Glossary term
Supplier Code of Conduct
Subject: Sustainability and ESG, Human Rights, Labour and Supply Chain
Also known as: Supplier code, Vendor code of conduct
A supplier code of conduct is a document that sets out the ethical, labour, environmental and legal standards a buyer expects its suppliers to meet as a condition of doing business.
Explanation
It is usually issued by the buying company and attached to purchase contracts or onboarding forms. Typical topics are forced and child labour, working hours and pay, health and safety, bribery, environmental protection, data handling and the right to audit. Suppliers confirm in writing that they will comply and often agree to pass the same rules to their own suppliers. The buyer backs the code with risk assessment, questionnaires, site audits, training and, where breaches occur, corrective action plans, or ending the relationship as a last resort. A code is only as good as its follow-through. Reviewers ask what happened after the code was issued, since a signed copy on file shows little by itself.
Example
A consumer electronics firm sends its code of conduct to 400 suppliers and requires signed acceptance. It then ranks them by risk and audits the top 40. One audit finds workers' passports held by an agency. The supplier is told to return them within seven days and repay recruitment fees, and a follow-up visit confirms it.
Not to be confused with
- Code of Conduct
- An internal code binds the organisation's own staff. A supplier code binds outside businesses through contracts.