The supplier code of conduct refers to a set of standards and guidelines that spell out both ethical and business practices that suppliers need to follow if they wish to conduct business with a company. Most companies with a global footprint tend to use SCOC to ensure that the set standards are met by suppliers and that they implement it in labor practices, human rights, environmental impact, and business conduct.
Suppliers have to provide their staff a safe and healthy working environment and ensure that their workforce is not subjected to forced labor or other forms of exploitation, in terms of wages, working hours and working conditions.
Upholding the basic human rights of workers is a must, and suppliers need to ensure that they are not involved in any activities that violate human rights. Requirements related to non-discrimination, freedom of association, and the protection of human rights need to be upheld at all times.
Suppliers need to ensure keep their environmental impact at the minimum and work toward achieving sustainability, including fulfilling requirements related to environmental sustainability such as reducing greenhouse gas emissions, conserving resources and minimizing waste.
Suppliers need to conduct their business in an ethical and transparent manner, including fulfilling requirements related to ethical business practices such as setting up anti-corruption measures, fair competition, and total compliance with government regulations.
The supplier code of conduct helps companies establish a framework for ethical and sustainable practices in its value chain. It provides a set of expectations for suppliers, which could act as guidelines to ensure that they follow a responsible and sustainable process.
However, ensuring that suppliers are following the code requires that procurement and supply chain teams of an enterprise conduct regular audits of suppliers. Many global companies have set mandates that suppliers possess proper certification or verification of compliance. Non-compliance with the code may result in termination of the supplier relationship.
Supplier code of conduct also means that an enterprise has set additional checkpoints for third-party risk management or TPRM. For an enterprise, SCOC is an important tool for its supply chain and procurement teams to ensure that its suppliers make serious efforts to meet the prescribed standards that it has set for areas such as labor practices, human rights, environmental impact and business conduct.
The supplier code of conduct also helps enterprises ensure that their suppliers are operating in a sustainable manner, which apart from ensuring compliance, also helps enterprises to mitigate supply chain risks, improve reputation and add value to their mission and vision.