Does your company have a supplier code of conduct?

  • Radia Guira

A supplier code of conduct is created for the purpose of ensuring that a company’s suppliers adhere to high standards of safe working conditions, fair and respectful treatment of employees, and ethical practices. The supplier code of conduct is formalized through a statement of the behaviours which an organisation expects of its suppliers and their staff. It may extend to the supply chain and may include commitments on how the organisation will work with its suppliers to build trust and ensure compliance.
The possible answers are:
– Yes
– No
If the answer is ‘Yes’, please indicate if it is referenced in all your purchasing contracts (old and new) in the comments section and attach the document.

This question is requesting information about whether the surveyed company has a « Supplier Code of Conduct ». A Supplier Code of Conduct is a set of guidelines and expectations that a company has for its suppliers in terms of their behavior, ethics, and operations, including areas such as human rights, environmental responsibility, fair labour practices, and anti-corruption.

The question is probing whether the company has set such standards for its suppliers as an indication of the company’s willingness to manage its supply chain sustainably and ethically. If such a code exists, it would mean that the company has made a formal declaration of the values and principles it holds in respect to its interactions with its suppliers.

An example of an answer could look like this: (Example: Yes, our company has implemented a comprehensive Supplier Code of Conduct that outlines our expectations for responsible and ethical business behavior from all our suppliers.)

Understanding Supplier Code of Conduct

In the realm of ESG (Environmental, Social, and Governance) criteria, a company’s supply chain is a critical area of focus. A Supplier Code of Conduct serves as a formal document outlining the principles and expectations that a company holds for its suppliers in terms of ethical practices, environmental responsibility, and social accountability. It’s crucial for companies to implement a Supplier Code of Conduct to ensure alignment with ESG standards and to communicate their commitment to sustainability across their supply chains.

The Supplier Code of Conduct typically addresses issues such as labor rights, health and safety standards, environmental impact, and anti-corruption policies. By adhering to a well-defined code, companies can mitigate risks, enhance their reputation, and contribute to a more sustainable and ethical business ecosystem. But beyond these benefits, setting up such a code is increasingly becoming a regulatory requirement and a key factor in investor decision-making, reflecting how deeply ESG considerations are embedded in today’s business landscape.

Benefits of Implementing a Supplier Code of Conduct

Implementing a Supplier Code of Conduct not only aligns with ethical practices but also brings tangible benefits to a company. It acts as a risk management tool by setting clear expectations for suppliers, thereby reducing the chances of ESG-related issues that could damage a company’s reputation or result in legal consequences. A comprehensive code of conduct helps in building a resilient and responsible supply chain, which is particularly important in times of crisis or supply chain disruptions.

A strong Supplier Code of Conduct also serves as a key differentiator in the marketplace. It demonstrates a company’s commitment to sustainability and corporate responsibility, which can positively influence customer perception and loyalty. Furthermore, it can be an effective tool for driving change throughout the supply chain, encouraging suppliers to adopt better practices and to innovate in terms of sustainability. For a deeper dive into the advantages and the elements of a Supplier Code of Conduct, check out this comprehensive guide.

On the economic front, companies with robust ESG practices, including a Supplier Code of Conduct, often see improved operational efficiencies and cost savings, as suppliers are encouraged to adopt more sustainable and efficient processes. Additionally, investors are increasingly looking at ESG scores when considering investment opportunities, meaning that companies with strong ESG commitments, including ethical supply chain practices, may see increased investment and shareholder support.

How to Create and Implement a Supplier Code of Conduct

Creating a Supplier Code of Conduct requires a comprehensive understanding of your company’s values, ESG goals, and the specific risks and impacts associated with your supply chain. Begin by conducting a thorough risk assessment to identify potential issues and areas of concern within your supply chain. This should be a cross-functional effort, engaging teams from procurement, sustainability, compliance, and other relevant departments.

Once you have identified the key areas that your code needs to address, draft the document by outlining clear, actionable, and measurable expectations. It’s important to ensure that your code is aligned with international standards and best practices, such as the United Nations Global Compact or the OECD Guidelines for Multinational Enterprises.

Communication and enforcement are key to the successful implementation of your Supplier Code of Conduct. Suppliers should be made aware of the code and its requirements, ideally as part of the onboarding process. Training and capacity-building initiatives can help suppliers understand and comply with the code. Continuous monitoring and auditing of supplier performance against the code are also essential for ensuring compliance and making necessary improvements. For more detailed insights on creating and implementing a Supplier Code of Conduct, GEP’s glossary entry on the subject is a valuable resource.

In conclusion, a Supplier Code of Conduct is not just a set of guidelines; it’s a reflection of a company’s dedication to ethical business operations. It plays a significant role in managing ESG risks, building a sustainable supply chain, and fostering a corporate culture of responsibility. For companies that are yet to develop a Supplier Code of Conduct, now is the time to act. Not only does it make good business sense, but it is also a step towards building a resilient and sustainable future.