Treating suppliers ethically

Just as (according to Dostoyevsky) “[t]he degree of civilization in a society can be judged by entering its prisons…” so can the degree of ethicality in a company be judged – at least in part – by assessing how it treats its vendors. While not as vulnerable as prisoners, of course, vendors do tend to be an easier target of abusive treatment than are other classes of a company’s stakeholders. Indeed, this vulnerability was part of the reason for the widespread revulsion at press accounts of Donald Trump’s not paying many of his company’s vendors, as described in this story last year in USA Today.

However, at least based on my experience, the ethical treatment of vendors is often not on the radar screen of C&E programs, at least not to a meaningful degree. In that respect the issue is a bit like corporate tax practices, a hugely important area for ethical consideration  that is rarely treated as within the scope of a C&E program (as discussed in page 27 of this e-book).

Earlier this month a law went into effect in the United Kingdom requiring large companies to disclose certain information about payment practices regarding suppliers. The specifics of the law can be found in this article by the Pillsbury Winthrop law firm and, needless to say, companies doing business in the UK should understand and take whatever steps are necessary to comply with the law – aspects of which do sound somewhat tricky.   My point in alerting readers of the COI Blog to this development, however,  is somewhat different: to suggest that the law provides a welcome occasion for C&E officers to urge their companies to think broadly about C&E issues regarding the treatment of a company’s suppliers, if they have not already done so. Hopefully, this can lead to greater emphasis in risk assessment, training and other parts of a C&E program on doing right by suppliers.

This is important principally because it is the ethical thing to do. However, it is compelling  as a matter of compliance logic as well. In that regard, I can recall from client experience two instances of the mistreatment of suppliers (in particular, lying) causing those suppliers to confer with each other in a defensive but potentially harmful and unlawful  manner. Doubtless there are many other examples of this kind too – and I hope the spirit of the UK law can reach beyond the area of payments and lead to better compliance and ethics generally in the relationships between customers and suppliers.

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