Code of Conduct of Buyers

The Responsible Purchasing Code of Conduct, also known as the Buyer Code, comprises a set of principles and guidelines that apparel brands and retailers, referred to as “Buyers” in this context, commit to follow to protect the human rights of workers across their global supply chains. When incorporated into a contract for apparel purchases, the Buyer Code becomes legally binding.

The Buyer Code was developed by a working group of the American Bar Association to emphasize the significant role that Buyers’ business practices play in ensuring human rights and favorable working conditions within supply chains. Unlike most codes of conduct that target Suppliers (factories and producers), the Buyer Code specifically targets brands, recognizing their direct impact on the supply.

Here’s an overview of the evolution of Codes of Conduct throughout history:

1. Ancient Civilizations: The roots of Codes of Conduct can be traced back to ancient civilizations like the Mesopotamians, Egyptians, and Greeks. These societies developed ethical guidelines, moral principles, and laws that governed the behavior of individuals and groups within their communities.

2. Religious and Philosophical Codes: Many religious and philosophical traditions have contributed to the development of ethical codes. Religions like Buddhism, Confucianism, Islam, and Christianity have formulated guidelines for adherents to lead moral lives, emphasizing virtues and principles such as compassion, honesty, and justice.

3. Chivalric Codes: During the medieval period, chivalric codes emerged in Europe, particularly among knights and nobility. These codes outlined the expected conduct of knights, promoting virtues like bravery, loyalty, and honor.

4. Military Codes: As armies were formed, military codes of conduct were established to regulate the behavior of soldiers during wartime. These codes emphasized discipline, respect for authority, and treatment of prisoners and civilians.

5. Professional Codes: As various professions developed, they also adopted codes of conduct to uphold ethical standards. For instance, medical professionals, lawyers, and journalists have their codes of ethics, outlining their responsibilities towards clients, patients, or readers.

6. Business and Corporate Codes: In the 20th century, with the rise of global businesses and multinational corporations, the need for ethical guidelines became apparent. Many companies developed Codes of Conduct to address issues such as employee rights, environmental sustainability, and fair business practices.

7. Supply Chain Codes: In more recent years, as awareness grew about human rights abuses and poor working conditions in global supply chains, industry-specific codes of conduct emerged. These codes aim to ensure that companies and brands uphold ethical standards and protect workers’ rights throughout their supply chains.

8. Modern Corporate Social Responsibility: Today, Codes of Conduct are a critical component of Corporate Social Responsibility (CSR) initiatives. Companies use these codes to demonstrate their commitment to ethical practices, sustainability, and social impact.

Objectives of a Code of Conduct for Buyers:

1. Ethical Behavior: Encourage buyers to conduct their purchasing activities ethically and responsibly, adhering to legal requirements and avoiding actions that could harm suppliers or violate human rights.

2. Fair Practices: Promote fair competition, avoid conflicts of interest, and prevent discriminatory or prejudiced behavior in the procurement process.

3. Transparency: Encourage openness and transparency in buyer-supplier relationships, including clear communication, accurate record-keeping, and disclosure of relevant information.

4. Sustainability: Promote environmentally and socially responsible purchasing practices, considering factors such as sustainability, diversity, and local economic development.

5. Compliance: Ensure compliance with relevant laws, regulations, and industry standards to mitigate legal risks and maintain the reputation of the organization.

What does the Buyer Code accomplish and why does it matter?

The Buyer Code’s primary objective is to address the power imbalance between Buyers and Suppliers by compelling Buyers to improve their purchasing practices. These practices include aspects like pricing, payment terms, production timelines, and delivery conditions. The code is crucial because irresponsible purchasing practices by brands can contribute to human rights abuses within their supply chains. For instance, during the early months of the COVID-19 pandemic, some apparel brands used one-sided contracts to cancel orders without payment, adversely affecting vulnerable workers.

Importance of a Code of Conduct for Buyers:

1. Building Trust: A well-defined code of conduct builds trust and credibility with suppliers, fostering long-term and mutually beneficial relationships.

2. Risk Mitigation: By setting clear guidelines, the code of conduct helps identify and mitigate potential risks associated with unethical or illegal behavior, reducing the likelihood of legal disputes or reputational damage.

3. Reputation Management: Demonstrating ethical purchasing practices enhances the organization’s reputation among stakeholders, including customers, investors, and the broader public.

4. Compliance and Legal Requirements: A code of conduct ensures that buyers adhere to relevant laws, regulations, and industry standards, reducing legal and compliance risks.

5. Sustainability and Social Responsibility: By including sustainability and social responsibility principles, the code of conduct helps buyers contribute to positive social and environmental impacts.

Functional Areas of a Code of Conduct for Buyers:

1. Supplier Selection and Evaluation: Guidelines for fair and transparent supplier selection, evaluation, and contracting processes.

2. Ethical Standards: Expectations for ethical behavior, including avoiding bribery, corruption, and conflicts of interest.

3. Fair Competition: Guidelines for promoting fair competition and preventing anti-competitive behavior.

4. Confidentiality and Information Security: Ensuring the protection of confidential information and maintaining information security.

5. Human Rights and Labor Practices: Promoting respect for human rights, fair labor practices, and avoiding the use of child labor or forced labor.

6. Environmental Sustainability: Guidelines for considering environmental factors in purchasing decisions, such as reducing waste, promoting recycling, and selecting environmentally friendly products or services.

Who developed the Buyer Code?

The Buyer Code was created by a working group from the American Bar Association’s Business Law Section, under the leadership of David Snyder, a Professor of Law at American University Washington College of Law, and Susan Maslow, a Partner at Antheil Maslow & MacMinn, LLP.

Alongside the Buyer Code, the working group also developed a collection of approximately 30 model contract clauses known as the MCCs. These clauses can be selectively integrated into international supply contracts by either the Buyer or the Supplier. The main purpose of the MCCs is to enhance the human rights performance of these contracts by incorporating human rights due diligence principles throughout the entire Buyer-Supplier relationship.

Examples of provisions within a Code of Conduct for Buyers:

1. Prohibition of bribery, kickbacks, or other corrupt practices.

2. Equal treatment of suppliers and avoidance of preferential treatment.

3. Clear guidelines on conflicts of interest and disclosure requirements.

4. Respect for intellectual property rights and confidentiality agreements.

5. Compliance with labor laws, including fair wages, working hours, and health and safety standards.

6. Consideration of environmental impact and preference for sustainable products or services.

7. Supplier diversity and support for local businesses or underrepresented groups.

8. Prohibition of discriminatory practices based on race, gender, religion, or any other protected characteristic.

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