Buyer-Supplier Mutual Code of Conduct

Background

The vast majority of supply chain codes of conduct focus exclusively on the requirements to be imposed on suppliers. This is the traditional ‘top-down’ approach  – the buyer dictates their expectations to the supplier.

We believe that the time has come for a new collaborative approach; one that incorporates the buyer’s purchasing practices and other responsibilities into a statement of shared responsibility.

Sample Buyer-Supplier Mutual Code of Conduct

A Buyer-Supplier Mutual Code of Conduct will have three main sections. Each company will need to create their own unique code, tailored to the size, nature, and complexity of their supply chains, but the following serves as an example of good practice. Some of the following components may not be immediately achievable by organizations, but could be added as the program evolves. This is not an exhaustive list. Buyers, suppliers and stakeholders should use it as a starting point for dialog. The goal is to start moving towards an ideal of collaboration and shared responsibility.

Section 1: Supplier Human Rights Performance Requirements

The human rights performance requirements section is the traditional code of conduct element. Organizations may choose to use their own existing codes of conduct or accept third-party certification schemes (such as the SA8000 Standard) to satisfy this element.

Section 2: Buyer Responsibility

1. Buyer will communicate its supplier policies and procedures regularly to Supplier.
2. Buyer will develop and implement a management system for managing human rights in its supply chain. It will assign responsibility to a specific team within the organization.
3. Buyer will routinely assess any negative human rights impacts it may cause or contribute to through its sourcing, compliance and other supply chain practices.
4. Buyer will build internal awareness, provide training and encourage its business units to use input from the Supplier so that the following Buyer practices do not negatively impact the Supplier’s ability to meet the human rights requirements:
   • Lead time
   • Order volume versus production capacity
   • Product development process and change authorization
   • Pricing
   • Order size fluctuation
   • Material sourcing
   • Product design for improved manufacturing
   • Consistency of orders, season to season
5. Buyer will collaborate with the Supplier in developing effective human rights management systems, improvement plans and remediation guidelines.
6. Buyer will support Supplier’s development and implementation of management systems through providing training, technical assistance or connecting Suppliers to external resources.
7. Buyer will consider Supplier’s human rights performance as part of its evaluation of the supplier.
8. Buyer will create incentives for Suppliers to improve their human rights performance.
9. Buyer will develop and implement a complaint management and resolution system that supplements that of the Supplier to address worker and external stakeholder concerns that cannot be effectively addressed by the Supplier’s system.
10. Buyer will encourage Supplier to engage workers and external stakeholders in continually improving its human rights impact in the workplace and surrounding community.
11. Buyer will not to circumvent Supplier for the purpose of placing direct orders with sub-contractors disclosed by Supplier for the purpose of meeting human rights requirements.
12. Buyer will provide Supplier with written notice of pending suspension for negative human rights impact, with detailed reasons, and provide for a concrete deadline for solving the problem prior to suspension.
13. Buyer will ensure that the reports and records used to assess Supplier’s human rights performance will be treated as confidential and will not be disclosed to any third party without Supplier’s written consent.

Section 3: Supplier Responsibility

1. Supplier will confirm that it has read and agrees with the human rights performance requirements stated in the Buyer-Supplier Mutual Code of Conduct.
2. Supplier will communicate the Buyer-Supplier Mutual Code of Conduct to all managerial and non-managerial staff and will provide training to ensure that it is understood.
3. Supplier will have ongoing dialog with Buyer about production capacity and order volume so that Buyer’s orders do not negatively impact working conditions and labor standards performance.
4. Supplier agrees to undergo periodic audits, announced and unannounced, by the Buyer’s auditors or a third party assessment team as approved by the Buyer, to assess human rights performance.
5. Supplier will provide Buyer, on reasonable notice, with access to Supplier’s adequate and accurate records related to labor standards and working conditions.
6. Supplier will develop and implement systems for managing human rights performance at its work place and engaging its workforce. It will assign responsibility to a specific team within the organization.
7. Supplier will implement a complaints management procedure for reviewing and resolving complaints directed at the Supplier.
8. Supplier will implement and monitor corrective action plans and improvement programs, on its own as well as with Buyer representatives.
9. Supplier will work with the Buyer to develop and implement an annual training and capacity building plan.
10. Supplier will engage with workers and external stakeholders in continually improving human rights impact in the workplace and surrounding community.
11. Supplier will develop and implement systems for managing human rights performance at its suppliers and sub-contractors. Supplier agrees to report on each supplier and sub-contractor to Buyer at time of hire, and to report to Buyer on results of any monitoring and corrective action plans.