Process requirement 3
Excerpt from the contract clause
Supplier shall prevent and mitigate actual and potential adverse impacts that Supplier causes or contributes to, by
a) ceasing activities that cause or contribute to adverse impact in its own operations or supply chains,
b) establishing action plans in meaningful consultation with affected rights-holders or their representatives, with a particular focus on the most significant risks identified and
c) promoting purchasing practices that do not hinder sub-suppliers from complying with the commitments in the Supplier Code of Conduct.
Ceasing activities
You shall cease activities that cause or contribute to adverse impact in your own operations or supply chains. The term activities includes both active actions and omissions, such as failing to provide safety equipment.
Causation
You cause an adverse impact if your activities on their own are sufficient to result in the adverse impact.
Contribution
You contribute to an adverse impact if your activities assist, facilitate, or encourage another party to cause it, or if the impact results from a combination of your activities and those of other parties.
Generally, you cause adverse impact within and in connection to your own operations, while contributions can occur both within your own operations and in the supply chains.
Examples of causation
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You expose your factory workers to hazardous working conditions by failing to provide adequate safety equipment.
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You discriminate against women or ethnic minorities in your hiring processes.
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You cause significant contamination of the local community’s drinking water through chemical discharges from your production.
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You pay bribes to Swedish or foreign public officials.
Examples of contribution
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You lend vehicles to security forces, who use them to travel to local villages and commit abuses.
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You set an unreasonably short delivery time or make last-minute changes without adjusting deadlines and prices, forcing your suppliers to violate workers' rights, such as through excessive overtime.
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You emit large amounts of carbon dioxide from your factory. While you cause your own emissions, you are not solely accountable for climate change.
For a contribution to be considered under the contract clause, it must be substantial – minor or trivial contributions do not count. Several factors shall be taken into account in this assessment:
Your impact on another party's actions
The extent to which your activities increase the risk of an adverse impact occurring.
Your awareness of the adverse impact
The extent to which you can or should be aware of the impact or the risk of it occurring (foreseeability).
Your ability to mitigate the adverse impact
The extent to which your activities actually mitigate the adverse impact or reduce the risk of it occurring.
In the supply chain risk assessment template we have developed, available below under Templates process requirement 3, we help you define the responsibility for adverse impact in the supply chain.
If you contribute to adverse impact, you should, to the greatest extent possible, use your leverage to mitigate any remaining adverse impact. See Process requirement 4 for more information.
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Instructions describing how you determine whether you cause, contribute to, or are linked to adverse impacts.
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Instructions describing how you work to prevent, mitigate, and cease adverse impacts.
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Risk assessments for your own operations, in which your responsibility has been defined.
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Supply chain risk assessments for sample products, in which your responsibility has been defined.
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Meeting minutes, board decisions, or implemented action plans showing that activities causing or contributing to adverse impacts in your own operations have ceased.
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Meeting minutes, board decisions, or implemented action plans showing that activities causing or contributing to adverse impacts in the supply chain for the sample products have ceased.
Guidance for auditor
Fulfils requirement
The company has instructions or equivalent documentation/templates that describe how it determines whether it causes, contributes to or is linked to adverse impacts in its own operations and supply chains.
Responsibility for adverse impacts has been defined in risk assessments for the company’s own operations.
Responsibility for adverse impacts has been defined in supply chain risk assessments of sample products.
The company has instructions or equivalent documentation/templates that describe how it works to prevent, mitigate and cease adverse impacts in its own operations and supply chains.
There is evidence that shows how the company has ceased activities that caused or contributed to adverse impacts in its own operations, such as meeting minutes where decisions to cease activities have been recorded or implemented action plans.
There is evidence that shows how the company has ceased activities that caused or contributed to adverse impacts in the supply chain, such as meeting minutes where decisions to cease activities have been recorded or implemented action plans.
Does not fulfil requirement
The company lacks instructions or equivalent documentation/templates that describe how it determines whether it causes, contributes to or is linked to adverse impacts in its own operations and supply chains.
Responsibility for adverse impacts has not been defined in risk assessments for the company's own operations.
