print this page Buyer Handout

Communicating Decent Work to Suppliers

Buyer Handout 2: Why should decent work matter to your suppliers?

Your suppliers have supply chains of their own. Share what decent work means for them too.

One important note: procurement practices that demonstrate respect for workers’ human and labour rights are part of business responsibility regardless of the existence of a business advantage

Buying the cheapest option may not cost the least

The cheapest option may be more expensive in the long run, if it doesn’t provide decent work for supplier employees, and if it doesn’t meet increasing expectations of businesses to respect human and labour rights. The costs can include financial loss due to reputational damage for the buyer brand or legal product liability costs for defective products among other factors.

What are the risks to your company?

  • Poor quality or product failures
  • Inconsistencies in the supply of products or services
  • Poor working conditions which could lead to:
    • Production stoppages due to worker unrest or strikes
    • Increased management costs to deal with any issues that arise, e.g. a third-party or media report
    • High employee turnover cost for suppliers
    • Increased compliance costs or legal liabilities, e.g. in the case of injuries to workers or consumers
    • Reputational impacts and increased stakeholder pressure if poor practices are found
    • Potentially losing out on government contracts
    • Potential loss of contracts to other suppliers that can offer decent working conditions to purchasers
  • Withdrawal of project financing by lenders if social (or environmental) requirements associated with a loan are not met (ESG – Environmental, Social, Governance-criteria are critical as they are considered together when it comes to accessing finance and reporting on loans)
  • More frequent audits and supplier monitoring to check conditions or address concerns about poor quality of work and products, which may increase costs

Buying responsibly can save you money in the longer term

The benefits for your company from considering decent work in buying decisions could be:

Strengthening your supply chain

  • Secure consistent and reliable suppliers
  • Build resilience into supply chains through longer-lasting trustful supplier relationships
  • Support capacity development of SMEs in the supply chain. Most SMEs might not have the resources to access technical advice on social sustainability and decent work requirements

Supporting your sales and reputation

  • Protect your company’s brand image and reputation
  • Comply with legal requirements and align your operations with the principles contained in international labour standards
  • Access new markets:
    • Customers increasingly take social responsibility into account when buying products and services
    • Workers are also consumers and having decent working conditions is a prerequisite for achieving sustained economic growth
  • Increase trade and business opportunities worldwide – from both businesses and governments; more government policies and contracts are expected to include requirements for the broader benefit of society
  • Be a good corporate citizen – in line with your company’s values and sustainability commitments

Improving staff-related costs and productivity

  • Less staff turnover, less recruitment and training costs
  • Motivated, productive staff
  • More competition via job creation
  • A wider selection of staffing by attracting the best candidates, including young people
  • Reduced workers’ compensation premiums

Wider benefits

  • Help build healthy societies – which in turn are good for business
  • Be part of the solution by supporting the achievement of the SDGs
  • Compliance with national and international laws, regulations principles and standards