It is expected that this Step will last one to six months depending on your company’s existing appreciation of working with Corporate Social Responsibility (CSR) and the responsibilities that come with such appreciation. If your company is already working with Responsible Supply Chain Management (RSCM) in your own way or in collaboration with others, it may take time to assess and appreciate the added value of the approach and collaborative effort offered by IMPA ACT.
Step 1 involves the following:
1. Commit to working with Responsible Supply Chain Management (RSCM)
Today, it is a globally established expectation that businesses act responsibly. Corporate Social Responsibility (CSR – the term used by IMPA) or Corporate Responsibility describe this notion. Part of acting responsibly is ensuring that businesses in your company’s value chain also act responsibly. RSCM is thus part of CSR and it is increasingly expected by your company’s stakeholders, when they assess whether your company is responsible or not. With this initiative IMPA provides members with the opportunity to demonstrate best practice and cost-effective RSCM. However, as a Purchaser you will have to establish that your executives are committed to work with RSCM; and if your company already works with RSCM, whether your executives are ready to apply the latest developments with the collaborative initiative IMPA ACT.
2. Commit to live up to requirements of the Supplier Code of Conduct (SCoC) in your own company
Your company will have to walk the talk. It is, of course, unacceptable that you start raising requirements towards your suppliers if your company does not live up to the same requirements. The international standard for responsible business behavior has been defined by the international community in the UNGPs, which are reflected in the SCoC. The international standard sets the bar quite high for the systems that businesses are expected to have in place to manage their impacts on sustainable development. In order to retain credibility towards your suppliers your executives will have to commit to implement the requested systems in your own company. The advantages for your company of implementing the SCoC expectations are similar to those that you would highlight as motivation towards your suppliers. Your executives should be aware of the expectations and need for resources in implementing the expectations from the SCoC.
It is expected that this Step will last one to three months and the following stages are involved in step 2:
Step 2 involves the following:
1. Prepare your engagement with suppliers
It is suggested that all suppliers, that receive written confirmation of cooperation from your company (e.g. a contract or your general terms of purchase), are introduced to the SCoC. It is reasonable to expect that all your suppliers will endeavour to comply with the SCoC over time, since the SCoC reflect globally agreed standards for any business conduct.
2. Include requirement in contracts
In order to create leverage for your company towards your supplier and to enable your company to react appropriately, should your supplier refuse to act responsibly, i.e. comply with the SCoC, you should have the code requirements referenced in the legal documents that govern your relationship to the supplier. IMPA ACT has proposed a generic contract clause. You may also include reference to the SCoC in your general terms of purchase.
3. Interact with suppliers
When introducing the contract terms and the SCoC it is expected that you will present the business advantages that the supplier can experience following successful implementation. Here you will also stress that the supplier will be allowed ample time throughout the implementation. You can state that the expectations outlined in the SCoC are not your invention, but rest on all businesses in the world as expectations from the international community and endorsed by the UN. In the IMPA ACT toolbox there is a template cover letter when sending the SCoC to your suppliers
Choosing and Engaging
It is expected that this Step will last one month, following the stages set out below:
Step 3 involves the following:
1. Choose suppliers to collaborate with
While it is possible to send the SCoC to all suppliers with which your company has a formal collaboration, it would be very costly and very difficult, if not impossible, to engage all suppliers in a collaborative process. Therefore it is important that your company establishes non-discriminatory criteria for choosing which suppliers it will engage with in a subsequent collaborative process.
Your company should primarily make use of ‘spend’ and ‘dependency’ criteria when determining who to engage with. In other words, your company identifies suppliers that it purchases for large amounts from (e.g. all suppliers where the buyer spends more than USD 200,000.- per year) or suppliers that sell products/services to the buyer where it would be impossible or very difficult to find a substitute supplier (e.g. where the decision to purchase a comprehensive ICT software solution makes it difficult, if not impossible, to find alternative service providers). Finally, in order to be in alignment with the international expectations reflected in the SCoC you will have to seek to identify specific ‘known risks’ of being involved with a certain supplier. The person(s) responsible for CSR in your company can assist in carrying out the identification. Your experiences from previous interactions with a given supplier may also indicate that the supplier faces difficulties meeting the expectations of the SCoC. Known risks can by themselves justify further engagement, irrespective of your company’s spend or dependency. If your company finds it appropriate a fourth criterion may also be used: ‘Frequency of purchase’. If the buyer is a regular customer such relationship may increase your company’s risk should the supplier neglect its responsibilities to manage adverse impacts in accordance with the SCoC. Finally, the suppliers identified through the criteria should be ranked in priority order if you find that you will not have the resources to engage with all of them.
2. Engage with selected suppliers and forward Supplier Self Assessment Survey (SSAS)
Once you have decided which suppliers you will engage more actively with you should inform these suppliers, highlighting their importance to your company and thus the wish to build stronger ties and to ensure the basis of a long-term sustainable collaboration.
IMPA ACT provides an Engagement Letter which is forwarded to your selected suppliers. The letter explains the need for the suppliers to fill in the Supplier Self Assessment Survey (SSAS).
You should contact the suppliers and agree for return dates of the SSAS.
3. Interact with suppliers
When introducing the contract terms and the SCoC it is expected that you will present the business advantages that the supplier can experience following successful implementation. Here you will also stress that the supplier will be allowed ample time throughout the implementation. You can state that the expectations outlined in the SCoC are not your invention, but rest on all businesses in the world as expectations from the international community and endorsed by the UN. In the IMPA ACT toolbox there is a template cover letter when sending the SCoC to your suppliers.
