One of the three pillars of supply chain sustainability is a duty to protect company revenue. Consumers and investors are becoming more sophisticated when it comes to corporate responsibility, and they know that they have a choice in how they spend their money or use their investment spend. These groups want transparency into business practices all the way through the supply chain to ensure ethical conduct and compliance with sustainability standards. For these reasons and more, it’s important to know that suppliers in your supply chain uphold your high company values by adopting your Code of Conduct.
Control Supplier Risk with a Code of Conduct
Key to supply chain risk management is the ongoing evaluation of suppliers, vendors, and contractors to ensure that their practices and company culture make sense for your business. Creating a Supplier Code of Conduct and making it a requirement for procurement is an excellent way to align everyone’s expectations and set a standard for acceptable behavior.
If your company doesn’t already have a Supplier Code of Conduct, then now is the perfect time to create one. Here are some topics you should consider including:
1. General Explanation of Sustainability and Your Company’s Sustainability Efforts: As your supply chain map will no doubt reveal, your suppliers will work with suppliers who work with suppliers who don’t know what sustainability is and may not care. Bring them up to speed on sustainability concepts and why they are important to you and why they should be important to everyone. When you break down sustainability to its core pillars – protecting business, society, and the environment – the concept becomes easy to understand.
2. General Requirements for Legal and Ethical Compliance: Since your supply chain will have a broad reach, specific legal requirements are inappropriate in countries where laws are different. Instead, suppliers should be required to follow all applicable legal systems. However, it’s not out of the question to include ethical provisions for general anti-corruption and fair competition. This can also include the same requirements against conflicts of interest that you include in your internal employee handbook.
3. Employment Rights and Child Labor: Protecting employees is a large component of sustainability. Your Supplier Code of Conduct should ensure that all employees are paid fairly, are given equal opportunity, and are not forced to work for you by an act of law. No one should ever be forced to work for a business. This is doubly true for children, so suppliers should be required to only hire workers above a minimum age.
4. Employee Health and Safety: It would be unrealistic to expect that every company across a global supply chain would have the same minimum employee safety standards. This section would help outline those standards in broad terms, such as taking steps to prevent accidents and controlling hazards on the work site.
5. Environmental Protection: Finally, including a section that details your company’s commitment to and expectation for environmental protection is a good reminder to suppliers that they can’t ignore the environment. This section can require that suppliers have a process for environmental compliance, certifications for environmentally sensitive operation, and training for employees to prioritize the environment as they work. You may even require an ISO 14001-compliant management system to enforce environmental protection locally.
Avetta is proud to support our customers on their journey to sustainability. We help them to manage environmental, social, and economic impacts and grow long-term value throughout the supply chain through prequalification, auditing, employee-level qualification and insurance verification.
Learn more about Avetta’s Sustainability Evaluations