Responsibility for adverse impacts has not been defined in supply chain risk assessments of sample products.
The company lacks instructions or equivalent documentation/templates that describe how it works to prevent, mitigate and cease adverse impacts in its own operations and supply chains.
There is no documentation showing how the company has ceased activities that caused or contributed to adverse impacts in its own operations, such as minutes where decisions to cease activities have been recorded or implemented action plans.
There is no documentation showing how the company has ceased activities that caused or contributed to adverse impacts in the supply chain, such as minutes where decisions to cease certain purchasing methods have been recorded or implemented action plans.
Establishing action plans
You shall establish action plans in meaningful consultation with affected rights-holders or their representatives, with a particular focus on the most significant risks identified.
The purpose is to prevent and mitigate future adverse impacts. Measures shall be tailored to the specific impact, and it is crucial that they address the root cause of the problem.
The action plans shall be documented, communicated with the affected parties, and include:
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Measures – descriptions of how you intend to prevent and mitigate the adverse impact, including the identified root cause.
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Timeframes – dates for when the measures must have been implemented.
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Responsible persons – persons responsible for the implementation of the measures.
In Sweden, legislation such as the Work Environment Act, the Discrimination Act, and the Environmental Code require that measures be planned and implemented as soon as possible.
In the supply chain risk assessment template we have developed, available below under Templates process requirement 3, we help you develop action plans for adverse impacts in the supply chain.
Below are proposed measures for the examples provided above.
Examples of causation
Proposed measures
You expose your factory workers to hazardous working conditions by failing to provide adequate safety equipment. | Eliminate the hazard to prevent injury and ill health. If this is not possible, provide safety equipment and adapt production processes as necessary. |
You discriminate against women or ethnic minorities in your hiring processes. | Introduce a policy against discrimination in employment, with clear guidelines for implementation. |
You cause significant contamination of the local community’s drinking water through chemical discharges from your production. | Install water purification to reduce the impact of pollutants. |
You pay bribes to Swedish or foreign public officials. | Train employees in anti-corruption, including how to report bribes to authorities. |
Examples of contribution
Proposed measures
You emit large amounts of carbon dioxide from your factory. While you cause your own emissions, you are not solely accountable for climate change. | Invest in a better facility and equipment, such as climate-smart technology or renewable energy. |
You set an unreasonably short delivery time or make last-minute changes without adjusting deadlines and prices, forcing your suppliers to violate workers' rights, such as through excessive overtime. | Adapt purchasing practices through long-term planning and close collaboration with suppliers to prevent excessive overtime. |
You lend vehicles to security forces, who use them to travel to local villages and commit abuses. | Introduce a human rights policy, including your approach to security forces, with clear guidelines for implementation. |
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Action plans for the company’s own operations, developed in consultation with rights-holders or their representatives.
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Action plans for sample products, which may have been developed in consultation with suppliers.
Guidance for auditor
Fulfils requirement
The company has documented action plans to prevent and mitigate adverse impacts that it causes or contributes to in and around its own operations.
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It is clear that the action plans have been prepared in consultation with the relevant rights-holders or their representatives.
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It is clear that the consultations are characterised by two-way communication, responsiveness, good faith and continuity.
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It is clear that the action plans focus on the most significant risks (assessed based on likelihood and severity).
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The action plans contain measures, timeframes and responsible persons.
The company has documented action plans to prevent and mitigate adverse impacts that it causes or contributes to in the supply chains of sample products. These action plans should be the same as under process requirement 4, but the responsibility for adverse impacts differs depending on whether the company has contributed to the impact or is linked to it.
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It is clear that the action plans have been developed in consultation with suppliers, if relevant and the relationship is sufficiently strong.
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It is clear that the consultations are characterised by two-way communication, responsiveness, good faith and continuity.
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It is clear that the action plans focus on the most significant risks (assessed based on likelihood and severity).
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The action plans contain measures, timeframes and responsible persons.
Does not fulfil requirement
The company lacks documented action plans to prevent and limit negative impacts that it causes or contributes to in and around its own operations, or they are incomplete:
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It is not clear that the action plans have been developed in consultation with the relevant rights-holders or their representatives.
