Supplier Code of Conduct: The foundation of Value Creation in your supply chain

Over 50% see ESG reporting as a challenge to the supply chain function

The survey showed that more than half of the respondents believe that ESG reporting may pose a challenge to the supply chain function, while another 21% believe that it will become a challenge in the future.

Leaders across industries are challenged by

Lack of clarity around product footprint related to materials, products and services

Ability to understand different carbon footprints across the value chain

Resilience of the supply chain from an environmental risk standpoint

Legal and regulatory requirements change rapidly

The survey showed that two thirds of respondents indicate staying aware of rapidly changing legislative and regulatory frameworks and jurisdictions are a current challenge in the supply chain. Another 19% believe it will become a challenge in the future. Increasing focus from business is on adhering to the global increase in the amount of reporting and regulatory requirements.

As ESG is in the spotlight, companies’ supply chain management has enhanced its importance as an efficient tool for implementing a sustainable strategy throughout the entire value chain and making sure that the challenges mentioned above can be sufficiently addressed and appropriately managed.

Where should you go from here?

Illustrated challenges suggest that ESG is on the radar and becomes more critical in business strategies. However, companies need to start being proactive, anticipating the challenges and opportunities to come.

Supplier Code of conduct should be considered as a tool to set up transparently the minimum requirements companies expect their supply chains to comply with. Supplier Code of Conduct supports the company's strategy and identifies minimum requirements for company’s suppliers related to business practices, social responsibility, and environmental responsibility. The Supplier Code of Conduct should be the basis for ensuring ESG is sufficiently addressed throughout the supply chain and offers a series of benefits:

Setting clear expectations towards suppliers and encourages engagement;

Helping to protect company’s reputation in case of possible incidents;

Enabling transparent monitoring of environmental and labour standards throughout the supply chain, even if the purchase (e.g., raw materials) is made from a less regulated area.

To achieve this, the Supplier Code of Conduct needs to be realistic and honest, tailored to market and company specific needs, approved, and promoted by top management. It should be regularly updated according to changes in company strategy and ESG trends.