How to Promote Sustainable Procurement with a Supplier Code of Conduct
A strong supplier code of conduct is crucial to ensuring a sustainable procurement policy. Find out how you can promote sustainability through your suppliers.
It’s no secret that sustainability is now, more than ever, the name of the game. Almost every business in every sector has felt the pressure to change its processes and functions in a way that positively impacts the planet.
Procurement is one of the very few industries that is ideally placed to make a real difference, with the global supply chain presenting one of the most important opportunities for sustainable change.
Although the ways in which this change can be brought about may seem muddied and unclear, there are plenty of ways that procurement can get started.
Enter: supplier codes of conduct.
New research carried out by Ardea illustrates the importance of having supply chain codes of conduct in place. It highlights how the understanding between supply chain stakeholders over what is expected in terms of working practices can be leveraged to boost levels of sustainability.
But how exactly can you put together a code of conduct that promotes sustainable practices?
The ingredients to making a strong supplier code of conduct
Ardea’s research details seven key areas of focus for ensuring codes of conduct are both sustainable and transparent.
- Reference the guiding principles on business & human rights from the UN. This will provide you with a good understanding of the overall ethical responsibilities of your organisation, and relates to more than just sustainability.
- Research the four main UN categories; human rights, the environment, labour, and anti-corruption, as these will inform the foundations of your code. It is also important to come up with a solid stance on whistleblowing.
- Once a foundation has been established, tailor it to your market. Explore sector-specific areas like technology or science, consumer interest, competitor and tax. The OECD guidelines for multinational enterprises is a useful resource here.
- Delegate the drafting of an initial set of guidelines to a senior member of staff who will be accountable for their implementation. Be sure to incorporate company values, an awareness of current issues, and an intention to address them. This initial draft must be reviewed by both senior management and legal representatives.
- Be sure to keep your code of conduct both honest and realistic. Avoid adding requirements that are impractical or hard to measure, and make sure a minimum expectation is set with clear examples.
- Regularly audit, update, and review the terms of your code. Keep a dialogue open with suppliers so that issues can be identified and addressed quickly.
- Ensure there are clear guidelines on how solutions to any violations can be implemented, rather than ending business relationships.
Following these steps to build a robust supplier code of conduct is a crucial tool that can be utilised in the quest for true sustainability. Being able to set out exactly how you intend to promote sustainable practices throughout the supply chain creates a clear mandate for others to follow.
The establishment of these guidelines also introduces an element of accountability. If other key stakeholders have agreed and signed up to your code then any violations that occur can be dealt with effectively.
The companies already getting it right
There are some great examples of companies that are already leveraging their supplier codes of conduct in the quest for more sustainable operations.
Balfour Beatty is a UK based international infrastructure developer with a fair share of complex supply chains. What they have done well is to clearly set out their expected code of conduct in a non-confrontational manner and with particular attention paid to the environment and promoting sustainability.
They have done this by including two specific points within the wider code that detail the required commitments of suppliers:
- “Continually improve our environmental performance and results and to review them on a regular basis”
- “Aspire to provide infrastructure that enhances ecology and ecosystem services”
These specific points within a wider section about the environmental impact of infrastructure allow suppliers to quickly identify what is expected. The way that it is worded is also important, because it does not jeopardise supplier relationships with the availability of confidential reporting clearly stated.
The well-known clothing brand H&M is another good example. In recent years the fashion industry has been placed under much more scrutiny when it comes to how their clothes are produced. In response to this many companies have updated their supplier codes of conduct in an attempt to ensure sustainability throughout the chain.
Some of the key points in H&M’s relate to both the environment and human rights:
- “Our suppliers must comply with all applicable environmental laws and regulations in the country of operation. In particular, we are concerned about how the production of our garments and other products contributes to climate change and water stress.”
- “The company must have the relevant environmental permits and licences for its operations.”
- “We acknowledge that according to the UN Convention on the Rights of the Child, a person is a child until the age of 18. We recognise the rights of every child to be protected from economic exploitation and from performing any work that is likely to be hazardous or to interfere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral or social development.“
Interestingly, H&M’s supplier code of conduct goes on to make recommendations for companies and subcontractors not in their direct supply chain. This further illustrates the knock-on effects a robust code of conduct can have, particularly when enforced by large companies.
Although there are many factors to consider and take into account when compiling your own code of conduct, keeping the environment and sustainability in mind facilitates greener processes throughout. This is just one of the ways in which procurement can leverage existing elements to work towards a sustainable future.
To learn more about procurement’s sustainable future, check out these articles:
