Procurer’s approach to ethical and sustainable work practices

When your business is a procurer (buyer) of goods and services

As a procurer, giving proper consideration to how workers are treated in your supply chain(s) can be essential to your organisation’s ability to operate. 

Non-compliance issues in your supply chain can range from breaches of employment standards like paying less than the minimum wages, to more serious forms of exploitation like forced labour. These issues can affect the quality of your products and services and have a significant impact on your organisation’s reputation and branding.

Making sure that the workers in your supply chains are treated fairly will have a positive effect on productivity and the health, safety and wellbeing of the workers.

A Guide for Procurers [PDF, 1.6 MB]

The New Zealand Government’s procurement rule on ‘Improving conditions for New Zealand workers’ is increasing expectations on business. For some contracts, government agencies must require their suppliers and their domestic supply chains to ensure, and prove, that they comply with all relevant employment standards, and health and safety requirements.

Rule 19: Improving conditions for New Zealand workers – New Zealand Government Procurement(external link)

On an international level, there is increased focus on compliance throughout supply chains. Assuring continued compliance is now a key part of New Zealand’s brand reputation overseas for sustainability and integrity.

For information about how to assure yourself that conditions in your supply chain will not negatively impact on your organisation’s reputation or sales revenue, see:

Ethical and sustainable work practice due diligence 

Key steps are set out below.

Undertaking due diligence in your supply chain

As a procurer, you need to start managing risk before signing a contract and continue to monitor risk after that. Carrying out supply chain due diligence will give you confidence about how workers will be treated by prospective suppliers throughout your supply chain before you enter into a contract. This should continue via monitoring throughout the life of the contract to maintain that confidence.

You should undertake due diligence activities to make sure that employment, labour and human rights standards are being met by your lead (Tier 1) suppliers, their sub-contractors, and supply chains.

Understanding and communicating with your supply chain

There are some key steps you can take to help mitigate labour rights and worker exploitation risks in your supply chains.

• Invest in supply chain mapping and understanding your organisation’s supply chains – identify potential risks, and implement strategies to avoid or mitigate them.
• Develop methods to monitor compliance over the life of your contracts — for example, create new channels like employee voice tools and employee grievance processes, or tighten settings, for example, a stronger employment relations focus later in the life of the contract.
• Have effective ongoing communications and contact with your lead supplier to strengthen your business relationship.
• Make sure your lead (Tier 1) suppliers have a commitment to focus on labour market risks. Depending on the size of the supplier, this could include a human resources (HR) function, or similar, reporting directly to 1 or more senior executive members. This commitment should extend throughout the supply chain from the lead suppliers to their own suppliers and sub-contractors. 

Supplier modern slavery requirements

In New Zealand, most businesses are small to medium-sized enterprises (SMEs) and are unlikely to have dedicated resources or systems that large businesses have in place to respond to modern slavery queries.

Mekong Club has guidance available to help SMEs develop a set of frequently asked questions (FAQs) and responses about what they are doing to identify and mitigate modern slavery in their business and supply chain. Procurers and suppliers can use these questions when completing their due diligence on modern slavery.

Modern Slavery and SMEs – Mekong Club(external link)

The Sustainable Business Network also hosts a free online toolbox, Docket, which is targeted to SMEs and provides a supply chain sustainability self-assessment.

It covers 6 key areas:

• workers’ rights
• modern slavery
• worker health and safety
• carbon emissions
• reducing waste
• regenerating nature.

It also helps SMEs share their sustainability achievements with customers and networks.

Docket: your free online toolbox for a more sustainable supply chain – Sustainable Business Network(external link)