Code of Conduct: the basis for compliance and practiced diligence

An effective Code of Conduct essentially fulfills three criteria: It is tailored to the company, takes into account its risks and is known to all employees. To achieve this, it is helpful to follow a few tips.

- The provisions in the Code of Conduct are tailored to the company profile: The text not only addresses your company's values, but also takes into account the risks your organization might face in your industry.

- The text is clear and easy to understand. Avoid long, complex sentences and focus on short, concise statements to avoid misunderstandings.

- The document is easily accessible to all employees. Do not keep it in a hard-to-find folder on the company server, but make it available on the intranet, for example.

- The Code of Conduct is regularly updated and communicated. If the company expands its business area, the Code of Conduct must be adapted to the new conditions.

- To ensure that employees are familiar with the Code of Conduct, the content can be communicated in training courses.

The Code of Conduct must be approved by the management. As with all compliance guidelines, it is important that the management level sets a good example. They should actively implement the regulations and make it clear to employees that ethical business conduct is of great importance in your organization.

A good CoC is only half the battle: Automation ensures complete success!

The following steps provide a guide:

- Compile all applicable laws and regulations for the company and the industry

- Define the values of your own organization

- Define potential risks arising from the company/business activity in an analysis (note: LkSG and CSDD are relevant here!)

- Derive clear guidelines and instructions for employees (e.g. for data protection, accepting gifts, etc.) - Define consequences in the event of violations

- Write down requirements in clear, simple language

- Have CoC legally reviewed if necessary

- Make the Code of Conduct public (have it translated if necessary), make it easy for all employees to find

- clarify binding effect when publishing, communicate to new employees from the outset

- In the event of changes to the law or new business areas, the CoC must be adapted and communicated again

Automation plays an important role in communicating to suppliers and obtaining consent

Employees undertake to comply with the obligations set out in the Code of Conduct by signing it. Failure to do so may result in measures such as warnings and even possible dismissal. However, violations can also constitute breaches of the law, for which legal penalties are imposed.

The situation is similar for supplier violations: Purchasing not only communicates the CoC to this target group, but also imposes the sanctions for violations, which can range from a lower ranking to termination of the supply relationship (which of course requires an alternative source of supply). In addition, chain of custody obligations can also be defined as contractual obligations and possibly be subject to penalties.

In this context, the EU requirements for which the chain of custody plays a role should also be considered (in particular the CSDDD, the "EU Supply Chain Act"). This is because it also provides for penalties for the purchasing company, meaning that breaches of the chain of custody obligations can also trigger specific damages under certain circumstances.

Take advantage of our free advice on developing your chain of custody strategy

The answer is clear: through automation. With the Supplier Lifecycle Management Tool, the DIG system provides the necessary, flexible form editor with which the CoC can be easily created and subsequently adapted as required - and the workflow engine for designing the desired automatic processes. These include, for example, sending the documents to the supplier contacts via an interface to the ERP, setting individual reminder intervals until the supplier responds and, of course, the central storage of accepted CoCs.

We will show you how it works in our free consultation!