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Supplier Code of Conduct — Embracing Sustainability

Supplier code of conduct allows businesses to establish their internal and external expectations. However, what is it?

In this article, we will discuss what supplier code of conduct is. We will tackle the connection between sustainable procurement policy and the code of conduct. Additionally, we will tell you how you can create a code of conduct and the ways to inform your suppliers about those codes. 

Once you are done reading this article, you will know how important it is to have a supplier code of conduct in your procurement process. Thus, this will allow you to engage with suppliers who can meet your sustainability standards. 

What is the Supplier Code of Conduct

A supplier code of conduct serves as the foundation of what the business expects from its internal and external stakeholders. The code lays down the framework for engagement with suppliers and other stakeholders to accomplish the company’s goals for a sustainable supply chain and procurement. 

Many businesses consider the supplier code of conduct as an affirmation of current expectations as a new set of sustainable criteria. They treat it as a logical extension of corporate values statements to implement in the areas of the business that needs improvement. 

During the formulation and research of the code, many businesses will discover that other businesses have already developed cooperative codes of behavior. By limiting the criteria that the suppliers need to comply with, the codes aim to lighten their load. 

The supplier code of conduct is meant to make it easier for corporations to create their own rules and speed up the process of conducting joint audits of suppliers

Nonetheless, there is still a chance that the code of conduct will not address all of the Global Compact’s problem areas to assess particular business sustainability problems

The codes may also be outdated and have low standards if not frequently revised. When this happens, the business must be ready to complement it with particular policies to handle sustainable risks that have not been addressed. 

The Connection Between the Code of Conduct and the Sustainable Procurement Policy

A sustainable procurement policy is put in place to help and guide businesses when to acquire goods and services and select the products based on their social and environmental impact. 

Without this policy, businesses will have a hard time ensuring that all their acquired products or services can contribute to their social and environmental responsibilities. 

Therefore, the code of conduct should be a reflection of the sustainable procurement policy. Both should be aligned in order for the company to clearly forward its expectations to its internal and external stakeholders. 

Thus, when a new code is distributed throughout the supply chain, it must be in accordance with your policy. So that all professionals will clearly understand how the business plans to incorporate sustainability in procurement.


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Developing a Code of Conduct

Here are some of the important things that you need to do when developing a code of conduct:
  • You must first consult with relevant parties, such as civil society, suppliers, and colleagues.
  • Establish standards based on current international norms of conduct rather than creating new ones to avoid weakening international law and to avoid conflicting requirements for suppliers with numerous buyers.
  • Key business executives from cross-functional teams should be involved in the code’s creation and support.
  • Speak with the cross-functional teams, especially supply chain management experts
  • It is highly advised to take into account requiring suppliers to convey these expectations to their supply base in order to guarantee that they are followed throughout the entire supply chain.
  • Where available, look to reliable outside textual or internet sources or contact the outside knowledge of acknowledged experts.
  • State clearly what you expect from informed workplaces.
  • Set expectations for grievance mechanisms clearly.
In doing this, you can ensure that all the stakeholders in your business are well-informed about the code of conduct in your procurement. 

Informing your Suppliers About the Codes

Of course, once you develop a code of conduct, you must inform your suppliers so they know your requirements and what you expect from them. Here are some of the strategies businesses do to inform their suppliers about the codes:

1. A customized, one-time message 

A one-time message is mostly the most effective strategy when informing the suppliers about your code of conduct. 

The business can do this by sending a message, usually in the form of an email, from the company’s top executive, such as the CEO or chief procurement officer to the potential suppliers. 

2. Include the code when contacting suppliers for the first time

Businesses are displaying the code on their websites and incorporating it in requests for quotations at the very beginning of new relationships with suppliers. 

This serves to educate potential suppliers about the significance of sustainability in their interactions with the organization.

3. Incorporating the code into supplier contracts

Several businesses additionally decide to include the code into their supplier agreements, or in certain circumstances, purchase orders, by having their suppliers sign agreements pledging to follow all the standards written in the code.

4. A review of the code during an official business meeting

The strength of the link between business performance and sustainability will be shown by connecting the introduction of the code to an established business process and having supply chain management experts provide the facts.

5. Annual supplier acknowledgment of supplier code of conduct

Suppliers re-acknowledge their commitment to support consumers’ sustainability standards every year, either online or in writing.

If you want to learn more about how the supplier code of conduct can improve your sustainable procurement processes, then our course is for you! Our Sustainable Procurement Course will guide you in achieving sustainability in your procurement successfully. Try now and experience efficient sustainable procurement!

Frequentlyasked questions

+ What is a supplier code of conduct?

It lays down the framework for engagement with suppliers and other stakeholders in order to accomplish the company’s goals for supply chain sustainability.

+ Why is the code important?

It is important for the business to clearly forward what it expects from its internal and external stakeholders to achieve sustainability.

+ What is a procurement policy?

It is a policy that helps and guides businesses when to acquire goods and services and select the products based on their social and environmental impact.

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