Ethical Supply Chain
Definition
An ethical supply chain is one in which all participants – from raw material suppliers to final distributors – operate in compliance with environmental, social, and governance standards. This includes fair labour practices, safe working conditions, environmental responsibility, and anti-corruption measures. Managing ethical supply chains requires ongoing due diligence, auditing, and supplier engagement.
Why It Matters
Supply chain ethics have become a top ESG priority as regulations like the EU CSDDD impose due diligence obligations throughout value chains. Companies with robust supply chain management reduce exposure to reputational, legal, and operational risks.
Related Terms
Human Rights Due Diligence
Human rights due diligence (HRDD) is a process by which organisations identify, prevent, mitigate, and account for how they address their adverse human rights impacts. It involves assessing actual and potential human rights risks across operations and supply chains, taking appropriate action, and tracking effectiveness. The concept is rooted in the UN Guiding Principles on Business and Human Rights.
Scope 3 Emissions
Scope 3 emissions are all indirect greenhouse gas emissions that occur in a company's value chain, both upstream and downstream. They include emissions from purchased goods, business travel, employee commuting, waste disposal, and use of sold products. For most companies, Scope 3 represents the largest share of their total emissions.
Anti-Corruption
Anti-corruption refers to the policies, procedures, and practices designed to prevent, detect, and address bribery, fraud, and other corrupt activities within an organisation and its business relationships. It encompasses compliance with laws like the UK Bribery Act and US Foreign Corrupt Practices Act, as well as ethical culture and whistleblower protection. Robust anti-corruption programmes are a core governance expectation.
EcoVadis
EcoVadis is a business sustainability ratings platform that assesses companies across four themes: environment, labour and human rights, ethics, and sustainable procurement. Using a combination of documentation review, industry benchmarking, and third-party data, EcoVadis provides a scorecard from 0 to 100 with medal levels. Over 130,000 companies across 175 countries have been rated.