The supplier code of conduct lays out the requirements for responsible sourcing and has become an important document in a number of companies. The purpose of the code is to have suppliers, many in global supply chains, commit to upholding the company’s standards for conducting business in an ethical manner. The typical supplier code of conduct includes principles like always conducting business ethically and lawfully, protecting human rights, using environmentally sound practices, protecting employee health and safety, adhering to governmental regulations and laws, ensuring the supplier’s suppliers also uphold the standards, and not tolerating discrimination.
Suppliers accepting the supplier code of conduct can be required to disclose information about their processes, including origin of raw materials and environmental performance indications. Though this sounds good, how does company management know for a fact their supply chain is meeting ethical expectations? There have been a number of situations where, despite the supplier commitments, supply chains contained suppliers who were not acting ethically or protecting the environment. Discovering a supplier is using child labor or dumping hazardous waste in waterways can hurt a company’s reputation for years to come because it makes senior management at corporate headquarters appear to be out of touch with the truth – speaking empty words for the benefit of the public.
Discovering the Truth
There are many cases of company leaders being surprised by public complaints about suppliers down the supply chain. It is embarrassing for management to realize their public commitments to ethics, human rights, and environmental protection are not upheld in practice by suppliers.
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