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Key takeaways
- Ethical sourcing means buying from suppliers that treat workers fairly and safely and respect human rights, and checking that they do.
- It centers on people. The wider environmental programme is covered in our sustainable procurement guide.
- A supplier code of conduct only works if it is in the contract, backed by audit rights and a path to correct problems.
- Audits show conditions on one day. Pair them with worker voice channels and unannounced visits for high risk sites.
- When you find a problem, the first question is how to fix it for the workers, not how to protect the brand.
Free PDF: Supplier code of conduct clause pack. Get it below
A fashion retailer discovers during a routine review that a third tier subcontractor, never named in its supplier list, is running night shifts with workers under the legal minimum age. The retailer has a code of conduct. The code has been signed by the first tier supplier. Nobody had asked whether the first tier supplier uses subcontractors, and the contract has no clause that requires it to say.
The case is invented, and it is a pattern that has played out in many industries. What it shows is that signing a code and enforcing it are different things.
Ethical sourcing is the practice of buying from suppliers that respect workers' rights, provide safe and fair conditions and operate honestly, supported by standards in the contract and checks that show the standards are met.
What issues does ethical sourcing cover?
| Issue | What to look for | Where it is most likely |
|---|---|---|
| Forced and child labor | Recruitment fees, held documents, workers under the legal age | Raw materials, agriculture, garments, electronics assembly |
| Working hours and pay | Hours above legal limits, wages below legal minimums, unpaid overtime | Contract manufacturing, seasonal work |
| Health and safety | Blocked exits, missing protective equipment, unsafe buildings | Factories, mines, construction |
| Freedom of association | Barriers to forming or joining a union or worker committee | Any sector, varies by country |
| Discrimination and harassment | Unequal pay, abuse, no safe route to complain | Any sector |
| Business ethics | Bribery, falsified records, unreported subcontracting | Any sector |
The table is our summary of common focus areas. The risk locations are general patterns, not a ranking of countries or firms. Your own risk map should rest on your categories and where they are sourced.
How do you write a supplier code of conduct?
- Base it on recognized standards. Many codes draw on the conventions of the International Labour Organization and the UN Guiding Principles on Business and Human Rights. Citing the source helps suppliers see that the demands are not invented by you.
- Keep it short and specific. Two to four pages of clear rules is better than twenty pages of aspirations.
- Put it in the contract. A code that lives only on a website cannot be enforced. Reference it in the agreement and make breach a ground for action.
- Require subcontractor disclosure. The supplier must tell you who else makes your product and cascade the code to them.
- Add audit rights. Include announced and unannounced visits and access to records and workers.
- Define the response path. State that a finding triggers a corrective plan with a deadline, with termination as the last step.
The clause pack in the download below gives sample wording for each of these. Have your legal team review it for your jurisdiction. Where the clause conflicts with local law, the law decides.
Free PDF
Supplier code of conduct clause pack
Sample clause topics for a supplier code and contract, an audit method chooser and a response plan for findings. Have your legal team review before use.
- Eight clause topics with prompts
- Audit method chooser
- Corrective plan table
- Escalation ladder for repeated failure
How do you check that suppliers comply?
| Method | What it shows | Weakness |
|---|---|---|
| Self-assessment questionnaire | What the supplier says about itself | Easy to answer well without being true |
| Third-party rating | A rater's view at a point in time | Covers what was reviewed, not the whole chain |
| Announced audit | Conditions on the day, documents and processes | Sites can prepare |
| Unannounced audit | A more realistic picture | Costs more, takes planning |
| Worker interviews and hotlines | What workers say when asked safely | Needs trust and confidentiality |
EcoVadis's 2026 barometer reported that about half of buyers, 48 percent, have visibility of ESG practices for most of their tier-one suppliers, with visibility falling sharply beyond that. If your reach stops at tier one, the code protects less than it appears to. Our supply chain due diligence guide covers how to extend it.
What do you do when you find a problem?
- Protect workers first. If people are at immediate risk, say a locked exit or unpaid wages, act at once.
- Agree a corrective plan. Name each issue, the fix, the owner and a date. Verify it afterwards.
- Share the cost where it is fair. If the supplier cannot afford a fix and your price is part of the cause, recognize that.
- Escalate repeated failure. If the supplier does not act on a plan, reduce volumes or exit in a managed way.
- Record everything. Decisions and evidence matter to regulators, to auditors and to your own learning.
A hurried exit can harm the workers you are trying to protect, because they lose income and the site may simply find another buyer. A plan that improves conditions usually serves workers better than one that ends the contract, unless the abuse is severe and the supplier refuses to change.
What mistakes do teams make?
- Relying on signed codes alone. A signature is not evidence.
- Treating price pressure and ethics as separate. If you squeeze the price below what a decent wage allows, you are part of the cause.
- Auditing the same way every time. Predictable audits produce predictable answers.
- Ignoring subcontractors and recruitment agents.
- Keeping findings inside procurement. Legal, compliance and communications need to know before a story becomes public.
For the wider environmental and social programme, read sustainable procurement. For where this sits in the plan, see procurement strategy. Software that supports supplier assessment is covered in our ESG supplier sustainability software category.
Sources
- EcoVadis, 2026 Barometer: 1,000 multinationals, about 2,000 suppliers, 48 percent of buyers with tier-one visibility.
- The issue table, code steps and response guidance are editorial summaries of common practice. References to ILO conventions and UN Guiding Principles are general. Legal wording needs review by counsel.
Frequently asked questions
What is ethical sourcing?
It is buying from suppliers that respect workers' rights, provide safe and fair conditions and operate honestly, backed by contract standards and checks that show the standards are met.
What is a supplier code of conduct?
It is a short document that sets the labor, safety, environmental and ethics standards suppliers must meet. It works only if it is referenced in the contract and backed by audit rights and a path to correct problems.
How do you audit suppliers for ethical sourcing?
Combine methods: self-assessments, third-party ratings, announced and unannounced audits and worker interviews or hotlines. Each shows something different, and none is enough alone.
What should you do if a supplier breaks the code?
Protect workers first, agree a corrective plan with owners and dates, verify the fix, and escalate to reduced volumes or exit if the supplier does not act. Record all decisions.
What is the difference between ethical sourcing and sustainable procurement?
Ethical sourcing centers on how people are treated in making what you buy. Sustainable procurement is wider and also covers environmental effects, whole life cost and supplier development.