Ethical supply chain management refers to the sourcing, production and distribution of products in a manner that is non-exploitative, fair, sustainable and responsible towards all stakeholders in the chain. This includes the valuing of the human rights of producers of component parts, workers, and communities as well as environmental protection so as to ensure the human rights of current and future generations. Features of ethical supply chain management include safe working conditions and fair pay, local community engagement, minimal environmental impacts, compliance with local laws and international best practice, at all points in the chain. It involves transparency and accountability in relation production, sourcing and suppliers.
The need for sustainable and ethical supply chains in a business is mainly driven by consumer demand. There is an ever-growing preference for ethically produced and environmentally friendly products. A commitment to ethics began as a means for a business to differentiate themselves in the market but is now a consumer expectation. Any deviation or failure regarding ethics can have a disastrous impact on business.
Beyond brand protection and reputation management, ethical supply chain management is vital for complying with EU laws such as the Conflict Minerals Regulation, the Corporate Sustainability Reporting Directive and the Directive on Corporate Sustainability and Due Diligence. If a business trades in the United Kingdom it must comply with Modern Slavery Act 2015 which requires transparency on measures taken by a business in relation to slavery and human trafficking within its supply chain.
Supply chains are an essential element of Environmental Social and Governance (ESG) due diligence when attracting investors and if seeking certification such as Fair Trade or ISO 14001.
It is becoming increasingly clear that ethical supply chains are an important part of ensuring the long-term sustainability of a business; as well as compliance, it allows a business to mitigate risk of reputation damage, to meet consumer and employee expectations and to fully participate in global trade.
The above is provided for information purposes and is not intended as legal advice. Fitzsimons Redmond LLP would be happy to discuss the needs of your business in relation to drafting its supply chain policy. Please contact us on 01-676 3257.
By Lisa Quinn O’Flaherty
Partner at Fitzsimons Redmond LLP
