Ethics hotlines and email are the top two reporting avenues listed in supplier codes of conduct, according to a study reported by Compliance Insider magazine. It states that information about how to raise concerns is one of the most critical, but often overlooked, parts of a supplier code of conduct. For those published codes of conduct that specify how to report potential violations, 31% list either a phone hotline or email, 19% provide a company phone number, 18% offer a web-based hotline, 16% provide a mailing address, and 14% direct people to the company website.

Supplier codes of conduct are, in many ways, a product of the global economy and the use of suppliers from around the world. Laws such as Sarbanes Oxley, Dodd-Frank, the Foreign Corrupt Practices Act, and the United Kingdom’s Bribery Act can make organizations responsible for illegal acts of their suppliers. The potential legal ramifications influence organizations to provide clear expectations and guidelines to current or potential suppliers. Public sentiment about substandard working conditions, child labor, or other human rights violations, conditions that often surface after a tragedy, also influences organizations to develop codes of conduct for suppliers.

The externally focused codes typically address such risk topics as human rights, workplace safety and health, discrimination, and environmental compliance, as well as bribery and corruption, data privacy, conflicts of interest, gifts and entertainment, and other topics often found in internally focused employee codes of ethics. They also may need to be tailored for country-specific topics.

The Compliance Insider story highlights best-practice content for supplier codes of conduct, to include:

• Accessibility: downloadable format; easily found on a public website; translated into the suppliers languages;
• Leadership visibility: introduction or other messages from the CEO or other senior executives;
• Comprehension level: easily understood and translated
• Risk topics: up to a dozen risk topics; provide sufficient detail and real-world examples of desired behavior while being concise
• Corporate social responsibility (CSR): mention key elements of CSR programs
• Dissemination requirements: suppliers to provide copies to their employees
• Implementation and enforcement: clear expectations and repercussions for noncompliance
• Reporting violations: information about how to raise concerns (such as via telephone hotlines); assure potential whistleblowers with non-retaliation language.

Increasing numbers of organizations recognize the importance of drafting supplier codes of conduct, if only to help avoid potential reputation damage resulting from environmental or human rights violations, or other illegal acts, at suppliers’ sites. Organizations will provide clear and effective guidance for their international suppliers by incorporating the topics summarized above, found in best-practice supplier codes.

Ethical Advocate provides hotline support and comprehensive compliance solutions for public and private companies, non-profits, educational, and government institutions. We’d be happy to answer your questions.

References:

Red Flag Group. “Supplier Codes of Conduct” Compliance Insider, November-December 2013.