This clause requires the vendor to source materials responsibly—meaning no child labor, fair wages, safe working conditions, and environmental protection. It matters because your company can face lawsuits, boycotts, and reputational damage if your vendors use exploitative practices, even if you didn't know about it. Under UK and US law, companies increasingly face liability for their supply chains (like the UK Modern Slavery Act). The vendor is promising their suppliers meet ethical standards, but they rarely guarantee this completely. This is high-risk because vendors often can't fully verify their entire supply chain, yet you could still be blamed if problems emerge.
Don't accept vague promises like "we comply with ethical standards"—demand specific commitments like third-party audits, certification (Fair Trade, SA8000), or annual reports on labor practices. Add a clause allowing you to audit their suppliers or terminate the contract if serious violations are discovered, and require them to notify you immediately if problems arise. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires the vendor to source materials responsibly—meaning no child labor, fair wages, safe working conditions, and environmental protection.
Why should I care about this clause?
It matters because your company can face lawsuits, boycotts, and reputational damage if your vendors use exploitative practices, even if you didn't know about it.
What are my options?
Under UK and US law, companies increasingly face liability for their supply chains (like the UK Modern Slavery Act).
How does this affect small businesses?
The vendor is promising their suppliers meet ethical standards, but they rarely guarantee this completely.