

Supply chain transparency vs. supply chain visibility

You’ll often hear the terms “visibility” and “transparency” used interchangeably, but they solve two different problems.

	What it means	Goal	Who needs it
Visibility	See what's happening at each tier in real time	Operational efficiency and risk mitigation	Internal teams (demand planners, logistics, finance)
Transparency	Share data about the above activities with regulators and customers	Trust, regulatory compliance, brand value	External parties (consumers, NGOs, auditors, investors)

Visibility is about what you can see—real-time SKU locations, shipment ETAs, or an alert that a Tier-2 facility just went offline. Transparency is about what you choose to share with the outside world. It involves creating proof points shoppers (and regulators) can trust, like factory audit results, CO2 footprints, or a digital passport that traces raw cotton back to a certified farm.

The two concepts work together. Transparency without visibility is impossible, as you can’t disclose data you don’t have. And visibility without transparency leaves you open to risk. If you spot a forced-labor flag, but choose not to disclose it, you risk a Boohoo-style backlash.

When reporters uncovered that some of the fashion brand’s undisclosed Leicester suppliers were paying workers £3.50 an hour, Boohoo’s share price dropped 23% and £1.1 billion was wiped off its market value in a single day. 

The brand also suffered investor lawsuits and years of expensive remediation. That one day of headlines shows how hidden tiers can cause instant reputational damage.

The benefits of supply chain transparency

Loyalty and CLV lift

Cheekbone Beauty wasn’t always committed to sustainability—or to communicating the origin of their goods to consumers. In fact, it wasn’t until 2020 that the company decided to transform their product line to be completely clean and vegan beauty. 

“Since then, actively sharing what our products are made of has become a fundamental part of our company’s marketing strategy,” says Jenn. The win? Customer loyalty surged. Returning customers now account for nearly half of the company’s revenue, up significantly from earlier periods.

Likewise, House of Baukjen, an ethical and sustainable fashion brand for women, reports that since they started replacing their product and sales messaging with “purpose messaging” in their welcome program, their conversion rates have increased by 27%. Not only that, but their click-through rate is up 11% and revenue per email is up 70%. 

“Our drive to balance purpose and profit is one of the key factors that keeps our returning customer rate so high,” says Ana Carneiro, House of Baukjen’s sustainability and project manager. “Being open and transparent is more than just a business differentiator—it engages our customers and sets the bar high so they can keep our business accountable.” These disclosures also reassure regulators that strict product safety benchmarks are met.

Stronger supplier relationships

Consider the production of a basic white cotton shirt. Making and producing even a staple can be complex and potentially involve a long chain of people all over the globe. Visibility across supply chain operations also exposes bottlenecks that collaborative fixes can eliminate.

There are the designers, the cotton farmers and brokers, the fabric manufacturers, the patternmakers, the garment workers, the sourcing and licensing agents… and that’s not even getting into the distribution, marketing, or fulfillment side of your supply chain. 

To know and understand where your goods are coming from, you’ll need to know who each of these parties is and how they work, and develop lasting relationships with them to ensure fair labor practices. 

“When you pay workers and treat them justly, they make better products and they’re less likely to make mistakes, so you have fewer recalls and repairs,” says Annie Agle, senior director of impact and sustainability at Cotopaxi, a sustainable outdoors brand known for their colorful and durable gear. “Ultimately, having positive relationships with our suppliers builds resilience into our supply chain and can help protect our bottom line.”

Developing these relationships and tracing the origin of goods is also easier than ever before. It’s possible to form sustainable partnerships and communicate on a daily basis with suppliers and receive real-time data through WhatsApp, LinkedIn, and cloud-based services.

“We regularly consult with all of our suppliers and visit their facilities,” says Ana Carneiro. “We value the process and know that it’s also helping us build stronger relationships with suppliers.”

ESG investment signals 

Gen Z and millennial workers vet employers on climate and human-rights commitments almost as much as salary. 

Deloitte’s 2025 Gen Z & Millennial Survey reports that 20% of younger employees have already switched jobs over environmental concerns, and more than 70% rank a company’s green credentials as “important” when job hunting.

Investors follow the same logic. KPMG’s Global ESG Due Diligence Study 2024 shows 55% of deal-makers will pay a 1%–10% premium for assets with high-ESG maturity and transparent supply chains. Openness widens your talent funnel and your access to capital. 

Regulatory preparedness

Regulations are getting teeth. Germany’s Supply Chain Due Diligence Act (LkSG) allows fines of up to €8 million (or 2% of global turnover) for companies that can’t prove they’ve identified and mitigated forced-labor risks. 

As mentioned, the upcoming EU Corporate Sustainability Due Diligence Directive (CSDDD) will extend similar obligations to any firm with €450 million in EU revenue starting July 2027, with thresholds tightening by 2029.

