Here, you can get inspiration for how to act if you become aware of a supplier's adverse impact on the CSR principles.
Identify opportunities for action
When you are to decide on the right course of action, you should consider your opportunities to influence the supplier and how important the supplier is to you.
No matter how many resources you devote to responsible supply chain management, you can still risk identifying adverse impacts on the CSR principles among your suppliers.
In these situations, you are expected to react. What you are expected to do depends on your ability to influence the supplier, as well as how important the supplier is to you. As a general rule, a supplier is important if it delivers a service or product that is essential for your activities and that cannot be substituted. You can use the decision-making matrix below to identify your options in various situations.
There are several ways to persuade your suppliers to make changes.
As a small company, you will not always have sufficient clout to persuade a supplier that either causes or contributes to an adverse impact on CSR principles to make changes. Yet clout consists of more than just the size of the orders you place. When you wish to influence a supplier, you can also consider your opportunities to:
Use the contractual terms between you and the supplier, or the revenue your company represents for the supplier, as leverage when requiring a change of conduct
Motivate the supplier to change its conduct via better business agreements, capacity development, etc.
Use the benefits to the supplier's reputation from working with you - and the equivalent reputational risks of losing you as a customer
Work with other companies or trade organisations to persuade the supplier to change its conduct
Engage local or national authorities in improving your suppliers' CSR performance by enforcing legislation and regulations, monitoring, sanctions, etc.
Do (not) break off cooperation
It is important that you do not just break off cooperation with a supplier that finds it difficult to comply with your Code of Conduct.
In general, instances of an adverse impact on the CSR principles should not be a reason to break off cooperation. The vital aspect is whether you can maintain a reasonable dialogue with the supplier, and whether the supplier is willing to make improvements. The purpose of responsible supply chain management is to create positive development for suppliers and to ensure ongoing improvements in their CSR performance.
There can, nonetheless, be situations where you should break off the cooperation with a supplier. This will typically be the case if the supplier has an adverse impact on the CSR principles and you do not have enough leverage to persuade the supplier to change its conduct - and it is not possible for you to increase your leverage. But you should at the same time assess the risks of breaking off the cooperation. Will breaking off exacerbate the situation? Will you be able to find alternative suppliers with better conditions?
You should take extra care if you continue to cooperate with a supplier that persistently has an adverse impact on CSR principles. In such cases, you should be able to document that you are seeking to improve the conditions and influence the supplier's development. You should also be ready to accept that maintaining the cooperation may have financial or legal consequences and may damage your reputation.
You should also pay extra attention to the risk of contributing to particularly serious infringements. Although there is no single definition of serious infringements, the following will generally be included: Genocide, slavery and slavery-like conditions, random executions, torture, forced disappearance, random and extended detention, and systematic discrimination. In these cases, there is a risk of incurring legal liability under international law. Suppliers that operate in conflict areas, or in areas where the population are subject to gross and systematic repression, will be at greater risk of contributing to particularly gross infringements by other parties, such as the State, local security forces or rebel forces. You and your suppliers should ensure that in such areas there are enhanced measures to exercise due diligence and to handle the risk as a legal risk.
If the suppliers have an adverse impact on CSR principles, the situation of the persons affected must be remedied.
Ensuring remedies concerns correcting an error or repairing damage. Fundamentally, this concerns taking care of the parties affected by the adverse impact on CSR principles. If a supplier has had an adverse impact on human rights, it is often easy to identify the parties affected. This might be employees, the local population, customers, etc.
If a supplier has had an adverse impact on the environment or used corruption, on the other hand, it can be more difficult to identify the parties affected. In these cases, ensuring remedy often concerns contacting the relevant authorities and cooperating on any ensuing investigation of the case. You must be aware, however, that an adverse impact on the environment or the use of corruption may affect people, for example when an environmental problem influences the local population's right to health, or the use of corruption affects employees' right to equal pay for equal work.
If a supplier has an adverse impact on CSR principles, the supplier has an obligation to ensure remedy for the affected parties. The same applies to your own company if you cause or contribute to such a situation. Your company can, for example, contribute to an adverse impact on the right to rest and leisure time, and to paid holidays, if you change the specification of requirements for your supplier shortly before the deadline, so that the supplier's employees are required to work overtime. You can find other examples of how your company may cause, contribute to or be linked to adverse impacts on CSR principles in the UNGPs Interpretive Guide, p. 17.
If your company has neither caused nor contributed to the adverse impact, however, you are not obliged to participate in the remedial action. But you can, nonetheless, choose to do so, as you have an interest in the supplier's responsible action in this situation. Taking part in remedial action can be a natural element of the cooperation with your suppliers.
Under the Complaint mechanisms tab there is good advice on how you should work to ensure that affected parties have access to remedy in your own company. This good advice can also be used when you support your suppliers in this area.