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It is not clear that the consultations are characterised by two-way communication, responsiveness, good faith and continuity.
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It is not clear that the action plans focus on the most significant risks (assessed based on likelihood and severity).
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The action plans lack measures, timeframes and/or responsible persons.
The company lacks documented action plans to prevent and mitigate adverse impacts it causes or contributes to in the supply chains of sample products, or they are incomplete:
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It is not clear that the action plans have been developed in consultation with suppliers, if relevant and the relationship is sufficiently strong.
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It is not clear that the consultations are characterised by two-way communication, responsiveness, good faith and continuity.
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It is not clear that the action plans focus on the most significant risks (assessed based on likelihood and severity).
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The action plans lack measures, timeframes and/or responsible persons.
Promoting responsible purchasing practices
You shall promote purchasing practices that do not hinder sub-suppliers from complying with the commitments in the Supplier Code of Conduct, meaning responsible purchasing practices.
Your purchasing practices play a crucial role in either protecting or harming workers. As a buyer, it is important to understand that your decisions can contribute to better conditions in the supply chain – or, conversely, intensify and worsen the adverse impact.
Here are examples of purchasing practices and the risks they may entail:
Purchasing practice
Risk of adverse impact
Time pressure | Excessive overtime |
Price pressure | Unfair wages |
Last-minute order changes, such as quantity increases or design changes | Excessive overtime, insecure employment |
Changes to payment terms during the contract period | Unfair wages |
Take-it-or-leave-it contracts, which make it difficult for suppliers to fulfill commitments | Deficiencies in health and safety, unfair wages, excessive overtime, insecure employment |
Insufficient weighting of sustainability in evaluation criteria, including the supplier's capacity to exercise due diligence | All commitments |
Lack of remedy for contributions to adverse impacts | All commitments |
Termination without responsible exits | All commitments |
An important way to promote responsible purchasing practices is to train and encourage the purchasing team to understand the link between purchasing practices and sustainable supply chains.
For practical guidance on responsible purchasing practices, we recommend the Buyer Code, developed by a working group of the American Bar Association Business Law Section, and the draft European Model Clauses. Both are included in the Responsible Contracting Project Toolkit. The Responsible Contracting Project is currently leading the consultation process to finalize the European Model Clauses, developed by a European working group and designed to align with the Corporate Sustainability Due Diligence Directive, as well as the UN Guiding Principles and the OECD Due Diligence Guidance. A draft of the European Model Clauses is available on the RCP website.
We also recommend the Ethical Trading Initiative’s Guide to Buying Responsibly and the material that has been compiled by the Working Group on Responsible Purchasing Practices, which both provide practical insights into responsible purchasing practices. Below is also a short video on the topic.
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Guidelines for responsible purchasing.
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Buyer codes of conduct.
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Shared responsibility contract clauses.
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PowerPoint presentations or screenshots from training sessions on responsible purchasing practices.
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Meeting minutes documenting decisions on longer lead times, adjusted pricing models, revised payment terms, etc., for sample products.
Guidance for auditor
Fulfils requirement
The company has instructions or equivalent documentation/templates that describe how it promotes responsible purchasing practices.
There is evidence that shows how the company promotes responsible purchasing practices, such as a buyer code of conduct, contract terms based on shared responsibility, PowerPoint presentations or screenshots from training on responsible purchasing practices, or meeting minutes or similar that show that the company has made decisions on improved purchasing conditions (e.g. longer lead times, adapted pricing models or payment terms).
Note that the documentation does not need to be linked to the sample products.
Does not fulfil requirement
The company lacks instructions or equivalent documentation/templates that describe how it promotes responsible purchasing practices.
There is no evidence showing how the company promotes responsible purchasing practices, such as a buyer code of conduct, contract terms based on shared responsibility, PowerPoint presentations or screenshots from training on responsible purchasing practices, or meeting minutes or similar that show that the company has made decisions on improved purchasing conditions (e.g. longer lead times, adapted pricing models or payment terms).
