6. Managing for supply chain compliance

This Principle applies to companies that source material from producers or suppliers. It requires buyers to engage their suppliers to ensure the fulfilment of the buyer’s commitments and other obligations at the supply-base level in accordance with Core Principles 7, 8, and 9.

6.1   The buyer engages its suppliers to communicate the following requirements, ensure that they are fulfilled, and support their implementation where needed:

• materials offered for purchase are produced, sourced, and controlled in accordance with the buyer’s commitments and obligations related to deforestation, conversion, and human rights; and
• suppliers have policies, systems, and processes in place that cover their entire business and supply base to ensure compliant production and sourcing, conduct adequate monitoring, and furnish information on compliance and performance to the buyer.

6.2   The buyer has systems in place to screen new suppliers for compliance prior to purchasing, manage compliance of volumes purchased on spot markets or otherwise outside of long-term supplier relationships, and take appropriate action with respect to non-compliant volumes (see Core Principle 6.5).

6.3   The buyer engages its direct suppliers to monitor their adherence to the requirements stated in Core Principle 6.1 and to support and strengthen their capacity to fulfil commitments and achieve ethical supply chains. If the buyer purchases directly from producers or producer groups, support prioritises engagement with smallholders and others who may require more assistance to avoid their exclusion from supply chains.

6.4   To the extent that a buyer lacks control or influence over its indirect suppliers, it engages its direct suppliers to institute effective incentives, support mechanisms, and purchase control systems to maximise compliance and avoid severe or persistent non-compliance in its indirect supply base.

6.5   The buyer, with engagement of its suppliers, manages non-compliance to resolve such issues expeditiously without enabling or promoting further non-compliance. Depending on the severity of the non-compliance – as well as the supplier’s degree of culpability for it and the supplier’s commitment and capabilities to move towards compliance – suspension or exclusion of the supplier may be warranted. When noncompliant suppliers are retained or suspended, the buyer engages them to develop, implement, and monitor an ambitious and time-bound implementation plan to achieve compliance, including any necessary remediation. Practices related to purchasing from and engagement of suppliers that produce or sell non-compliant materials are in line with Sections 4 and 5 of the Operational Guidance on Supply Chain Management.