It is expected that this Step will last one to three months, progressing through the following stages:
Step 4 involves the following:
1. Assess suppliers’ feedback to SSAS
You should review the filled-in surveys (SSAS) that you receive from the selected suppliers. This will give you a clearer understanding of whether the supplier is on the right track in ensuring compliance with the SCoC or whether you will need to engage more thoroughly with the supplier in question.
From evaluating the surveys (SSAS) you should choose which suppliers you would like to engage more in-depth with. You should focus your resources on the suppliers that may pose the highest risk to you; i.e. the suppliers that did not do anything and possibly the suppliers that would report back claiming that they are in full compliance. For the latter group you should engage your CSR advisor to explore whether such proclamation reflects the actual performance of the supplier.
Some suppliers may report back that they have started implementation and are committed to continue until the system described by the SCoC is in place. You may not need to use your resources to engage with suppliers that have already started implementing the expectations from the SCoC. They can become a source for inspiration to your own company and may find it worthwhile to register in the IMPA ACT database.
2. Continue engagement with high risk suppliers
You should determine which high risk suppliers to engage with by combining the suppliers that either checked all or none of the elements in the SSAS with the priority list as described above. Based on these characteristics, and depending on the resources available, you should carefully select the suppliers that you intend to partner more actively with. Once you decided which suppliers you will partner more actively with you should inform these suppliers highlighting their importance to your company, whilst raising the concerns that their answers to the SSAS caused. You can share with the supplier how far your own company is in implementing the SCoC and your company’s wish to build a partnership ensuring the basis of a long-term sustainable collaboration.
3. Suggest Partnership
Following up from your contact to the supplier you should forward the Partnership Letter provided as a template by IMPA ACT. The letter outlines the expectations to your supplier and to your company entering into a partnership that aims to enable the supplier (and possibly your company) to successfully pass an audit.
4. Forward CCT
Contact all high risk suppliers individually. Base your dialogue on their answers to the SSAS and your contextual knowledge for the country of operation, the sector and any known risks. Discuss your wish to engage in a partnership of mutual benefit eventually reaching a stage where the supplier complies with the SCoC. State again the business case for spending resources on such compliance. Explain and describe the advantages of using the Constructive Collaboration Tool (CCT) as foundation for assessing progress over the coming year(s).
5. Register partnership and supplier progress
Register the partnership(s) that you enter into the IMPA ACT database in order to fully achieve the advantages of the IMPA ACT membership.
This step constitutes the main bulk of the work in RSCM and is expected to last one to three years. The following stages are involved:
1. Assist supplier to implement the SCoC
Once you have received a filled in version of the CCT you will have much more elaborate information about the supplier’s ‘defence system’ that manages risks of adverse CSR impacts that could eventually become a problem for your company as well. Based on a comparison with your own company’s CCT you can identify where your company’s CSR advisor(s) may be of use for your supplier and where your company may learn from your supplier.
Use this knowledge as basis for establishing points of contact between your company’s and supplier’s CSR advisors to strengthen the partnership efforts. Let the supplier know that they can ask for assistance from you or your CSR advisor(s) if they have questions concerning the implementation. IMPA ACT will also be capable of referring to adequate advisors to help the supplier to implement the SCoC. You may already at this point ask the supplier for additional information for your inspiration and learning, where you can see that the supplier has better practises in place.
2. Follow-up on progress in agreed intervals
In your first partnership meeting you should make sure to agree on progress reports e.g. every six months with a follow-up meeting.
Your supplier partner should get a full overview of the elements that need implementing in order to comply with the SCoC i.e. the policy commitment, the ongoing due diligence process and the mechanisms to provide for access to remedy.
You should agree to forward your company’s own progress reports at similar intervals. Has your company already implemented the SCoC and has it been successfully audited so that you can agree to forward your annual communication? I.e. the findings from your identification with the explanation on what you are doing to prevent and mitigate adverse impacts in addition to where your company had actual adverse impacts and how it enabled access to remedy.
You can use the Supplier Action Plan (SAP) as a tool to follow up on agreed milestones for moving the implementation of the SCoC forward.
3. Exchange good practises
One of the major advantages of the partnership is that it will work for the benefit of both partners. You may very well become aware of practises or innovative ways in which your supplier implements the SCoC that can enhance your performance or reduce your costs in implementing or maintaining the system. Similarly your supplier may benefit from your experiences. In all interactions with your supplier throughout implementation, make sure to identify such mutual learning points that your companies may benefit from.
4. Prepare for Audit
When your supplier and possibly your own company is getting close to the point where your CSR advisor(s) would agree that the system requirements from the SCoC are met, you should assist your supplier in preparing for an external audit.
The sixth and final step in the process is the audit and it is expected that this will take one to three months:
Your supplier is now ready for the Audit by IMPA ACT accredited auditors. You should follow the audit with interest and inform your supplier that if the auditors find it of value, you and your company’s CSR advisor(s) are ready to assist during the audit.
You should make sure to register the results in the IMPA ACT Database once the Audit is successfully finished. The registration enables your supplier to reap all the advantages of becoming a preferred IMPA supplier, and also make sure that audit results are used to inspire your supplier’s and indeed your own company.
The success of the audit should be celebrated with the supplier. The registration may enhance the supplier’s business considerably and you can celebrate to operate with an important, but relatively risk free supplier.
4. Agree on annual submission of communication on addressing adverse impacts
Once audited and celebrated the SCoC compliance system should be well-functioning. You should agree that your companies exchange ‘communications’ once a year. The communications are the result of annual (re)assessments of potential and actual adverse impacts and the records of the effects of actions to prevent and mitigate such impacts (part of the due diligence process designated by the SCoC).
You should make sure to register the results in the IMPA ACT Database once the Audit is successfully finished. The registration enables your supplier to reap all the advantages of becoming a preferred IMPA supplier. Also make sure that audit results are used to inspire your suppliers and indeed your own company.