Corporate Code of Ethics

Organisations adopting the Code will need to commit to the following:

Understanding and commitment

• ensure consistent understanding of business ethics across the organisation at all levels
• continually enhance knowledge of all relevant laws and regulations in the countries in which the organisation operates, either directly or indirectly
• commit to eradicating unethical business practices including bribery, fraud, corruption and human rights abuses, such as modern slavery and child labour

Ethical practice

• conduct all business relationships with respect, honesty and integrity, and avoid causing harm to others as a result of business decisions
• treat all stakeholders fairly and impartially, without discrimination or favour
• actively support and promote corporate social responsibility (CSR)
• avoid any business practices which might bring the procurement profession into disrepute.

Professionalism

• use procurement strategies to drive unethical practices from the supply chain
• ensure procurement decisions minimise any negative impact on human rights and the environment whilst endeavouring to maximise value and service levels
• put ethical policies and procedures in place, regularly monitored and updated, and ensure compliance
• mandate the education and training of all staff involved in sourcing, supplier selection and supplier management to professional standards
• practise due diligence in all business undertakings.

Accountability

• accept accountability and take ownership of business ethics
• foster a culture of leadership by example
• take steps to prevent, report and remedy unethical practices
• provide a safe environment for the reporting of unethical practices.

Corporate ethics are a set of principles that guide the way your organisation conducts itself in its dealings with customers, suppliers, employees and regulators. By creating a set of established principles, an organisation is publicly declaring its intent to behave ethically and responsibly in its practices. The CIPS Corporate Code of Ethics is an established guide which, when adopted, will demonstrate impartiality, transparency, professionalism and accountability. 

This guidance is designed to help you interpret and implement the Code:

Understanding and commitment

All employees involved in sourcing and supplier management should be:

•  aware of and understanding of the organisation’s ethical code, and how it relates to procurement and supply management; this should form part of new staff induction and ongoing performance measurement objectives;
• given appropriate professional training and receive relevant and regular training on the impact of fraud and corruption within the supply chain;
• up to date with new local and international legislation relating to malpractice in business, including fraud and corruption, bribery and human rights abuse.
  For more information on human rights abuse, please visit www.walkfreefoundation.org.

Ethical business practice

You can make sure your organisation is operating ethically by:

• aligning ethical behaviour between the procurement team and all those in the organisation who are involved in sourcing, supplier selection decisions and supplier relationship management;
• developing processes and procedures which clearly segregate duties and delegation of authority and ensure all staff understand and comply with their authority limits;
• creating a system for detecting any exceptions to delegated authority and addressing any anomalies;
• avoiding any practices which require payment or other commitments from suppliers in order to achieve preferred or approved supplier status;
• ensuring confidentiality between buyers and suppliers is safeguarded through Non-Disclosure Agreements and confidentiality clauses in all contracts; any third parties involved should also sign up to these agreements;
• reporting any illegal activity to the relevant authorities.

Sourcing suppliers

Honing your processes for sourcing suppliers forms part of the Code, and organisations should:

• understand the full supply chain beyond Tier 1 suppliers; know the countries of origin and ensure that at some stage in the supply chain there is some form of physical audit of the premises or sites where commodities, goods and services are being sourced;
• ensure suppliers have their own code of ethics and put in place a process for monitoring their compliance;
• carry our procurement tendering openly and transparently with clear evaluation criteria; avoid the use of discriminatory language or clauses in documentation
• ensure staff involved in sourcing and supplier selection decisions do not show favouritism or are unduly influenced by familiarity with suppliers;
• develop evaluation criteria which covers economic, social and environmental factors.

Tendering

In order to meet our tendering standards, organisations should:

• use prequalification questionnaires to ensure that tendering is carried out in an  equitable manner, with opportunities for under-represented suppliers to bid and with no unfair barriers to entry;
• make specifications outcome-based wherever possible to encourage competition by increasing the opportunity to participate;
• communicate tenders widely and give sufficient time to allow suppliers to submit.

Corruption

Avoid accusations of corruption by:

• Putting in processes to allow procurement professionals to alert senior management to corrupt activity
• Being aware of, and eradicating, any corrupt activity from your supply chain, including bribery; extortion or solicitation; trading in influence; money laundering; and nepotism

Why has CIPS developed a Corporate Code of Ethics?

CIPS has always had a Code of Conduct for individual members which enables us to self-regulate our profession and ensure, as far as we are able, that CIPS members operate ethically.

The increase in complex global supply chains is also increasing the opportunities for procurement malpractice. We have seen serious issues of bribery, fraud, corruption and human rights abuse emerging and we believe procurement and supply management has a part to play in eradicating these problems.  We also believe it is important for procurement teams, which may include non-members, to be held accountable for sourcing, including supplier selection, and supplier management and for the organisations they work for to set the highest ethical standards for them to work to. If we are to eradicate unethical business practices from the supply chain, it is not enough to rely on individuals, we need to change organisational behaviour.

Is the Code mandatory?

Any organisation is free to adopt the CIPS Corporate Code of Ethics or use it as a guide to improve and strengthen its existing code. However, adoption of the CIPS Corporate Code of Ethics (or its key principles) is mandatory for organisations wishing to achieve and retain the CIPS Corporate Ethics Mark.

What does the CIPS Corporate Ethics Mark stand for?

The Mark is a way for an organisation that commits to ethical procurement to be recognised by CIPS and – because organisations that hold the Mark are listed on a publicly accessible register – by the wider community.  It shows that they have been able to demonstrate the value they place on ethical procurement and gives suppliers, customers, potential employees and other stakeholders confidence that they are dealing with a business that is committed to ensuring its staff are trained in ethical sourcing, supplier selection and supplier management, and they have adopted ethical values in the way in which they source and manage suppliers.

For the organisation itself, the Mark contributes to enhancement of its brand and is a sign that it has taken steps to safeguard itself against procurement and supply chain malpractice, thus reducing supply chain risk.

What is Corporate Ethical Procurement and Supply?

Find out more.

Find out more about ethics in procurement by clicking on the following links: 

• Definition of Ethics
• CIPS Position on Practice: Sustainable Procurement
• CIPS Australia: Supply Chain Fraud
• CIPS Practice Guide: Corporate Social Responsibility
• HMC: Bribery Act 2010
• How To: Effective CSR Implementation
• How To: Ethical Business Practices
• Knowledge Now: The Bribery Act
• Knowledge Now: Ethical Sourcing, Organisations and Brands
• Socially Responsible Procurement: Corporate Social Responsibility in a Supply Chain Context