Now is the time to be prepared for when these laws—and others like them—come into effect across the globe.

“At Cotopaxi, we’re already in a position to meet new regulations and celebrate them as accountability that always should have been in business,” says Annie. “If you can’t deliver products that are well-made in safe environments, you’re not going to have a healthy business in the next couple of years.”

Why supply chain transparency can be difficult to achieve

Multi-tier complexity and data gaps

Unlike in Sinclair’s day, globalization has made tracing the origins of goods a complex task, even for the companies producing them. Let’s go back to that white cotton shirt. Do you know it will be produced directly by the supplier you’ve contracted—or could they outsource its production? This point is key, as most environment and human rights violations occur within suppliers’ and 3PLs’ own lower-tier suppliers.

And even if you are able to prove that a worker sewing that t-shirt is being paid and treated fairly, it may be difficult to determine the same thing about the production of the fabric. In fact, some of the worst human rights supply chain abuses are documented on cotton farms. 

“It’s challenging to operate in a never-ending onion of supply chains. We’ve tried to grow as responsibly as possible—but we could never make the claim as a smaller company that we can never really ensure that there are no human rights abuses happening somewhere across our supply chain,” admits Annie. “Even if we do everything right and insist on fair labor practices and living wage practices, there can be other brands who use those same suppliers who aren’t insisting on that or who are canceling orders, which jeopardizes work payments.”

But this complexity is obscured from customers, who hold brands increasingly accountable. 

“If something happens in our supply chain that we do not know of, then the perception is that it was our responsibility to know,” says Ana Carneiro. “Admittedly, it stands to reason that we’d know the journey our products go through, but that’s just not how the industry has been set up. We have to educate people on why this area is so complex and difficult to manage.”

However, this can prove to be an opportunity, points out Jenn.

“Transparency from a brand helps to build trust amongst consumers, but also helps manage unrealistic expectations from the consumer regarding the supply chain process and how long the processes may be,” she says.

Supplier disclosure fatigue 

When developing internal standards, it can feel a bit like a Pandora’s box in terms of deciding what information to disclose to consumers. Sure, you might let some light in, but you could also let out some information you’d prefer remained in the dark. 

It can also mean that new product development becomes more complex than it was previously. 

“When we introduce a new product, it must meet a set of standards that are pretty strict, and sourcing the manufacturers and vendors who can meet those standards can be challenging,” says Jenn.

Technology trends in supply chain transparency 

Blockchain

AI and blockchain—especially when used to prevent the spreading of fraudulent, stolen, or counterfeit goods—are being lauded as the answer to supply chain transparency. They help businesses manage data in real time, increase traceability of materials, and improve compliance.

Yet nearly every ecommerce merchant we spoke with for this article said they’re currently relying on low-tech methods for tracking and managing their supply chains. Single-origin spice company Burlap & Barrel, for example, runs their projections through a model built in Google Sheets. The simple system makes it easy to update as new information becomes available, new suppliers are added, and economic conditions change.

“Everyone thinks that a modern supply chain is run on the blockchain or using algorithms or some kind of ERP or inventory management software. The truth is that our supply chain is built on mutually supporting relationships based on trust between partners,” says Ori Zohar, cofounder and co-CEO of Burlap & Barrel, who adds that the brand manages relationships on WhatsApp and Facebook Messenger, with the help of Google Translate.

Annie from Cotopaxi agrees: “Blockchain really is a database that is supposed to be available 24/7 for people who don’t trust each other. We have tried to build relationships based on trust with our suppliers that are also held to third-party verification and assurance, including through audits,” she says, adding that there’s an environmental cost to using blockchain, as it requires multiple computer servers running 24/7. Openly recording partner business practices creates a shared baseline for wages and safety.

That’s not to say that technology isn’t a useful tool for tracking and assessing the sustainability of your supply chain. Cheekbone Beauty reports recently switching to an ERP system, to help the company locate batches and lot numbers for more precise internal tracking.

Digital product passports

The EU’s Ecodesign for Sustainable Products Regulation (ESPR) has locked Digital Product Passports (DPPs) into law. Every product placed on the single market will need a scannable digital ID that discloses its provenance, material mix, and end-of-life options. 

Rollout started in 2024 with textiles and footwear, and is scaling sector by sector to full enforcement by 2030. 

Luxury and outdoor brands are already treating the DPP as a growth lever rather than a checkbox. The latest Vogue Business Index found that 67% of the world’s top luxury labels have piloted or launched DPP programs, chasing gains in counterfeit-proofing and resale authentication. 

Several brands now embed real-time emissions tracking inside each passport for side-by-side climate comparisons. Austrian performance brand Löffler, for instance, printed a QR code inside every 2024 mountain sports garment so shoppers could trace each cut-and-sew step and see care tips that extend product life. 

