Companies should have a publicly available supplier code of conduct that reflects international standards such as the ILO core labour standards (covering child labour, forced labour, trade union rights and equal opportunities), covers health and safety and working conditions, and contains at least a longer term target for a living wage.
The code should apply to direct suppliers as well as sub-suppliers, labour brokers and recruiters.
A supplier code of conduct is the first step for a company to formulate and communicate its expectations to suppliers and provide them a framework for compliance. It provides a company the opportunity to broaden standards it may already have in place for its direct employees to the employees of all its suppliers and other business partners, thus avoiding mixed messages and establishing a foundation for managing supply chain labour practices.
- Has the company published a supplier code of conduct that reflects the ILO core labour standards?
- Is the code approved at senior level and reviewed on a regular basis?
- Does the company have a public supplier code of conduct that:
- Reflects international standards, including health and safety and working conditions;
- Includes at least a longer term target for a living wage;
- Applies to all suppliers and sub-suppliers;
- Specifically applies to labour brokers and recruiters?
- How does the company work with its suppliers to improve their practices in relation to:
- Forced labour;
- Child labour;
- Freedom of association and right to collective bargaining;
- Discrimination (especially with regards to women and migrants);
- Working conditions;
- Living wages?
Examples of supplier codes of conduct which fulfil at least one of the above elements include:
Living wages: The Canadian food processing and distribution company George Weston states in its Responsible Sourcing Code of Conduct that suppliers need to pay living wages, and explains this means that “wages should always be enough to meet basic needs and to provide some discretionary income”. This follows the definition of living wage of the Ethical Trading Initiative (ETI).
Applicability to sub-suppliers: The Global Supplier Code of Conduct of the US food manufacturing company Kellogg states that suppliers as well as agents and subcontractors need to comply with the code, which in turn applies to all employees, including temporary staff and migrant workers. The code expects suppliers to review their own operations and the operations of their suppliers insofar as they are providing goods and services to Kellogg, and to verify compliance with the code. Kellogg may verify compliance via its own or third party audits.
Applicability to labour brokers and recruiters: The No Deforestation, No Peat, No Exploitation Policy of Singaporean agribusiness group Wilmar includes specific clauses to ensure the rights of all workers – including contract, temporary and migrant workers – are respected. The policy includes very specific provisions regarding ethical recruitment and recruitment fees, passport retention and employment contracts, accommodation, access to remedy, etc.
Tools and further guidance
Guidance for companies on how to create a supplier code of conduct:
- SAI, IFC (2010). Measure & Improve Your Labor Standards Performance. Performance standard 2 handbook for labor and working conditions, chapter eToolkit: Labor Standards Performance In Your Supply Chain f: section eCreate Supplier Code based on PS2 f, p. 156ff and section fCommunicate f, p. 165ff.
- BSR, UN Global Compact (2015) - Supply Chain Sustainability - A Practical Guide for Continuous Improvement, Second Edition, chapter 3: Establishing Sustainability Expectations for the Supply Chain, p. 23ff.
Examples of internationally recognised corporate labour codes:
- Ethical Trading Initiative (ETI) Base Code
- FLA Workplace Code of Conduct
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From poor working conditions to forced labour - what's hidden in your portfolio?