What to think about when creating a Supplier Code of Conduct (CoC). Businesses are expected to not only focus on profit but also on ethical and social responsibility (ESG). One crucial aspect of this responsibility is ensuring that suppliers and partners follow ethical, social, and environmental standards. This is where the Supplier CoC comes into play.

A Supplier CoC is a set of standards and expectations that a company sets for its suppliers and partners in terms of ethical, social, and environmental responsibility. It is a tool that helps organizations promote sustainability and social responsibility throughout their supply chain.

What makes a good Supplier Code of Conduct

Here are some tips:

1. Keep it clear and concise: A supplier CoC should be easy to read, understand, and implement. The language should be clear, concise, and accessible to everyone, including non-native speakers. It should also be structured in a logical and coherent way to facilitate comprehension.
2. Cover all relevant topics: A good supplier CoC should cover all relevant topics, such as labor practices, human rights, anti-corruption, environmental sustainability, and product safety. It should reflect the values and mission of the company and be aligned with industry standards and best practices.
3. Make it actionable: The supplier CoC should not only outline the standards and expectations but also provide guidance and examples on how suppliers can implement them. It should also offer resources and support for suppliers who need help or advice on how to comply.
4. Monitor and enforce compliance: To ensure that the Supplier Code of Conduct is effective, businesses should monitor and enforce compliance with the standards. This can be achieved through regular audits, assessments, and evaluations, as well as feedback from stakeholders.
5. Communicate and promote the Supplier Code of Conduct: A Supplier CoC is only effective if suppliers are aware of it and understand its importance. Therefore, businesses should communicate and promote the Supplier Code of Conduct to their suppliers and partners through various channels, such as emails, newsletters, training, and events.

In conclusion, a well-crafted Supplier CoC is an essential tool for businesses that want to promote and assure sustainability and social responsibility throughout their supply chain. By keeping it clear, concise, actionable, and promoting compliance, companies have taken the first step towards a status where they are able to promise customers an ethical supply chain.

Having suppliers sign a CoC as part of their onboarding process, before any contractual agreements are made, is a crucial step in establishing a responsible and ethical supply chain.

Learn more about Supplier CoC

If you want to learn more about Supplier CoC, LHTS have a course for the tactical buyer role. Procurement departments are responsible for sourcing goods and services from suppliers that meet the organization’s requirements for quality, cost, and delivery. However, in addition to these basic requirements, procurement professionals must also consider the ethical and social implications of their purchasing decisions. This is where a supplier code of conduct comes in.

Who Should Enroll:

• Procurement professionals seeking to deepen their understanding of ethical procurement.
• Supply chain managers responsible for developing and enforcing supplier standards.
• Anyone in a procurement role looking to enhance their organization’s ethical and social responsibility.

Supplier Code of Conduct Compliance Clause (example)

An example of a contract clause for educational purposes. Always adapt the clause to your specific conditions and consult legal advice.

Clause: Compliance with Supplier Code of Conduct

1. Compliance Obligation: The Supplier acknowledges and agrees to comply with the Buyer’s Supplier Code of Conduct (“Code of Conduct”), as updated from time to time. The Supplier shall ensure that all activities under this Agreement are conducted in accordance with the principles and standards outlined in the Code of Conduct.
2. Communication and Training: The Supplier agrees to communicate the requirements of the Code of Conduct to its employees, agents, subcontractors, and any other third parties involved in the performance of this Agreement. The Supplier shall provide appropriate training and resources to ensure adherence to the Code of Conduct.
3. Monitoring and Audits: The Buyer reserves the right to monitor the Supplier’s compliance with the Code of Conduct. The Supplier agrees to cooperate fully with any compliance assessments or audits conducted by the Buyer or its designated representatives. This may include providing access to relevant documentation, facilities, and personnel.
4. Reporting and Remediation: The Supplier shall promptly report any violations or suspected violations of the Code of Conduct to the Buyer. If any non-compliance is identified, the Supplier agrees to take immediate corrective action as directed by the Buyer to remedy the situation and prevent future occurrences.
5. Termination: Failure to comply with the Code of Conduct shall constitute a material breach of this Agreement. In the event of such non-compliance, the Buyer reserves the right to terminate this Agreement with immediate effect, without prejudice to any other rights or remedies available under this Agreement or applicable law.
6. Updates to the Code of Conduct: The Buyer may update the Code of Conduct from time to time. The Supplier agrees to review and comply with any updates to the Code of Conduct. The Buyer will provide the Supplier with reasonable notice of any material changes to the Code of Conduct.
7. Indemnification: The Supplier agrees to indemnify and hold harmless the Buyer, its affiliates, and their respective officers, directors, employees, and agents from and against any and all claims, liabilities, damages, losses, and expenses, including reasonable attorneys’ fees, arising out of or in connection with any breach of this clause by the Supplier.

By signing this Agreement, the Supplier confirms that it has received, read, and understood the Buyer’s Supplier Code of Conduct and agrees to comply with its terms and conditions.

About Learn How to Source

Learn How to Source is an online platform based in Sweden, offering a range of procurement courses accessible globally. It serves as a community where procurement experts share their knowledge through online courses, designed for various experience levels from introductory to expert. Courses are concise, about 30 minutes each, and cover different aspects of procurement, tailored for different buyer roles. The courses focus on practical knowledge, presented by seasoned professionals, and include quizzes and certificates. They can be accessed from any device, emphasizing micro learning for flexibility and efficiency.

Note: Illustration to the blogpost “Creating a Supplier Code of Conduct” created with support of Chat GPT on Dec 21, 2023.

Utbildning Inköp provides information in Swedish about LHTS’ courses.