AI-driven risk prediction 

Generative AI models can process data from multiple sources (ERP, freight IoT, weather, social) and identify potential risks before they occur. 

West Monroe’s Q1 2025 supply-chain poll reports that 98% of US manufacturers, retailers, and distributors have already integrated some form of AI into their supply-chain workflows, and more than a third say proving ROI is now their top challenge.

Early payoffs are significant. IBM’s cognitive control-tower program shaved $160 million from inventory, transportation, and production costs within two years by pairing a supply-chain digital twin with prescriptive AI.

How to achieve a transparent supply chain

1. Identify and prioritize risks
2. Create a code of conduct to meet your goals
3. Measure your progress
4. Disclose your results to stakeholders and customers

Here’s what this could look like in action:

Identify and prioritize risks

First, visualize and map your existing supply chain. How do you goods flow from ideation to manufacturing and production, and eventually reach your customers’ hands? Make sure you understand the number of suppliers and all the processes within your supply chain. If there are gaps in knowledge (including countries of origin) now is the time to do the research and fill them in. 

Then, examine this chain of events to identify vulnerabilities: Where have past disruptions emerged? What supplier-related issues have you encountered? What new legislation and regulations are coming down the pipe? Where are the areas for improvement?

Only once you’ve done both of these exercises is it time to set goals. When doing so, don’t forget to adopt a holistic approach to sustainability. 

Create a code of conduct to meet your goals

Establish a code of conduct and determine if it’s one that you’ll meet only internally, or if each of the suppliers you plan on working with will be bound to the same terms. Supplier agreements should spell out timelines for swift corrective action if standards aren’t met. 

In order to establish your code of conduct, you’ll need to confer with direct suppliers to review their existing codes of conduct and practices and determine whether they’ll be able to meet your goals. 

How can you work together to address specific issues, such as health and safety, environmental impacts at job sites, and unclear sources of origin? Does it involve creating new codes of conduct and stricter procurement policies?

“Create systems for the disclosures you expect your suppliers to make to you, so that everything is part of a process and not an add-on they need to worry about,” advises Ana Carneiro.

Measure your progress

Determine how you are going to measure and report on your progress, and what tools you’ll use. Are there any existing tools to help you reach your goals, such as reports suppliers already have to fill out? Will you need to engage the services of a third-party auditor?

Annie says that Cotopaxi relies primarily on the Higg Index, a suite of tools for the standardized measurement of value chain sustainability and quality control designed primarily for apparel brands. 

“We like it because the first aspect for suppliers is self-assessment, so rather than having a Western top-down approach, they can do a self-evaluation first,” says Annie. “Suppliers are seen as partners, and we’re going to treat them with kindness and justice.”

She adds that many of the suppliers they work with may not immediately have the ability to pay higher wages or have access to better machines with better safety features—so it’s up to Cotopaxi to step in to support those suppliers with a long-term financial investment if they want to meet their goals. In addition, they rely on third-party verifiers such as Elevate (the makers of Sourcemap) to ensure labor situations are being met. 

“People often think supply chains are built on tech, but they’re built on relationships. The tech helps you manage the movement of goods, but good relationships are at the center of the best supply chains,” says Zohar. “Think of your supply chain in that framing and see how it shifts your thinking about how to manage and strengthen it."

Whatever systems you choose, remember that supply chains are dynamic and ever-changing, so progress will need to be measured at regular intervals to achieve your goals. 

Disclose your results to stakeholders and customers

In the absence of regulatory mandates or specific compliance issues, it’s up to you as a company to determine what and how much you want to disclose to your stakeholders and consumers. 

Whatever you choose to do, don’t make it complex. Of the consumers surveyed by Forester, 41% said a significant influence on their purchasing decisions in the last year was when a brand made it “easy to understand the actions they are taking to achieve their environmental and/or social impact goals.” Plain-language reporting fosters transparency, leading to durable consumer trust.

“Your customers are curious about how your products are made, who's making them, and what the process is. If you don’t know yourself, find out,” says Ori from Burlap & Barrel. 

If possible, he suggests even connecting customers directly to the producers and suppliers along your supply chain. “Customers love it, and producers rarely get to interact with the end customers, so creating that direct line will also lead you to have a higher quality product or even think of new products to introduce,” he says. 

The future of supply chain transparency

Today’s global supply chains span dozens of countries, increasing the need for verifiable data. From customer demand to forthcoming regulatory changes, building transparent supply chains is far from a fad—and with those regulatory changes on the horizon, it may also soon no longer be optional.

That doesn’t mean that building supply chain transparency can’t or shouldn’t be motivated by the desire to do better for the people you’re working with—and the planet we share.

“Invest in your relationships with your suppliers and rehumanize your approach to your supply chains. Don’t just see them as risk centers or as margin deteriorations,” says Annie.