What is it?
Industries rely on sourcing unprocessed materials like wood, fibers, minerals, metals, and others to manufacture the final products. The sourcing of these materials can result in adverse environmental impacts, including deforestation, biodiversity loss, resource scarcity, soil degradation, landscape alteration, and pollution, among others.
Industries with the highest impact on this topic include:
- Consumer Goods (apparel, accessories & footwear, building products & furnishings, household & personal products)
- Technology & Communications (semiconductors, hardware)
- Transportation (auto parts)
- Food and Beverage (restaurants, meat, poultry & dairy, alcoholic beverages, non-alcoholic beverages, processed foods, tobacco)
- Renewable Resources & Alternative Energy (biofuels, pulp & paper products)
- Resource Transformation (containers & packaging)
These industries are highly dependent on raw materials as critical inputs for their finished products, including biological raw materials (e.g., cotton, leather, rubber) and non-renewable materials (e.g., precious metals and other minerals).
Companies must strive to promote a sustainable material sourcing of their products, either if they are sourcing these materials directly or indirectly through their supply chains. A company’s environmental impacts from material sourcing can vary significantly depending on the technologies and techniques implemented in materials production and the countries from which it sources. Thus, including precise information about the company’s material sourcing supply chain or activities is paramount.
It is important to consider commodity-driven deforestation. Some companies 'only' deforest and do not use other ecosystems to source materials. This is of materiality for alcoholic and non-alcoholic beverage industries, tobacco, and others.
Remember that using a certain amount of hectares of land does not automatically mean that the company is deforesting. This can be from different land uses, conversions, etc.
For instance, one of the most significant impacts of textile sourcing is water use in cotton and water pollution for leather, while eutrophying emissions from the restaurant industry are also significant.
If the company does not include water consumption or pollution related to its material sourcing (upstream - supply chain), meaning that it is not captured on the platform, then it can and should be treated here.
Often, companies will not include all the resource consumption in their supply chain in company reports. For instance, they would disclose water withdrawal and use during its operations, but not the water used to source the materials/ingredients.