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While the expansion of global trade has put affordable products on global markets, produced new business opportunities and helped some regions develop, it has also brought about its share of issues. From the early 2000s, reports of labour abuse in the factories where their goods were manufactured affected the reputation, sales and profitability of large global Brands and resulted in an increase in consumer awareness over labour standards. Today, not only consumers, but investors and stakeholders at large, expect organizations to respect labour standards and behave in a socially responsible manner.

Implementing Codes of Conduct throughout the Supply Chain

Guaranteeing acceptable conditions in a global supply chain can be a complex challenge. Developing countries are at different stages of industrialization and in some regions good practices are only beginning to emerge. As part of their efforts to demonstrate ethical practices, many large companies and global brands are integrating codes of conduct and guidelines into their corporate cultures and management systems. Through these, corporations are making demands on their suppliers (facilities, farms, subcontracted services such as cleaning, canteen, security etc.) and verifying, through social audits, that they are complying with the required standard.

Today, thousands of corporate codes of conduct exist, the majority of which are based on the International Labour Organization (ILO) conventions. These codes of conduct and standards are usually the result of intense negotiation between interested stakeholders and strongly reflect the organizations that developed them. Suppliers however often express concern at the multiplicity of audits and duplication of effort, which may contribute to hindering the improvement of conditions in the workplace. In order to minimize this, the trend has been for commercial organizations with shared goals to come together, agree on common codes of conduct and share information. An increasing number of initiatives now seek to drive forward consistency of standards and processes. The EICC (Electronic Industry Citizenship Coalition), ICTI (International Council of Toy Industries), RJC (Responsible Jewellery Council), to name just a few, are all examples of joint efforts by specific industries to harmonize their requests towards their suppliers.

More support for supply chains is required. It is expected that the coming years will still see large numbers of audits but that new schemes will also come into place to further support suppliers to improve labour conditions. It is indeed generally accepted that, despite strong efforts to consolidate best audit practices and lead suppliers to improvement, audits alone are not a driver for improvement of workplace conditions. Overall, suppliers in many parts of the world need more support to attain the standards that are required from them. Distributors and brands will be looking at new schemes and models and will work together with their suppliers to address the root causes of their challenges in order to engage into longer term business relationship and implement sustainable supply chains.

With more than 400 auditors with social accountability expertise and an extensive knowledge of all major codes of conduct, SGS is a partner of choice for social audits and training. We are also committed to supporting new initiatives and developing new services to assist companies on their sustainability journey.

Cécile Oger
Consulting & Business Development
SGS – CTS
t: + 33 1 41 24 87 47

ABOUT SGS

SGS is the world’s leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. With more than 67,000 employees, SGS operates a network of over 1,250 offices and laboratories around the world.