Ethical procurement and purchasing

Women weaving

By

Annette McGill

Ethical purchasing and/or procurement policies aim to promote good labour and environmental standards in supply chains. Many charities have introduced ethical procurement policies.

What do ethical procurement policies include?

Policies typically set out

a) the standards which the organisation abides by, and 

b) the standards which charities require from their suppliers, their agents sub-contractors, and sometimes also governments and communities.

How to draft a policy

Some charities may begin by holding a stakeholder consultation to identify the key areas of concern. Another route is to set up a staff working group. Smaller organisationsmay simply ask their facilities manager, operations manager or procurement manager to draw up a policy that covers purchasing.

Getting agreement

The policy should be approved by your chief executive, and ideally your Board of Trustees.

What should you include in an ethical procurement policy?

Different charities may have particular areas of concern, but typically that standards which you include may cover:

Compliance with the law

  • The supplier (and their agents and subcontractors) shall comply with the law in all areas where they operate.
  • Supplier shall comply with the Modern Slavery Act 2015
  • Suppliers must respect human rights, e.g., they shall not use indentured labour,  they shall not discriminate on the basis of gender, race, religion, etc.

Working conditions

  • Suppliers must provide a safe and healthy working environment
  • Suppliers shall provide acceptable working conditions, e.g.  clear terms of employment, limits on working hours
  • Suppliers shall pay a living wage
  • Employees must have the right to join unions and/or bargain collectively

Business practice

These requirements may cover such issues as payment of invoices, compliance with tax regimes, anti-bribery legislation, etc. Your charity may also wish to specify that suppliers are not in any way involved in the arms trade or other businesses which conflict with your charity's remit.

Environmental sustainability

  • Suppliers shall comply with environmental regulations 

Sustainable procurement policies may also include advisory elements encouraging suppliers to work towards higher environmental standards.

Standards for your charity

Obviously ethical procurement also involves your staff maintaining strict integrity when it comes to selecting people for tendering work, awarding business to suppliers and contractors and evaluating their performance. 

How to implement your ethical procurement policy

Communicating your policy

Once your organisation has agreed a policy, it is essential that that policy is communicated across your charity, so that all staff who may be entering into purchasing arrangements are aware of its requirements and ensure they are implemented. You may wish to set up training sessions for staff who are regularly involved in purchasing.

It is vital to clearly communicate your policy to all existing and future suppliers and contractors, and their staff.

Any discussions about tenders and new contracts should include provision of a written copy of your policy to potential suppliers and contractors. Contracts should reference the policy.

Many charities publish their policies online. However it is advisable to also directly discuss your procurement policy with suppliers, rather than relying on them having read your website. 

Monitoring

Monitoring whether your suppliers are abiding by your policies may be as simple as meeting with contractors and going through your ethical purchasing policy together, ticking off each requirement as you go.

Monitoring compliance is much more difficult if you are dealing with suppliers in distant countries, or with a long and complex supply chain. In these instances initiatives such as the Fairtrade label can be helpful.

Where resources permit, the most effective strategy may be to engage with suppliers and to encourage them to improve their standards.

Guidance and further resources

ISO 20400:2017 provides guidance to organizations, independent of their activity or size, on integrating sustainability within procurement - follow the link below

One simple way to move towards sustainable procurement is to identify organisations leading the way such as the Fairtrade Foundation. Fairtrade is the best-known ethical label in the UK. It works with 1.6 million farmers and workers across 74 developing countries, providing a safety net against volatile market prices.

Fairtrade sets social, economic and environmental standards and certifies products and ingredients. The Fairtrade logo on products indicates that Fairtrade standards have been met by the farmers, workers and companies that are part of products’ supply chains. 

The Ethical Trading Initiative (ETI) is a membership organisation which aims to improve working conditions in global supply chains. It has developed the ETI Base Code of labour practice, which sets out standards based on the work of the International Labour Organisation (ILO).

The Ethical Procurement for Health Workbook aims to provide practical guidance for organisations in the health and social care sector to embed labour standards considerations into procurement and supplier management activities.