Working in an ethical company, respecting workers as much as the environment, is important on both personal and business levels. But while you are directly in charge for your company, you are also responsible for your whole supply chain and the acts of your suppliers. If one of them does not respect human rights or is engaged in an environmental scandal, it may bring trouble to your supply chain and damage your brand…
To avoid this situation, you can set up a Supplier Code of Conduct ruling the ethical practices of your suppliers in order to align them with your company values.
We will today learn more about this code of conduct and how to implement it in your supply chain.
What is a Supplier Code of Conduct?
A Supplier Code of Conduct, also known as “Code of Ethics” or “Code of Practice”, is a set of rules defining the tolerated processes and best practices applied by one’s suppliers. The goal of such a code is to ensure that suppliers are providing safe working conditions, pay their workers properly and respect the environment according to the company standards. A standard code of conduct generally covers the following topics:
- Labor and working conditions
- Environmental standards
- Documentation policy
Why do I need a Supplier Code of Conduct?
Having a transparent and controlled supply chain is one of the greatest company assets. Nevertheless, working with international suppliers also means working with different ethical grounds. A Supplier Code of Conduct increases the engagement of suppliers and ensures that they are sharing the same values as your company.
By implementing a code of conduct with your suppliers, you can easily follow up on your suppliers practices and can prevent any brand damage in case of environmental or human right violation at a supplier’s site. It also can be used as an efficient tool to select your suppliers and on the long run as a competitive advantage.
How to set up a Supplier Code of Conduct?
Most of the Supplier Codes of Conduct are based on three texts :
- UN Global Compact Ten Principles
- UN Universal Declaration of Human Rights
- International Labour Organization - Labour Standards
These texts set the basic principles for human rights and labour regulation. Regarding environmental standards, the code of conduct can be based on existing international standards such as the ISO 14000. Depending on the standards set by your company, you can adopt the Supplier Code of Conduct for your business. For example, if you manufacture organic products and require organic and sustainable products, you can add those requirements to your Supplier Code of Conduct.
To set up a Supplier Code of Conduct tailored for your company, you will need to first analyze your supply chain and its related risks. Depending on the industries and the countries you are sourcing from, you will have different factors and issues to take into consideration.
You will also need to discuss with your suppliers as they are directly concerned by this code of conduct. Also, they may already follow Supplier Code of Conduct with other customers and can give you some guidance with its implementation.
Implementation and follow up
Once your supplier code of conduct is ready, you will need to define an implementation process and follow-up procedure. Audits can help you keep track of the implementation and how well your suppliers are following the code on the long term. These audits can be made by the supplier itself, but also by one of your internal team or an independent audit body.
If a company violates your Supplier Code of Conduct, you will also have to define proper sanctions beforehand. Depending on the gravity of the violation, you can give your suppliers some time to fix the problem or decide to stop every business relationship with them. It is also recommended to plan ahead the level of public transparency you wish to have regarding Supplier Code of Conduct violations.
Further information
Would you like to easily share your Supplier Code of Conduct with your own suppliers and automate the follow up? Do you need to be audit ready at any time and require steadily up-to-date documents from your suppliers? Discover now ecratum platform and our Supplier Relationship Management tool specially tailored for Small and Medium Businesses.
