Model Supplier Code of Conduct

By: Alan S. Gutterman

This model supplier code of conduct is excerpted from Business and Human Rights: Advising Clients on Respecting and Fulfilling Human Rights by Alan S. Gutterman. The book provides practical guidance to help lawyers and other professionals determine the necessary steps to effectively counsel their clients and businesses on the content and execution of human rights diligence in daily business operations.

While preparation, adoption, publication, and enforcement of a supplier code of conduct are widely recommended, there is no universal standard that companies must or can follow. Reference can be made to resources prepared by various standards-setting groups. This document provides two examples: (1) a concise version adapted from the Commodity Trading Sector Guidance on Implementing the UN Guiding Principles on Business and Human Rights (Bern: Institute for Human Rights and Business, 2018) and (2) excerpts from the United Nations’ own Supplier Code of Conduct.

The toolkit for responsible supply chain management goes far beyond codes of conduct for suppliers. It includes a formal policy and related processes on engagement with supply chain partners, which should be approved by the company’s board of directors and reviewed at least once a year by the board or a committee of the board created as the primary oversight body for Corporate Social Responsibility (CSR). Also included are assessment tools reflecting analysis of underlying causes of violations, metrics on human rights and anticorruption practices of business partners, corrective action plans, evidence of remediation, evidence of using the collected information to inform an improved supply chain management policy, and model-sourcing contracts with mandatory provisions relating to CSR matters, such as human rights and environmentally sound practices.

Business and Human Rights notes that Finnish Textile and Fashion (FTF), the central organization for textile, clothing, and fashion companies in Finland, emphasizes that companies must require their partners to have responsible operating practices. These partners should also draft corporate responsibility principles for their own activities and corporate responsibility criteria intended for the partners from which materials are purchased and manufacturing is outsourced. Companies’ outside sales representatives and distributors should also be required to adhere to responsible business practices, including prohibitions on actions that would violate laws relating to bribery and corruption. The company’s policies and procedures relating to its supply chain partners—including required provisions in standard contracts with such partners—should be available for public viewing on the company’s website, and the company’s reporting on corporate responsibility should highlight how the company is collaborating with its major partners on corporate responsibility issues.

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