Monitoring the contract
During implementation, the contract manager or internal client should check that the supplier is in compliance with the agreements reached. Are there any indications that international social conditions have been violated? If so, engage the supplier in a dialogue about possible solutions.
Ensure that all agreements are transparent
During implementation, the contract manager or internal client should check that the supplier is in compliance with the agreements reached.
In the event of risks, review the action plan
If the contract falls within the scope of the 10 riskcategories the supplier is obliged to make an effort to address risks in the supply chain. The suppliers must prepare an action plan at the start of the contract period. This action plan includes a risk analysis and a description of the effort, monitoring, and measures involved to prevent a violation of the social standards. Check that the measures are clear.
An effective risk analysis requires an understanding of the supply chain (and the value chain), and involves:
- the products/services purchased by the supplier for the purposes of the contract in question;
- the supplier's host countries and its own suppliers for this contract;
- a risk assessment based on the specific products/services and on host countries;
- independent research, if necessary, and
- asking stakeholders (non-governmental organisations (NGOs) and trade unions) about the track records of specific countries, suppliers and production methods.
Review progress in the annual report
During the contract period, suppliers shall submit reports annually (or on completion, in the case of a shorter-term contract) regarding the efforts they have made in connection with improving social conditions along the supply chain. This must show that the supplier has made a "reasonable effort" to eliminate risk. It is not always easy to assess this. Make prior arrangements with suppliers about the verifiability of their efforts. Also, examine initiatives by other companies in the sector.
Suppliers' annual reports must at least contain the following:
- an updated risk analysis;
- details of the measures taken to minimise risks and remedy violations;
- details of the approach used (and the results obtained) to monitor compliance with the standards;
- how indications that the standards have been violated are dealt with.
Discuss indications that the standards have been violated
If there are indications of standards violations in the chain, then the supplier must take action. In such cases, always engage suppliers in dialogue and reach agreement on how to deal with these issues. Suppliers must immediately address any violations in their own organisation. In the case of their direct suppliers, they can require that an improvement plan be drawn up and that contractual measures be taken, if necessary. In the case of violations by parties further down the supply chain, suppliers can engage in dialogue and try to exert pressure through their own direct suppliers, for example.
Always seek solutions through mutual agreement
If a supplier fails to comply with their obligations, engage them in a dialogue to find a solution. Help them to understand the importance of the social conditions and encourage them to take action. If this fails to achieve the desired effect, you can seek external advice, investigate the matter further (or arrange for this to be done), declare the supplier to be in default, or impose a fine. Any measures taken must be proportionate to the infringement involved. We recommend that you always try to find a constructive solution through mutual agreement.
Termination for non-compliance with contractual agreements
If, after being issued with a notice of default, the contractor still fails to comply with the agreements made concerning the international social conditions in the contract, then this is a legitimate reason for terminating the contract.
Maintain a dialogue on social conditions in the global supply chain
For many parties, the implementation of social conditions is unfamiliar territory. This applies equally to procurers and suppliers. Be sure to maintain a dialogue about social conditions throughout the entire contract period. Think of it as a learning process. Every single effort made is a positive contribution to better conditions in the supply chain. Transparency and mutual trust are essential if international social conditions are to be successfully implemented.
Refer suppliers to MVO Nederland
Suppliers can contact MVO Nederland if they have any questions about international social standards in the chain. They can get in touch via @email or, if they have any questions about the CSR risk checker, via @email